Audit of Troon books shows accountant didn’t review cash receipt files, Hearn says

Cove president says suit against former Cove management company might proceed after completion of forensic probe by CohnReznick

By TOM STAUSS Publisher

There’s been some developments in the ongoing forensic audit of Captain’s Cove Golf and Yacht Club finances for the first six months of the 2021-22 fiscal year ending this past October, in which the Cove’s former management company, Troon Golf, did not produce monthly financial reports.

The omission resulted in the termination of an agreement under which Troon through an affiliate provided management and financial services to CCGYC.

It also resulted in a lawsuit filed against the management company by CCGYC to find out the status of more than $1 million in unaccounted for CCGYC funds under Troon’s control. The parties have agreed to put the lawsuit on hold pending completion of the audit.

“Just because we will eventually receive the audit does not mean that the lawsuit is over,” CCGYC President Tim Hearn said, suggesting that the audit might not end up resolving differences at issue..

Hearn said the amount of cash that was possibly used inappropriately by Troon management and without authorization of CCGYC might now be closer to $1.2 million

The Cove Board of Directors hired the regional auditing firm CohnReznick to conduct the forensic audit of Troon’s Captain’s Cove books, a process that has been under way for several months.

The results so far have been disappointing, Hearn said.

“We’ve learned that Troon’s accountant didn’t review the cash receipt files for individual [Captain’s Cove] accounts,” he said, instead only compiling a composite monthly total.

“CohnReznick concluded there was a gap in what the accountant did compared to what was supposed to have been done,” he added. “It’s disappointing that Troon didn’t do what they said they would do in the operating agreement with CCGYC.”

Hearn said that the auditors are having to review individual cash line items to produce an accurate schedule of accounts receivable activity for the six months at issue.

In addition, Hearn said the auditors are trying to identify whether there were any operating losses during this period and will be producing a statement of cash flows.

Hearn has said it’s not necessarily true that $1 million or more is truly missing, but he expressed doubt that the problem lies simply with unaccounted for accounts receivables.

“If it was in AR, they wouldn’t have been able to operate in Captain’s Cove as long as they did,” he said.

His interpretation of what’s been learned so far during the audit is that the accountant in charge of the CCGYC may have been trying to shift blame for errors in cash accounting to others working for Troon.

If that’s the case, then getting to the bottom of the unaccounted for more than $1 million will prove to be more elusive than Hearn had hoped it would be.

The audit is being conducted on the premises of Troon Golf offices in Reston, Va.

Documents that are being examined include general ledgers, bank reconciliations, balance sheets and income statements.