This report was requested by the IVGID Audit Committee and is included in the 1/28/2021 IVGID Board packet. Following is a summary of the key findings and observations from a local perspective. You can find the complete report here.
- District business-type activities are better suited for Enterprise funds.
- The District’s current presentation of central services costs is not in compliance with Generally Accepted Accounting Principles.
- The punch card “contra-revenue” accounting should be discontinued.
- The District’s capitalization practices are not in compliance with established government accounting practices.
The “Greater transparency” claimed as the reason for converting from enterprise funds to special revenue funds was not honest to the property owners who pay the facility fees. By reporting capital expenses and debt service separate from operating expenses, special revenue funds only made it more difficult to see what the venues really cost.
The central services cost allocation is simplistic and based on budgeted, not actual expenses. Even though citizens have pointed to these specific inadequacies, staff continued to use its flawed central services cost allocation.
Punch card accounting needs to end. Even Mr. Navazio has called this practice confusing and “weird”. It was really just another way to make IVGID’s venues look like they were performing better than they actually were. Revenues that had already been assigned to specific funds/venues were “diverted” to the ones where punch cards were used, rather than remaining in the funds where initially allocated. When no actual revenue was received, no revenue should have been reported. Crystal Bay residents are rightfully incensed that fees intended to support Community Services have ended up supporting beaches they cannot use.
There are numerous instances where what should have been reported as operating expenses were reported as capital expenses (like the nearly million dollars that was spent on the Diamond Peak Master Plan) This practice resulted in financials that made it look like our operating revenues covered operating expenses, when they did not. Although citizens have brought this concern to the attention of past boards, it was ignored. Additionally Board Policies and Practices are improper in this regard.
So what have we learned?
Our District needs to tap into the resources provided by the many experienced local professionals who have no agenda, have chosen to live in this extraordinary community and willingly share their vast collective knowledge. Additionally the District needs to hire outside help to develop Policies and Procedures as well as internal controls. Elected Boards generally don’t have (nor are they typically expected to have) the experience to develop financial policies and practices. Staff, as we have seen in the past, may have the expertise, but their interests are not always aligned with those who pay taxes and fees.
It is becoming increasingly evident that the District has not been able to responsibly manage its assets. Our “Community Amenities” have gradually been molded into global tourist attractions. Our small community lacks the resources to maintain or operate them efficiently. We may have to look at alternatives as costs of replacing our aging facilities place too much of a burden on local property owners who now have to compete with tourists just to access the recreational venues they have subsidized for so long.