This article examines the Land in the Utilities account:  $6,715,543.64 according to the audited financial statements (6/30/2022). That $6,715,543.64 matches the Fixed Asset Ledger-Land-Utilities  exactly. That should be good – but it’s not. Why? Because the ledger does not contain accurate, supporting details.

Only one item in the ledger contains  a parcel number.

The FA Ledger for Land – Utilities ties exactly to the audited financials for 2022 back to 2009:  $6,715,544.

And then from 2007,  the numbers don’t match  (graphic)– until magically they again match in 1990.

 

This is evidence the FA Ledger was created to tie to the General Ledger – but likely does not contain accurate details of the Land IVGID owned. The ledger was probably created for the financial conversion to Innoprise in 2010.

There are 36 items in the FA Ledger for Land-Utilities in 6 categories. A summary of the issues:

1.    Land (Water/Sewer Dept).

a.The first date Washoe County has a recorded document for land owned by IVGID is June, 1968 for the beaches. There is also no record of land acquired in 1961 or 1962 by IVGID in the Board minutes. A checking account for sewer and water was only authorized in Dec 1962.  Are the 2 transactions totaling $98,736.64 accurate? We do not know.

b. Multiple items in the FA Ledger are described “LAND & LAND RIGHTS” but have no parcel number, address, or legal description, or acreage. There are no recorded documents until 1968. Are the 7 transactions totaling $510,808.85 accurate? We do not know.

2.    Water Rights. The ledger has $2,136,553.55 in water rights acquired from 1997-2009. But  Board Minutes state, “It was brought to the attention of the Board that water
rights for the Incline Village area were under the name of
Mountain Pure Water Co. whose officers were Mr. Chandler, Mr.
Barbieri (IVGID’s auditor), Mr. McDonald (IVGID’s lawyer), and Mr. Carano (IVGID’s lawyer). The Board asked that [General Manager] Mr. White secure a quitclaim deed from Mountain Pure Water Co.
for all rights.” [July 11, 1968] Clearly there was self-dealing going on.

3.    Costs. The ledger has $3,774,259.35 in costs for erosion control, stream restoration, TRPA BMPs, and the wetlands project. The wetlands is in Minden, Nevada in Douglas County at 3050 Vicky. IVGID never owned the land – the federal government Bureau of Land Management owns it. All of these costs should have been expensed – not capitalized.

4.    When compared with the Washoe County records,  IVGID owns 20 parcels that are utilities-related.  These parcels contain utility buildings, tanks, equipment, etc. related to sewer / water services. Nineteen of these parcels are not in the FA Ledger.

5.    Two utilities-related parcels that IVGID owned were sold: parcel# 132-240-09 in Oct 28, 2003 and  parcel# 132-020-11  on May 24, 2006 ($102,510). The IVGID Board minutes show both land sales were approved. However, neither of these parcels was in the FA Ledger. Not in Land – Utilities. Not in Land – General Government. Not anywhere. So – what accounting entry did IVGID make when it sold the land? We don’t know. But, from audited financial statements, we know the Land – General Government account did not change from 2000-2007.

6.    Until around 1991, the County did not keep reliably accurate property records for Incline Village.  Washoe County has duplicate recorded document numbers prior to 1991. And IVGID did not keep reliably accurate records for the property it owned.   This means that neither IVGID nor Washoe County has a accurate record of the deed for certain land parcels, including the main sewer plant at Sweetwater, as well as three other parcels with a utilities function.

As we originally reported Jan 18, 2018, then Finance Director Gerald Eick sold 3 parcels of land that had been designated OPEN SPACE by deed from Washoe County. The parcels were tax delinquencies. Mr. Eick never received permission from the Board. There was no public notice.  Mr. Eick in defiance of Nevada Statutes unlawfully sold three parcels of public land  to private buyers of his choosing. He set the prices, signed the deeds and collected the money. Executive Assistant / District Clerk Susan Herron notarized the sales.  In response to these disclosures and a letter from the Washoe County District Attorney, IVGID General Manager Pinkerton and Legal Counsel Guinasso issued a series of denials in the Bonanza, the District’s website and the Reno Gazette. Mr. Eick retired in early 2020 to South Dakota. Mr. Pinkerton left IVGID and is now General Manager of the Mountain House Community Services District in California.  Susan Herron still works for the District  These parcels were not included in the F A Ledger. We are reporting it here so the sad saga of Cooking the Books can come to a close – at least for the Land account.

From an auditor perspective, it appears that no one has ever really reconciled the LAND asset account. If someone had, the costs being capitalized would have been noticed as an error. Instead, the purpose of the FA Ledger appears to be to match the CAFR/ACFR, as long as the fixed asset ledger details were not examined.

 

Conclusions:

The LAND – Utilities account appears to contain $3,774,259.35 that were improperly capitalized. These costs did not increase the useful life of the land asset. Stream restoration expenses were $1,426,728.84 and the Wetlands project $950,000.The financial statements need to be restated as these amounts are material.

The Water Right purchase costs should be ascertained. There should be paper files on all water rights. Disclosure in the financial statements should clearly state water rights are included in the land account and disclose the value of those rights.

Questions need to be asked as to why this ledger has not been reconciled to the General Ledger – and whether the Costs recorded for LAND & LAND RIGHTS are accurate.

These findings reinforce what was observed in Cooking the Books – Part 1 and Part 2. 

IVGID has improperly capitalized expenses intentionally. The FA Ledger was composed of items to match the ledger, rather than be an accurate record of assets. Fraudulent intent is evident. Why do it? Because employees – including the general manager – received bonuses based on financial results.  Capitalizing costs meant IVGID overstated its net income and fund balances, painting a much rosier picture than the reality.   This is fraud.  There is a clear need to investigate beyond what a forensic audit would encompass.

The author, J. Gumz, is a long-time resident and property owner of Incline Village and a registered voter. She is a retired CPA.

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This article contains allegations and the defendant is presumed innocent until and unless proven guilty in a court of law.

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36 items in the FA Ledger for Land-Utilities http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Ledger_Land_Utilities.png

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Links to Audited Financial Statements 1990 – 2007

We obtained these statements NOT from IVGID, who has been non-responsive to many of our public records requests, but another entity.  Please contact us at village_alliance  at ourivcbvoice.com if you would like further details.

CAFR 1990 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_1990.pdf

   CAFR 1992 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_1992.pdf

   CAFR 1994 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_1994.pdf

   CAFR 1997 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_1997.pdf

   CAFR 1998 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_1998.pdf

   CAFR 2000 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_2000.pdf

   CAFR 2002 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_2002_Excerpts.pdf

   CAFR 2003 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_2003.pdf

   CAFR 2007 http://ourivcbvoice.com/wp-content/uploads/2023/10/IVGID_Audited_Financials_2007_Excerpts.pdf