Police Report filed after City officials break into NN

dinwitty · **Joined:** Wed Oct 22, 2008 8:18 pm **Posts:** 2226

I already thought about those angles, but I was pushing the argument whats up on the other way.

**

adding to whats happened on this situation, there could also be something political going on here we don't know, and the fact the committee removed 2 board members and replaced them and violated the open meeting act gets suspicious as to what might really be going on. You can use the rules of law to violate the rights of others if its "convenient to you", IE a murder suspect is convicted just because some policeman said he did it without full proof. Thats where political corruption sets in. This is where the judge restored the members because of the violation and commented more or less "You guys get along kids..."

wilkinsd · **Posted:** Thu Oct 30, 2014 11:33 am

superheater wrote:

It is less than useless to look at financial records (and no audit inspects 100% of anything) without having some idea how they are designed to be prepared and how actual practice adheres to intended procedure.

Indeed, without such observations and inquiries, one doesn't know where to concentrate one's efforts and the auditor's judgment about any transaction can be affected by his or knowledge of the intended and actual methods of preparation, accumulation, classification and recording.

Junk in=Junk out.

superheater · **Joined:** Sun Aug 22, 2004 11:54 pm **Posts:** 2605

"Junk in=Junk out."

The deficiencies of this situation and this "engagement" are so profound as to make me indict it with a truncated version of Wolfgang Pauli's famous quote

"not even wrong".

or if you prefer "reports of individual acts of perversion, so profound and disgusting, that decorum prohibits my listing them here".

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

It's been a few months since this thread was updated. Here are some links --and short excerpts of-- articles that have been printed in The Ely Times newspaper:

Locomotive engine to begin two-year restoration - October 31, 2014

Quote:

For the first time in twenty-four years, Nevada Northern Railway Locomotive 81 was once again outdoors. On Oct. 23, Locomotive 81 was moved from the Enginehouse to the RIP Building to begin a two-year restoration project with the goal of having Locomotive 81 in service for the 2017 excursion season.

Polar Express returns to NNRY - November 7, 2014

Quote:

The Nevada Northern Railway’s award-winning Polar Express starts Nov. 22 and runs on select dates/times through Dec. 27. This magical train ride, licensed by Warner Bros., is pulled by a vintage diesel locomotive and follows the beloved story by Chris Van Allsburg, which is read aloud.

NNRy offers Community Food Train, Polar Express - November 15, 2013

Quote:

On Nov. 16, the Nevada Northern Railway and the Boy Scouts are teaming up for a food drive. The Boy Scouts, who will be going door-to-door to collect food and will receive a free train ride from the Nevada Northern Railway as a thank you for their efforts.

City council passes plan to talk to railroad board - November 21, 2014

Quote:

The Ely City Council and Railroad Board of Trustees took a step toward increasing communication with the Nevada Northern Railway’s management board by creating an official set of rules for both to use to talk to each other at their last meeting on Nov. 13. The new rules, which were put together by Councilman Marty Westland, break down communication into two categories, formal and informal, and calls for anything that falls into the formal category to be done so in ink and filed.

Railroad raising money through auction - November 21, 2014

Quote:

The online auction continues until Dec. 1 with limited time deals on unique programs like BE the Engineer, Night at the Museum in a Caboose, Winter Photo Shoot Attendance, Ride with the Engineer, as well as train rides, antiques, art and collectibles. There is even a private steam charter available, for that special rail baron in your life and a party on the train for any group, car/bike club or special event.

First National Bank of Ely issues a $30,000 Challenge Grant for NNRY - December 12, 2014

Quote:

The First National Bank of Ely has issued a $30,000 Challenge Grant to the Nevada Northern Railway Museum. Through Dec. 31, the First National Bank of Ely, will match all giving to the Nevada Northern Railway Museum either as memberships, membership renewals or donations up — to $30,000 – dollar for dollar!

Councilman resigns, city attorney to follow in Jan. - December 19, 2014

Quote:

[City Attorney Richard Sears’] resignation comes just two months after he was criticized by Chief Justice Robert Rose during a preliminary injunction court hearing for a lawsuit filed against the council by the Railroad Management Board.

A look back at the year that was for the Nevada Northern Railway - January 9, 2015

Quote:

It’s a new year, full of excitement and optimism, but before we say good bye to 2014, let’s review it. For starters, 2014 was a good year for the railroad. Passenger wise, we carried 12,725 riders. Slightly better than 2013, making 2014 our fourth best year since passenger operations began in 1987. But the real surprise was the Polar Express, we carried 3,261 passengers to the North Pole in about a month! It was our best Polar Express ever, a 21% increase over 2013!

Update issued on forensic audit of railroad - January 16, 2015

Quote:

The auditing firm Larry L. Bertsch, CPA & Associates, released an update into their ongoing forensic audit into the Nevada’s Northern Railways books on Jan. 8. In a three-page email sent to City of Ely mayor Melody Van Camp, the update provides a time-line of the firm’s progress over the past several months.

Recall petitions fall short - January 23, 2015

Quote:

The recall attempt for all five Ely City Council members and the City of Ely’s Mayor officially failed to get enough verifiable signatures to move forward according to the Nevada Secretary of State’s office.
All five petitions for the council members as well as a sixth petition for the Mayor were found to have an “insufficient” amount of signatures from verified voters in an email sent from the Secretary of State’s office to the County Clerk on Jan. 16.

City finances in good shape annual audit finds - January 30, 2015

Quote:

[City Auditor Chad Atkinson of Hinton Burdick CPAs] also presented findings from the calender year 2013 for the Nevada Northern Railway as part of the city’s annual audit, to which no major discrepancies were found.

Candidates file for city positions - February 13, 2015

Quote:

Only two candidates filed for the position of Mayor, including current City of Ely Mayor Melody Van Camp and Don Purinton, owner of Ely Central Theater. Purinton has been vocal about his displeasure with the job the Mayor and the current city council have been doing. He was one of three people that spearheaded the recall attempt for the entire city council and Mayor

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

And a Letter to the Editor that The Ely Times printed.
Letters to the Editor - February 13, 2015

Quote:

To the Editor,

For the past 12 months, scarcely one issue of the Ely Times has been published that has not had something negative in it concerning the Nevada Northern Railway.

Usually this involved reporting on the Ely City Council members stating their concerns about the Nevada Northern Railway’s audit (“There are FOUR red flags in the audit — totally unacceptable”) or about the supposed indebtedness to the city due to the S&S Shortline contract (“The city is responsible for $375,000 debt due to S&S! No, it’s a debt of $750,000!”)

The recent audit of the City of Ely’s finances (which, by the way, contained 14 of these so-called ‘red flags’) states clearly, in Note #15 on page 47, that “The City and the Ely Railroad Enterprise fund have no obligation for the rehabilitation costs.”

In other words, just as Mr. Bassett and the Railroad Management Board have maintained over the past year, the city is at no financial risk due to the S&S Shortline agreement, nor has it ever been.

Furthermore, buried in the last sentence in the January 30 front page article headlined “City finances in good shape annual audit finds” is this sentence:

“Atkinson also presented findings from the calendar year 2013 for the Nevada Northern Railway as part of the city’s annual audit, to which no major discrepancies were found.”

Yes, the city’s own audit corroborated the Railroad Management Board’s assertions that the railroad is, not only in excellent financial shape but that there is nothing suspicious to be found in its books.

I believe that the Ely Times, having helped plant seeds of mistrust and doubt concerning the Railroad’s finances, has the responsibility to clearly publicize the reassuring news that:

The railroad’s finances are in good shape, according to the city’s own audit.

No one in our community needs to be fearful about any negative financial implications to the taxpayers and the city due to the S&S Shortline agreement.

Let’s be fair here. To not publish pertinent follow-ups to stories you have already printed gives the impression that you are favoring one side over another.

Susan Wetmore

Baker, NV

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

The newspaper also printed a wonderful 12-paragraph long piece by Mark Bassett:
Photographers shoot railroad from every angle - by Mark Bassett, Executive Director, Nevada Northern Railway - February 20, 2015

A short excerpt:

Quote:

So why do photographers from around the world come to Ely, Nevada to experience this very rare opportunity? It’s our authenticity. The Nevada Northern Railway is not a mishmash of equipment from different railroads or different countries, nor is the equipment prettified or garish. This is the original railroad equipment in the original paint schemes in the original setting. All of this equipment has been on the property for decades and in lots of cases more than a century. The trains operate on the original track that was graded and laid a century ago. Strip the color out of the photograph and its hard to tell what century the photograph was taken in.

Alexander D. Mitchell IV · **Posted:** Mon Feb 23, 2015 1:45 pm

From the revenue-raising standpoint, I love the concept of auctioning charter slots. It establishes that you are willing to schedule and run them, and apparently demand exceeds willingness/ability to run them.

Of course, it's likely to drive up the prices for the good ones and, like "first class" on steam excursions, make it a more exclusive "rich man's club"........

dinwitty · **Joined:** Wed Oct 22, 2008 8:18 pm **Posts:** 2226

It feels like the breakin only created a hubub, their problem was about communication.
Much ado about nuthin but some hijinks on the part of the city, perhaps acting a little too suscipious over nothing.
Their not explaining the red flags.

back to the regularness of the day, thanx for the popcorn moment...(rollseyes)

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

Another update:
Ely Times: Railroad forensic audit calls for changes (March 13, 2015)
An excerpt:

Quote:

The long awaited city-ordered forensic audit of the Nevada Northern Railway’s finances and operations was released in a special meeting put on by the railroad trustees on March 5 inside the armory. The 69-page document, which was distributed at the meeting but can also be found on the city’s website, details the current financial status of the railroad and includes recommendations in areas the auditing firm of Larry Bertsch, CPA & Associates LLP found lacking. Bertsch, along with fellow auditor Nick Miller, gave a presentation to both the Railroad Board of Trustees and the Railroad Management Board, presenting their findings and analysis of the way the NNRY has been operated through Nov. 17, 2014, which is the end date of the findings from the report.

And here is the link to the Audit itself, posted on the City of Ely's [Nevada] website:
Examination Report of The White Pine Historical Railroad Foundation, Inc. Report of Larry L. Bertsch CPA & Associates LLP March 5, 2015

dinwitty · **Joined:** Wed Oct 22, 2008 8:18 pm **Posts:** 2226

I'm seeing record keeping issues issues and the report reccomending methods to impliment stronger record keeping. I don't see how breaking in would have done anything here. Doing that immediately creates a level of distrust which you now have to try to mend.
A congenial business like audit would have sufficed regardless of findings or if you think someone would be deleting data etc, its already noted the banks have records and its still traceable. I said it before they need a standard congenial reporting of records on a daily/weekly/monthly whatever method to figure out to whomever they should report to.

As a side note the US practically threw money at Iraq in the billions of dollars and they can't trace where any of it went, well duh....

Lets get the line and council back on the smooth side of things and carry on the projects that we all here enjoy seeing happen on the positive side of operating historical line.

I could go into some Governmental business concepts I requested out of curiosity from the government IE Corporate/Corporation/Sole Proprietorship etc ad nauseum but thats not the purpose here, the railroad group is operating an entertainment line for the attraction of riders to enjoy the trips, and you have all your financials to square up as usual like all else others deal with. Now get back in action and the fun....guys...

superheater · **Joined:** Sun Aug 22, 2004 11:54 pm **Posts:** 2605

This report appears to be problematic to me.

Just a couple of items:

1.) Nicolas Miller is not licensed as a CPA and should not be a signatory. Larry Bertsch is a licensed CPA and should comply with professional standards no matter what he is doing-acting with integrity and not brining the profession into discredit-he should also o avoid confusion about the nature of the engagement and the responsibility assumed.

2.) The use of the term “examination” seems inappropriate, since the report specially indicates that an audit was not conducted. Worse, they say they were engaged as a consultant, despite what appears to be attestation services, in which case the words “independent accountant” should appear.

It’s not clear to me what they were doing, because the nature and extent of the engagement and the applicable standards are not identified in the report. The practitioner must identify the subject matter or the assertion being reported on and state the character of the engagement in the report. Given the nature of the report, it appears to be an engagement that should have been conducted as a Compliance Attestation. If this was an “agreed upon procedures” engagement, it’s use and distribution should be limited. Some of their conclusions (such as those regarding the status of various entities) appear to be LEGAL judgments, not accounting or consulting judgments.

3.) You don’t issue a report with a date and say “we reserve the right” to modify the report pending the receipt of additional information. If you haven’t received everything you require to issue a report, you aren’t done with the work supporting your opinion. If somebody refuses, otherwise fails to supply information or its unavailable, you have a “scope limitation” which is disclosed in the report-and if the scope limitation is significant enough, you may have to either disclaim an opinion.

If the entity believes things have changed significantly enough to support a better opinion, you start over and issue a new report. These reports are not meant to be webpages.

4.) Other engagements, such as prior audit reports might be useful in informing preliminary judgments about the entity or its operations, but it appears there’s a complete reliance on these reports, there is no indication of first party work in the period under question.

5.) COSO is an acceptable framework for designing and reviewing internal controls, however this report cites Reducing Grant Fraud Risk: A Framework for Grant Training and that is an advisory and training document, not an authoritative one.

6.) Although I didn’t see this phrase in the report, Bertsch apparently made a presentation using the phrase “going out of business curve.” That sounds very much like a “going concern” exception, which is ordinarily something that arises out of an auditor’s judgment after conducting a financial statement audit, which was not conducted. CPA’s should be careful about expressing an opinion like that, apart from actually conducting a financial statement audit.

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

Another week, another update -- Ely Times: Council fires railroad CPA, forms debt committee (March 20, 2015)

An excerpt:

Quote:

The Ely City Council and Railroad Board of Trustees fired Robert Moore, the long time certified pubic accountant (CPA) for the Nevada Northern Railroad, and approved the creation of a debt management committee in their first meeting since the forensic audit of the railroad’s books was released. Both actions came from recommendations found within the 69-page audit done by Larry Bertsch, CPA & Associates LLP..... NNRY Executive Director Mark Bassett argued that he “didn’t understand” why the trustees would want to remove someone that has had a working relationship with the railroad for 20 years. According to councilman Bruce Setterstrom, the move was a necessary first step towards fixing issues brought to light in the forensic audit, namely keeping the board more informed upfront.

and

The Ely Times: Vote to disincorporate city delayed (March 20, 2015)

Quote:

Voters in the City of Ely will have some extra time to consider whether or not they would like to see the city disincorporated. State Senator Pete Goicoechea called Mayor Melody Van Camp on Tuesday to inform her that his bill to put a vote on the city’s general election ballot, asking city residents if they would like to disincorporate the City of Ely, will still go forward to the state legislature, but won’t be on the ballot until 2017. The original bill had planned for the vote to be on this year’s general election ballot on June 2.

Heavenrich · **Joined:** Mon Aug 23, 2004 11:07 am **Posts:** 630

Chris Webster wrote:

Another week, another update -- Ely Times: Council fires railroad CPA, forms debt committee (March 20, 2015)

An excerpt:

Quote:

The Ely City Council and Railroad Board of Trustees fired Robert Moore, the long time certified pubic accountant (CPA) for the Nevada Northern Railroad, and approved the creation of a debt management committee in their first meeting since the forensic audit of the railroad’s books was released. ....

I think the reporter has made a big blooper here, for a CPA to do an independent audit of a business, he/she can't be an employee of that business, so the CPA probably wasn't "fired", but the contract terminated.

Also, it can be healthy to change accountants from time to time to get different/ fresh approaches and ideas and that's not that unusual a business practice. Sometimes this can be done within an accounting firm, sometimes it means going to a different one in which case there always is some learning curve expense.

I'm also surprised they didn't use the term finance committee.

Bob H

Dennis Storzek · **Posted:** Tue Mar 24, 2015 4:50 pm

After a discrete interval, watch for the council railroad committee to hire Larry Bertsch, CPA & Associates LLP, the firm that performed the kamikaze audit.

superheater · **Joined:** Sun Aug 22, 2004 11:54 pm **Posts:** 2605

"After a discrete interval, watch for the council railroad committee to hire Larry Bertsch, CPA & Associates LLP, the firm that performed the kamikaze audit."

If everything is reported properly, I think that the State of Nevada State Board of CPA's and the Nevada Society of CPAs and the AICPA should be made aware of these actions.

"I think the reporter has made a big blooper here, for a CPA to do an independent audit of a business, he/she can't be an employee of that business, so the CPA probably wasn't "fired", but the contract terminated."

The average reporter presents accounting stories as well as they do railroad stories.