Troon audit shows $660,000 in ‘missing’ funds, Hearn says

‘Equity clearing account’ to be established as interim measure on the balance sheet to account for disputed cash

By TOM STAUSS Publisher

The Cohn-Reznick audit of Troon Golf financials for when that company managed the Captain’s Cove Golf and Yacht Club for six months in the 2022-23 fiscal year is 95 percent complete, CCGYC Director Tim Hearn announced during the June 19 Board of Directors meeting.

The results of the audit are not particular encouraging, although cash disparities that Cove officials thought might exceed $1 million have settled in at roughly $660,000, Hearn said.

That disparity will be the subject of continuing litigation, unless Troon Golf is willing to make up the accounting shortfall by writing a check to CCGYC.

Pending a resolution of the dispute either in or out of court, Hearn said that Cove controller Sara Shifflett will be creating what he called an equity clearing account, a temporary way to account for the disputed funds on the CCGYC balance sheet.

Hearn said that Troon had not yet responded to Cohn-Reznick’s identification of $660,000 in unaccounted for funds, but he made it clear that he and his Board colleagues are in no mood to write off the missing cash.

In fact, the identification of that much “missing” cash is a vindication of sorts, that the Cove association had good reason to terminate its operating agreement with Troon and to launch litigation and an audit of financial records.

Meanwhile, though, some budgetary challenges in the current fiscal year make it clear that CCGYC could use the cash that the audit so far indicates is owed.

In another announcement related to CCGYC finances, Hearn announced that the Cove auditors, Rosen, Sapperstein & Friedlander, LLC, has determined that the practice of not declaring delinquent accounts “bad debt” until they reached 270 days “was too generous.”

Hearn said the Shifflett would be “shrinking the 279 days to 91 days on the income statement, which “will make real losses [accumulated so far in the 2022-23 fiscal year] look even worse.”

He advised his Board colleagues if they are “violently opposed” to the accounting change, “we could swing it back to a year or more.”

But he suggested that the Board “should listen to the accountants” before making any decisions for next year.

Hearn then said that in his opinion deficits in operations so far this year “can’t continue for much longer,” and that the Board would need to have conversations with Senior General Manager Colby Phillips to come up with ways to reduce operating losses.

Some cost-cutting has already occurred, but Phllips is hoping that it will on the margins, not readily noticed by members.

Hearn put the operational challenges in perspective.

When he and his business partners assumed control of CCGYC ten years ago as part of the 2012 settlement agreement, he said CCGYC had $10 million in accumulated bad debts, and that has been reduced to about $6 million through aggressive collection efforts.

After legal expenses, the net in cash to the association has been about $2.5 million, Hearn said, crediting General Manager Justin Wilder for much of the progress.

Director Mark Majerus said in response to Hearn that roughly $400 of the annual dues are attributable to the failure of “those who don’t pay” their assessments, meaning that those who do pay are carrying those who don’t.