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.

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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]