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Is The District in Violation of The Local Government Budget and Finance Act (“LGBFA”) Because of Its Failure to Create New Major Reporting Funds For Ski, Champ Golf And Possibly Mountain Golf?

IVGID 101 Posted on by

The answer is yes!

As elsewhere stated, the District is subject to the LGBFA1, and the Governmental Accounting Standards Board’s (“GASB’s”)2 standards. GASB Statement No. 34 instructs that “major funds are funds whose revenues, expenditures/expenses, assets, or liabilities (excluding extraordinary items) are at least 10 percent of corresponding totals for all governmental or enterprise funds, and at least 5 percent of the aggregate amount for all governmental and enterprise funds,” and “Statement 34 requires the individual presentation of (all) major funds, with all other funds combined into a single column.”03

The Violation of GASB Statement No. 34: Rather than being their own stand alone enterprise funds, the District’s champ golf, mountain golf, facilities, ski, parks and recreation, tennis and other recreation funds are all sub-funds within the Community Services Fund. And this is in spite of the fact the District’s Ski, Champ Golf and possibly Mountain Golf sub-funds all qualify as “major funds.” Since NRS 354.612(2) instructs that the District’s “financial statements and other schedules required for funds…must be prepared in accordance with GAAP,” and here they do not, in our opinion this is a violation of GASB Statement No. 34.

Why District Staff Are Unwilling to Create Stand Alone Ski And Champ Golf Enterprise Funds: The answer is quite sinister. For the last five (5) or more fiscal years4, all of the sub-funds under Community Services have lost money and required financial subsidy from the Recreation Facility Fee (“RFF”) but for Diamond Peak. This has allowed staff to freely transfer positive cash flow from Diamond Peak to the other money-losing sub-funds within Community Services as a subsidy. As things stand now, there is no prohibition against transfers within an Enterprise Fund. And as a result, Diamond Peak positive cash flow can be used to subsidize the losses in all of the District’s other Community Services sub-funds. But if the Ski and Champ Golf sub-funds were made into stand alone “major funds,” monies could no longer be transferred without violating NRS 354.613(1).

The Penalty For Violating NRS 354.612(2): NRS 354.626(1) provides the answer: “Any officer or employee of a local government who willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor and upon conviction thereof ceases to hold his or her office or employment.”

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  1. See NRS 354.474(1)(a) which instructs that “the provisions of NRS 354.470 to 354.626, inclusive, apply to…districts organized pursuant to chapters…318.”
  2. GASB “is the independent, private-sector organization…that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles (‘GAAP’). Nevada is one of those states.
  3. See https://gasb.org/page/PageContent?pageId=/standards-guidance/pronouncements/summary–statement-no-34.html&isStaticPage=true.
  4. See page 150 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).

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