State Places IVGID on Fiscal Watch Amid $740,411 Cash Discrepancy and Audit Failures
INCLINE VILLAGE, Nev. – The Incline Village General Improvement District (IVGID) has been placed on fiscal watch by Nevada’s Committee on Local Government Finance (CLGF) after receiving its fifth extension to submit audited financial statements for fiscal year 2024. The decision was announced at a public Zoom meeting on April 29, 2025, with a firm warning from CLGF Chair Marvin Leavitt that he would be “very unhappy” if IVGID does not provide audited financials by this revised deadline. Mr. Leavitt did not further explain what “very unhappy” meant.
Public Records Reveal Deep Accounting Failures, $740K Unexplained Cash Shortage
A public records release of approximately 100 emails and audit documents between IVGID staff and external auditors Davis Farr LLP reveals systemic dysfunction in the district’s accounting operations, including basic errors, persistent delays, and alarming financial discrepancies. The full correspondence is available at ourivcbvoice.com.
Among the most troubling issues: an unexplained $740,411 cash shortage and attempts to “plug” unreconciled figures into the financial statements—raising serious red flags about internal controls and fiscal integrity.
Some Red Flags from the 2024 Audit
1. $740,411 Cash Shortage
IVGID’s books show $740,411 less cash than is reflected in its bank balances—a severe and unexplained discrepancy. This shortfall suggests fundamental failures in reconciliation and raises concerns about the safeguarding of public funds.
2. Unsupported “Plugging” of Numbers
In October 2024, Davis Farr partner Jennifer Farr flagged the practice of force balancing:
“I wasn’t comfortable with the CPA firm’s [BakerTilly] journal entries because I know they were just trying to plug things to make them work.”
“Plugging” is a major accounting violation that undermines the credibility of financial statements. But months later, Baker Tilly is still at IVGID.
3. Ongoing Journal Entries During the Audit
Auditors expressed frustration at IVGID’s continuing adjustments after the audit had begun:
“At some point, we have to STOP making journal entries. It is impossible for us to try to produce financial statements when the numbers keep changing.”
Finalizing books before an audit is a standard requirement IVGID failed to meet.
4. Unbalanced Journal Entries
Numerous journal entries provided to auditors were incomplete or the debits did not equal the credits. This reflects a lack of fundamental accounting controls.
5. Major Unresolved Variances
Multiple significant discrepancies remain unexplained, including:
- A $29,000 variance staff could not justify
- A $546,000 unresolved difference related to Utility Capital Improvement Projects
Such open items should have been resolved well before audit review. The Open Items list did not include the $9,302,232 in the Recreation LAND account which is improperly capitalized expenses. They were not addressed in 2002 when accounting standard “GASB 34” should have been implemented. Likely this will need to be written off. Nor did the Open Items address the bowling alley parcel valued at $83,643, which was acquired in 1976 but sold in 1978, but remains on IVGID’s books.
6. Delayed and Incomplete Audit Support
Davis Farr noted in December 2024 that essential documentation was still missing:
“I do not see any new uploads to CaseWare since 11/6/24 and we are still waiting for the capital assets support. “
This indicates chronic delays and possible disorganization in IVGID’s finance office.
7. Incorrect and Inconsistent Accounting
Routine errors, like misclassifying postage, required frequent correcting entries, revealing inadequate review processes.
8. Fraud Questionnaires from Management
Critical documents, including required fraud questionnaires from senior management, were not included in the public records received. However, an email referred to a IT security breach.
9. Growing Auditor Frustration
Communications show Davis Farr’s increasing concern over IVGID’s audit readiness and their working relationship. At one point, resignation and a potential “disclaimer of opinion” were openly discussed.
(Note: A disclaimer means the auditor could not obtain sufficient evidence to form any opinion—one of the most serious audit outcomes.)
Audit Committee Member Accepts Fiscal Watch
Even within IVGID, officials acknowledge the seriousness of the audit crisis. In a March 19, 2025 email, Audit Committee member Mick Homan advocated for accepting fiscal watch rather than risking another failed audit opinion:
“It is in everyone’s best interests to bring the audit to completion, even if that means we miss our latest deadline and get put on fiscal watch… we are in a much better position living with the consequences of fiscal watch than going another year with a disclaimer.”
Homan also warned that auditor resignation could lead to “substantial negative consequences” and stated that writing off unreconciled differences to beginning fund balances was one solution.
What Fiscal Watch Means for IVGID
Being placed on fiscal watch means IVGID may be asked to provide additional reports. But Chair Leavitt downplayed the meaning of fiscal watch.
Summary
IVGID’s placement on fiscal watch and the granting of a fifth audit extension reveal deep, systemic problems in financial governance. Publicly released audit communications document critical issues, including:
- An unexplained $740,411 cash shortage
- The plugging of discrepancies
- Unbalanced journal entries
- Large, unresolved variances and missing documentation
Being placed on fiscal watch may have no effect, except to make the LGFC believe they have done something.
[updated: May 1, 2025] see “cash problem” below: $740,411
[UPDATED Tuesday, May 6, 2025]
Looks like we need a DOGE committee to reconciled this situation.
Yes, and does it mean the RecFee increase is NOT going to happen? Always suspected IVGID would fail audits given price increases over the recent years and no new/reliable services. Water quality seems to be going down as well.
This is a long time coming. Fortunately the majority of old Board members have left of were voted out st the last election and now there’s new, competent, Board leadership in place. Funny comments about DOGE. Perfect solution if we want to become a part of Reno.
New – yes. Competent? Really? It has been 4 months since they have been in office and IVGID has yet to produce audited financial statements.
I agree with Trustee Homan – go until we get it fixed. For almost 60 years, IVGID has managed its audits well and I think the CLGF would agree. Being perfect is something to strive for but when you have had, during this time, one of the most damaging Boards in the history of IVGID and pile on an almost complete destruction of professional staff, this outcome is minor. Let’s show some kindness to one another because after all IVGID employees are your neighbors, friends and community do-gooders in more ways than I can count.
The loan IVGID received from the State of Nevada was funded by US EPA. IVGID received $10,164,634 in 2023 fiscal year. $4,671,325 in FY 2024. IVGID was required to submit a Single Audit under federal law—due by March 31.
According to the Federal Audit Clearinghouse, that audit has not been submitted.
This is not a minor issue. Failure to comply with federal audit requirements can jeopardize access to low-interest funding. In addition, the US Forest Service Special Use permit for Diamond Peak requires IVGID to comply with all applicable federal and state laws and regulations. IVGID is definitely not in compliance with federal regulations at this time. Delays may seem harmless now, but they carry real risks for the district.
Audited financial statements were prepared by IVGID beginning in 1966. From the beginning, there were severe issues, including lack of controls and no proper segmentation by fund, plus cash rather than accrual accounting. IVGID has never properly categoried the illegal assessment tax levied to puchase the beaches and later the venues as non-operating revenue. This is materially misleading. The assessment tax was illegal because no special assessment district was formed, and the levy violates the Nevada and US Constitutions. No physical inventories done. Improper capitalization. So many issues – and yes, they are material. The external auditors rely on the representations of management.