The $10,000 set aside for a forensic audit of the Nevada Northern Rail Road might be a down payment but would in no way cover the total cost, said one of the leading Certified Public accountants of San Francisco Geoffrey Kulik.
“If we were asked to do a forensic audit of a similar sized organization in San Fransisco I would guess the cost would be easy between $35,000 to $45,000 and perhaps double that,” Kulik said Wednesday. “There is a big difference between a regular audit where you check the books and make sure that the company is running under GAP (General Accounting Practices) and a forensic audit where you are looking for criminal wrong doing like fraud. I don’t know what the cost structure is like in Nevada but it can’t be that much different than California.”
Earlier this month the Ely city council voted to budget the forensic audit at the urging of Councilman Marty Westland and over the strenuous objections of the Rail Roads director Mark Basset.
This is the third call for a forensic audit of the NNRY in six months the earlier this year the council held off on the funding and appointed a committee consisting of city councilmen and rail road board directors to better liaison between the council and the rail road.
According to Westland said the committee hasn’t help answer the council’s questions.
“We haven’t gotten answers to the questions we had from the committee,” Westland said.
“The trustees have never given a written request of concerns to the management board, so how are we supposed to give answers when we don’t even know the questions,” Bassett said. “What Westland forgot to mention was that there were no city council members in attendance at the last ad-hoc committee meeting.”
The Ely City council is currently involved in what can be described as a power struggle with the NNRR.
Officially the dispute is over irregularities in the NNRR audit and the council has run what critics call a full court press for more extended over sight of the Nevada Northern Rail Road operations.
According to both sides last year’s audit of the NNRR revealed a $72,000 loan by NNRR director Mark Bassett to the NNRR comprised of uncompensated business expenses to the railroad.
While it is against general accounting practices for an employee of a company to “loan” money to the same company NNRR supporters claim that the so called red flag raised in the audit is but an excuse in a long grudge match against Bassett and Ely city councilman Marty Westland.
To back their up allegations Bassett and board members released a long list of Westland actions both before and after he was elected to the city council in 2011 where he inserted himself into NNRR operations including setting up a rival corporation, using the NNRR logo, writing up unfounded safety violations, and interfering in a grant application that may have cost the rail road over $10 million.
“I think it is odd that no one said anything about the previous year’s audit that had some of the same issues,” Bassett said at the time. “It was only after the last election where Marty got some of his cronies elected to the council that it comes up.”
In the last city election the self described reform movement took the majority on the Ely City council.
“During the election they complained that the so called Good Ol’ Boy network was using the city council to pursue personal vendettas,” said NNRR board chairman John Gianolli. “Now they are doing it.”
While admitting that he had indeed set up a corporation in 2008 that would seem to be in competition with the NNRR, Westland said that now defunct enterprise existed only to run the northern non-historical part of the rail road.
