IVGID Audit Committee Meeting Highlights

December 16, 2021

Chair Tulloch presented his draft Audit Committee Report on the 2021 Annual Comprehensive Financial Report.

Based on the Audit Committee’s discussions, Chair Tulloch will be revising the draft report and including a number of recommendations.

The capitalization policy and practice still need clarifying language; staff insisted they had discretion to combine items like multiple exercise bikes into a single unit for capitalization rather than treating each item beneath the capitalization threshold of $5,000 as an operating expense. Since IVGID has traditionally set its fees primarily to cover operational costs, capitalizing rather than expensing items has two effects: 1) It makes the operations look more “profitable” and 2) It gives citizens the impression that their Facility Fees are actually being used to fund capital improvements. As Chair Tulloch remarked, the District has collected nearly $70 million in Facility Fees for capital improvements over the past ten years, however, the only major facility is the new Burnt Cedar pool.

Lack of internal controls over financial reporting is still causing concerns with the committee and the external auditor. Due to a lack of progress made over the past year, the Committee will be recommending a consultant be brought in to help develop internal controls, as well as work on policies that may have ambiguities. Trustee Schmitz emphasized that compliance with Board policies and practices is not “optional”.

Trustee Dent expressed the need for a more in-depth audit. Committee members concurred, especially after the current auditor made it clear that the type of audit required by NRS is not to be relied upon as an indicator of financial health. Committee member Cliff Dobler felt an internal auditor was essential in an organization the size of IVGID.

Further discussion is needed on the subject of whether the Facility Fees are general revenues or program revenues. The current and past auditors have listed them as general revenue, while Moss Adams called them program revenues.

The Audit Committee timeline needs to be revised to provide adequate time for review of the ACFR by the committee as well as the Board. Trustee Schmitz confirmed that according to Kelly Langley of the Dept. of Taxation, the deadline for filing the ACFR with the State is December 31, and in practice, it is not necessary to forward it to the state “immediately” after it is presented to the Board.

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