From 2016-2022, IVGID purchased over $53 million of “capital assets”, account 8120.  These expenditures, include vehicles, off-road vehicles (snowmobiles, utility carts, etc.), heavy equipment (Caterpillar front-loaders,  backhoe, etc.), equipment (golf course mowers, spreaders, forklift, etc) tools (chainsaws, etc) and other items, as infrastructure projects. These expenditures push up rates and fees; the golf courses have millions of dollars of equipment. If Fixed Assets are not properly managed, rates and fees are higher than they should be.   

In May, 2023,  public records requests were made to examine IVGID’s Fixed Assets List, year ending 2019. In examining the Fixed Asset List[1] of 3958 items, there were multiple issues[2] with vehicles:

1.     No mileage or usage hours are included as part of the asset record, even though this is fundamental to determining replacement timing and value on disposition.

2.     No condition (excellent, very good, good, fair, poor, etc.) is provided for any asset.

3.     No salvage value is set for any asset.

4.     For vehicles, the VIN# is often not provided or only a partial VIN of 15 digits was provided. The serial number for equipment maintained by the Fleet Division was often not provided.

5.     Assets maintained by the Fleet Division have a TAG Number as part of the description but this is not consistent; there are missing TAG numbers, and some assets with duplicate TAG Numbers:  e.g. #542.

6.     The Make/Model/Year for vehicles was not recorded consistently in the asset description.

7.     There were no details regarding disposal of an asset, including amount obtained; only the date of “disposal” or “retirement”. Often a disposal or retirement date was June 30; it seems a date of convenience for financial statements, rather than an actual disposal date.

In addition, these three anomalies were observed:

1)    No mileage logs or usage logs appear to be maintained for any vehicles; although logs were requested, none were provided by IVGID.

2)    The 5-year capital plan budgets replacement of assets SOLELY on asset useful life, rather than considering asset condition and use. As IVGID is a seasonal operation, many assets are used about half the time. For example, the golf courses are only open May – October. The ski resort is open for less than five months. Replacing these assets, without considering their condition, means IVGID spends more than they should, and this will only be made worse by recent high inflation.  Some vehicles are given to other departments, and new vehicles purchased. No approval by the Board of Directors is made on these transfers.  Based on the fuel utilization for some departments, the need for some of these transfers is questionable. The State of Nevada requires justification of 1,100 miles per month for a vehicle.  The District might have a lower figure – the point is now there is no justification for transfers among departments or tracking of mileage and usage.  The 38 pickup trucks and vans in use at year-end 2019 cost over a million dollars. (graphic right).

3)    In the Accounts Payable register, purchases of parts for vehicles, such as tires, do not describe what vehicle the tires are for, and sometimes do not even include the specifications of the tires purchased, e.g. “tires”.

 

DISPOSAL OF ASSETS

And what about disposal of capital assets?

The current policy (right) states:

5.1 The following procedures should apply to the retirement and disposal of company assets:

•                No item of property and equipment should be removed from the premises without a properly approved disposal form 


•                A disposal form should be completed for all disposals 


•                This disposal form should be reviewed and approved 
by the fixed asset accountant 


But when we requested disposal forms for the following vehicles, IVGID could not provide any disposal forms.

Here is the excuse “from staff” provided by public records clerk Susan Herron on July 24, 2023:

“So not everything used to get processed through those forms.  Staff’s recollection is that the statement was that in the Fixed Asset Set Up form, there is a section for the asset that is being disposed. So that would take care of that disposal.  Then the fixed asset inventory which is supposed to be done every 2 years, those disposals didn’t get placed on those sheets for the most part either since that was just a whole other process.   To be honest those were barely used since usually a disposals was a direct relation to an addition and so the addition sheet would take care of that.

 

What kind of logic is this? A approved authorization form (with signature) cannot be replaced by data entry into a computer system. This is an internal control break-down. And the fact that District staff provided the excuse above is a red flag regarding their understanding of internal controls – an indicator that their knowledge is deficient.

We found evidence regarding the following assets that bring up questions about asset disposal.

1)    The 2017 Chevrolet Traverse was, per accounting records, taken out of service May 16, 2022. It had been used by the Recreation Center, starting July 12, 2017. It was nearly fully depreciated (5 years, no salvage value was set by IVGID), with $840 remaining. But an on-line search revealed a vehicle with the SAME VIN#[3] and make/model/year was auctioned on Oct 15, 2022 for $10,100. Vehicle mileage listed was 141,293.  How in the world had so much mileage been accumulated? Could use for the Seniors Transportation program really generated that much mileage?  And where was the vehicle from May, 2022 to October 2022 when it was auctioned?   The General Ledger (June 30 2022-May 30, 2023 partial) did not reflect any auction proceeds. This General Ledger was from the MUNIS system, and was $3.9 million out of balance, so more research will need to be done.  Conclusions: A vehicle was purchased, its mileage and usage not documented, and then it was disposed with no evidence available showing the District was properly compensated for the asset.

 

2)    A 2006 Club Car Carryall, serial number #RG0645-702795, was taken out of service Oct 6, 2021 per accounting records. It was used by the golf courses. It was fully depreciated (10 years, no salvage value set by IVGID). But an on-line search revealed a sale with the SAME SERIAL# and matching description was auctioned Oct 9, 2021. Hours: 2273  Proceeds: $2,768.50

https://www.motorsportsuniverse.com/listing/auction-results/208830175/club-car-carryall-1-utility-utility-vehicles

The FY2022 General Ledger does not show any auction proceeds for October 2021.  Who was paid for the proceeds of the auction? And if it was the District, where were the funds deposited?

The District “disposed” of 7 other Club Car Carryalls. We were unable to find a record of any auctions proceeds being deposited in the General Ledger, or any record of online auctions for the Club Car serial numbers. How were these off-road utility vehicles disposed? Who received them?

Conclusions: Eight utility vehicles, with a market value of over $20,000 appear to have been disposed, but the District did not receive proceeds.

 

 

3)    A 2019 Chevrolet Silverado 1500 EXTENDED CAB PICKUP 4-DR, operated by an IVGID employee, was “totaled” in an accident according to a General Ledger journal entry. Picture below – note doors.

Although a public records request was made, the District did not provide the accident report. The truck had been used by the Utility Compliance Department.  The photo is from the auction provider.

Other photos at: https://en.bidfax.info/chevrolet/silverado/6126289-chevrolet-silverado-ld-k1500-base-ls-2019-white-53l-8-vin-2gcvknec6k1136639.html

No conclusions can be drawn until more evidence is obtained.

 

CONCLUSIONS

a) Whether IVGID receives value for all assets disposed should be investigated, and not just the 3 specific cases above.

b) The condition and hours of use should be part of the replacement consideration for assets, rather than only using the depreciation construct of “useful life” .

c) Disposal Forms must be completed and signed for ALL fixed assets disposed.

d) Mileage logs must be maintained for all District vehicles.

e) The Fixed Asset Inventory must be reconciled to the assets annually, rather than every two years.

f) Mileage or hours, as appropriate, and condition must be provided by FLEET for all vehicles and rolling stock equipment to Accounting, which must record the mileage, hours, condition on the financial records.

g) Accident reports must be completed and filed with the department in charge of Safety for any accident involving a district vehicle.

h) The DRAFT Accounting Manual currently being reviewed by Moss Adams must be updated with disposal procedures that have controls sufficient to safeguard District Assets.

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

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