A newly-published audit has called for the Traverse City Downtown Development Authority (DDA) to improve its financial policies and practices related to the management services it provides to the Downtown Traverse City Association (DTCA). The audit, conducted by Plante Moran and published by the DDA on Friday afternoon, found that, from January 1, 2022 to February 25, 2024, the DDA made numerous financial missteps around cash withdrawals, expense reimbursements, and spending documentation, raising questions about potential financial losses for the DTCA.

According to the audit, the DDA decided to undertake “a specialized internal control review” after identifying that former CEO Jean Derenzy had “issued a check payable to ‘Cash’ from the DTCA gift certificate bank account on November 7, 2023 and subsequently deposited the cash into the general DTCA bank account on December 1, 2023.”

“While no funds were missing from this transaction, the former CEO did not follow the proper procedures for transferring funds between bank accounts, which raised concerns by the TC DDA Finance Committee,” the report notes.

As auditor, Plante Moran conducted interviews with DDA personnel, analyzed bank account activity, and reviewed supporting documentation for transactions, with a focus on disbursements from DTCA bank accounts and “DTCA-related expense reimbursements” paid to Derenzy.

“At the time, segregation of duties was limited, as [Derenzy] could issue checks, withdraw funds, and make transfers between DTCA bank accounts,” the report states. “Due to these control weaknesses, we were engaged to analyze bank account disbursements for irregularities and recommend improvements to strengthen the internal control environment.”

The audit ultimately flagged three questionable cash withdrawals from the DTCA gift certificate account totaling $25,000. (The DDA administers the gift certificate program for participating DTCA businesses.) Per the report, such withdrawals raised flags because “cash withdrawals are not typically associated with DTCA operations.”

Plante Moran traced two of the three withdrawals “to deposits into the DTCA general bank account.” The first was a $5,000 withdrawal in November 2021 that Derenzy later told auditors via email was for cash needs at that year’s Downtown Light Parade. Only $30 of the $5,000 was used and the rest was deposited back into the gift certificate account, which Plante Moran auditors confirmed.

A second withdrawal, in the amount of $10,000, occurred in March 2023 and remains under question.

“We did not identify a corresponding deposit into the DTCA bank accounts for this amount,” the audit says. “It is our understanding that [Derenzey] represented that these funds were used for Comedy Fest expenses. However, we did not receive supporting documentation for this withdrawal to substantiate the purpose these funds were withdrawn. The use and recipient of the $10,000 is unknown. Therefore, it is undetermined if this withdrawal represents a loss to the DTCA.”

The Traverse City Comedy Fest was a DTCA event in 2023 and 2024 before becoming an independent event in 2025.

Finally, regarding the $10,000 check made out to “cash” in November 2023, Plante Moran was able to confirm the check was used to transfer funds from the gift certificate account to the DTCA’s general fund.

“No loss was incurred from this transaction because the funds merely moved from the gift certificate bank account to the general bank account; however, this was not the standard process for transferring funds and no explanation was provided for the nearly one-month delay between the issuance of the check and the deposit,” the report states. The check was deposited on December 1.

Beyond these three transactions, the audit also flags 14 checks totaling $23,835.82 paid to Derenzy for expense reimbursements throughout the audit period.

“Based on our understanding, it was common practice for [Derenzy] to occasionally pay business-related expenses using her personal credit card,” the report notes. For these reimbursements, Derenzy would submit a memo to the DTCA board chair, detailing her expenses and providing “documentation that allegedly supported the purchases.” But in 12 of those 14 cases, Plante Moran found that Derenzy’s memos “did not include detailed receipts” and instead “consisted solely of personal credit card statements.” A 13th reimbursement had no supporting documentation.

“Due to the lack of detail, we cannot verify the appropriateness of the reimbursed expenses,” the report reads.

While the audit stops short of alleging any financial improprieties by Derenzy or anyone else at the DDA, Plante Moran’s auditors also write repeatedly that, due to lack of sufficient documentation, they can neither confirm nor deny that the DTCA incurred any financial losses stemming from the DDA’s management during the two-year audit period.

To ensure greater clarity in the future, Plante Moran recommends the DDA and the DTCA update their financial best practices to include more timely reimbursement requests, back up all transactions and requests with “itemized receipts or invoices” rather than credit card statements, and steer toward electronic transactions for DTCA accounts rather than relying on cash withdrawals. The firm wrote that it had already “observed that the DTCA has implemented improvements that have strengthened its internal controls.”

DDA board members discussed the audit for nearly an hour and a half in closed session Friday. Afterward, Chair Ed Slosky read a short statement explaining the board had authorized the audit in early 2024. “This board just received this financial review, and we reviewed the findings today,” Slosky said. “The financial review provided us with accounting recommendations with respect to how we handle the DTCA accounts. The full financial review will be posted later today on the DDA website.” There was no further board discussion or comments about the audit.

Shortly after the meeting, DDA CEO Harry Burkholder shared the report in an email with DTCA members. He apologized that “financial best practices were inconsistently applied and did not meet organizational expectations” during the period detailed in the audit. “Under new leadership, the DTCA has worked closely with the DDA and a public accounting firm to strengthen oversight and ensure a return to best practices moving forward. The DTCA board has also adopted and implemented new financial policies and procedures consistent with the recommendations in the review.”

Derenzy did not immediately respond to a request for comment from The Ticker Friday afternoon. After six years at the helm of the DDA, Derenzy stepped down in early 2024. Burkholder was named interim CEO that February, and selected as permanent CEO that June.

Read the full audit report here.