IVGID’s Management response to forensic audit report
Below is the evaluation of IVGID’s Mgmt response to the Rubin Brown Forensic Audit Report , written by an Artificial Intelligence Bot. Our human observations are that there will be no change in IVGID or its culture of no controls, based on continued stonewalling regard financial records. For fiscal year 2023, the General Ledger is over $4 million out of balance (as of 8-3-2024) while the fiscal year 2024 is over $15 million out of balance (as of 7-10-2024). Clearly the Tyler Munis is not properly implemented.
In a Committee meeting on Local Government Finance at the State of Nevada Tax Department, Trustee Ray Tulloch stated on August 7, 2024, “The scope of the audit was to identify fraud risk, it was not to identify fraud.” This directly contradicts the RFP Scope of Services that was originally posted for the forensic audit (graphic). 
And that is why the report doesn’t include the word F-R-A-U-D. Because Trustee Tulloch and General Manager Bobby Magee made sure FRAUD was not in SCOPE. The original bid by Rubin Brown was about $117,000. The revised bid based on a different scope of work where fraud was not defined cost $400,000. Does it really cost more to NOT identify fraud than to find it? Something is wrong here.
So what is the solution – Investigation by independent Law Enforcement. IVGID cannot fix or investigate itself.
Executive Summary
The management response acknowledges issues raised by RubinBrown and expresses commitment to address them. However, the response lacks specific, actionable plans for many observations and relies heavily on requesting additional information or disputing findings.
Detailed Evaluation by Observation Number
Observation #1: Tyler Munis Implementation
Response Adequacy: Partially adequate. The response indicates leadership but lacks a specific timeline or detailed action plan.
Recommended Improvement: Provide a concrete timeline and detailed steps for the implementation.
Observation #2: Initiators and Approvers of Vendor Disbursements
Response Adequacy: Inadequate. The response is vague and relies on receiving more data.
Recommended Improvement: Develop a preliminary action plan based on available information, with contingencies for additional data.
Observation #3: Insufficient Support for Vendor Disbursements
Response Adequacy: Partially adequate. The response explains some discrepancies but lacks a comprehensive plan to address the issue.
Recommended Improvement: Outline specific steps to ensure all disbursements have proper support going forward.
Observation #4: Operating Bank Account and Bank Reconciliations
Response Adequacy: Adequate. The response acknowledges past issues and outlines current compliance.
Recommended Improvement: Provide a specific timeline for implementing the quarterly package recommendation.
Observation #5: Other Bank Accounts and Bank Reconciliations
Response Adequacy: Inadequate. The response lacks a clear action plan.
Recommended Improvement: Commit to a specific timeline for deciding on and implementing the quarterly package recommendation.
Observation #6: Operating Bank Account Reconciliations Have Unreconciled Differences
Response Adequacy: Inadequate. The response lacks specific actions.
Recommended Improvement: Provide a detailed plan to address unreconciled differences, including timelines and responsible parties.
Observation #7: Cash Entries Posted to General Ledger
Response Adequacy: Inadequate. The response lacks specific actions or timelines.
Recommended Improvement: Commit to a specific timeline for completing the assessment and implementing any necessary changes.
Observation #8: Treatment of Capital Costs
Response Adequacy: Inadequate. The response lacks specific actions or timelines.
Recommended Improvement: Provide a detailed plan and timeline for addressing the treatment of capital costs.
Observation #9: Capitalization of Projects Relating to Repairs and Maintenance
Response Adequacy: Partially adequate. The response explains past practices but lacks forward-looking actions.
Recommended Improvement: Outline specific steps to ensure proper classification of projects going forward.
Observation #10: Green Fee Pricing Schedules Not Followed
Response Adequacy: Partially adequate. The response identifies the issue and mentions ongoing work but lacks specific actions.
Recommended Improvement: Provide a detailed plan and timeline for implementing system improvements and staff training.
Observation #11: Green Fee Play Passes
Response Adequacy: Inadequate. The response only requests more information.
Recommended Improvement: Commit to a specific timeline for investigating the issue internally, regardless of additional information.
Observation #12: Personal Use of Procurement Cards
Response Adequacy: Inadequate. The response fails to acknowledge the seriousness of the issue and incorrectly requests a reclassification of the fraud risk category.
Evaluation: The management’s response is problematic for several reasons:
- It fails to recognize that personal use of a government procurement card, regardless of reimbursement, is considered fraud under federal regulations.
- The request to lower the fraud risk category demonstrates a lack of understanding of the severity of the issue.
- The response minimizes the problem by referring to it as a “mistake” and emphasizing that employees are “human.”
Recommended Improvement:
- Acknowledge that personal use of procurement cards is a serious violation of federal regulations and IVGID policy, regardless of reimbursement.
- Maintain or elevate the fraud risk category, not lower it.
- Develop and implement a comprehensive plan to prevent future occurrences, including:
- Mandatory training for all procurement card holders on proper use and the legal implications of misuse.
- Stricter oversight and approval processes for procurement card transactions and procurement card holders.
- Clear, written consequences for any personal use of procurement cards, including potential termination.
- Conduct a thorough review of all procurement card usage to ensure no other instances of personal use have occurred.
- Consider engaging an external auditor to review procurement card processes and suggest improvements.
- Provide regular updates to the Board of Trustees on measures taken to prevent future misuse.
The response should demonstrate that management takes this issue seriously and is committed to preventing any future occurrences of procurement card misuse, rather than downplaying the significance of the violation.
Observation #13: Insufficient and Inappropriate Support for Procurement Card Transactions
Response Adequacy: Inadequate. The response only requests more information.
Recommended Improvement: Commit to a specific timeline for reviewing current practices and implementing improvements.
Observation #14: Sales Tax Charges
Response Adequacy: Inadequate. The response lacks specific actions or timelines.
Recommended Improvement: Provide a detailed plan and timeline for addressing sales tax charge issues.
Observation #15: Oversight of Procurement Card Program and Related Expense Reports
Response Adequacy: Partially adequate. The response mentions plans to revamp the program but lacks specifics.
Recommended Improvement: Provide a detailed plan and timeline for revamping the P-card program.
Observation #16: Physical Inventory Observations and Reconciliations
Response Adequacy: Partially adequate. The response disputes findings but mentions potential system improvements.
Recommended Improvement: Commit to a specific timeline for reviewing current practices and implementing any necessary changes.
Observation #17: Inappropriate User Access in Point-of-Sale Systems
Response Adequacy: Partially adequate. The response mentions ongoing work but lacks specifics.
Recommended Improvement: Provide a detailed plan and timeline for implementing access control improvements.
Observation #18: Contracts Awarded May Exceed Board of Trustees Funding Approval
Response Adequacy: Partially adequate. The response explains past practices but lacks forward-looking actions.
Recommended Improvement: Outline specific steps to ensure proper reporting and approval processes going forward.
Observation #19: Expenses Incurred Prior to Board of Trustees Funding Approval
Response Adequacy: Partially adequate. The response explains past practices but lacks forward-looking actions.
Recommended Improvement: Provide a plan to ensure expenses are not incurred before proper approvals in the future.
Observation #20: Yearly Budget Allocations by Board of Trustees May Not be Used
Response Adequacy: Inadequate. The response disputes the observation without providing alternative actions.
Recommended Improvement: Propose specific improvements to the budgeting process to address the auditor’s concerns.
Observation #21: Community Programs and Funding Not Approved by Board of Trustees
Response Adequacy: Inadequate. The response disputes the observation without providing alternative actions.
Recommended Improvement: Propose specific improvements to ensure all programs and funding receive proper approval.
Observation #22: Informal Process for Receiving Grants and Funding
Response Adequacy: Inadequate. The response lacks specific actions or timelines.
Recommended Improvement: Commit to developing and implementing a formal process for receiving grants and funding.
Observation #23: Sequential Gaps within Disbursement Checks
Response Adequacy: Adequate. The response indicates the issue has been resolved with the new system.
Observation #24: Vendor & Employee Master Files – Duplicative and Overlapping Record Data
Response Adequacy: Inadequate. The response only requests more information.
Recommended Improvement: Commit to a specific timeline for reviewing and cleaning up master files, regardless of additional information.
Observation #25: Projects Relating to Private Funding or Donations
Response Adequacy: Inadequate. The response disputes the observation without providing alternative actions.
Recommended Improvement: Propose specific improvements to ensure proper handling of privately funded projects.
Observation #26: North Lake Tahoe Fire Protection District Agreement with IVGID
Response Adequacy: Partially adequate. The response acknowledges the need to refresh the agreement but lacks specifics.
Recommended Improvement: Provide a specific timeline and action plan for refreshing the agreement. Overall, the management response lacks specific, actionable plans for many observations and relies too heavily on requesting additional information or disputing findings. To improve, management should provide more concrete action plans, timelines, and commitments to address each observation, even in cases where they disagree with the auditor’s findings.
Clearly, the trustees should implement a management system like MBR which by its nature requires quantitative results in a finite timeframe. However, the trio headed for election under the „just let The employees do their jobs“ rubric will be a step back from where we are now. If Cliff, Joy, Aaron and Ray can‘t turn the errant tanker it looks like a receivership is the only answer with any chance! I am amazed at the total lack of normal financial controls in this GID. I was raised on serious trip reports and rigorous
Accountability for use of company resources. This included the C officers too or especially. Perhaps the outsized influence of realtors here explains this anomaly?
I would like to see Ray get a chance to be GM for a finite period say 18 months just to gauge if Ivgid is manageable in its current form. The constant flow of CA rejects isn‘t cutting it and certainly fits the definition of insanity.
Unfortunately, appointing a Trustee as GM will NOT solve the problem. Trustee Tulloch was the lead Board contact on the forensic report, which purposely avoided finding fraud. The personal use of procurement cards by one employee multiple times is – by federal regulations – fraud.
The LAND account has over $13 million in capitalized expenses. This asset account on the balance sheet is only $24 million – so the amount is “material” in the accounting sense.
So the forensic auditors MUST have been told “Don’t go there” – even tho the forensic auditors, Trustee Tulloch, and Audit Chair Nolet were all provided with the evidence on the LAND account, and financial statement fraud.
No – Mr. Tulloch is not the right person for GM. The fact he wants the GM role creates a conflict of interest as that he now fearful of offending employees. The Trustee role pays $9,000, while the GM role has paid over $300,000. The Trustees need to call for an investigation by law enforcement. The Trustees can’t fix the problem; they are part of it.
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