Auditing

In Tennessee, the financial records of all local governments must be audited annually.  T.C.A. § 9-3-211.  The state comptroller of the treasury through the Division of Local Government Audit is given the authority to establish accounting standards (T.C.A. §§ 5-8-501, 9-3-212(b)) and auditing standards. T.C.A. § 9-3-212(b).  The county legislative body contracts with a certified public accountant or the Division of Local Government Audit to make the annual audit.  T.C.A. § 9-3-212. However, the county must receive approval of a private auditor from the Division of Local Government Audit and comply with other requirements of that office. The contract cost to use the state department of audit was set in 2016 at $0.36 cents for each person in the county based on the most recent federal census with an annual 3% fee increase beginning July 1, 2017.  T.C.A. § 9-3-210.  Regardless of who performs the audit, a certified copy of it must be submitted to the state comptroller. T.C.A. § 9-3-213. In the event state-shared funds are misappropriated or misused, the state is authorized to withhold state funds for the amount misused.  Also, the state may collect on the individual official's surety bond if the misused funds result from that official's unlawful or dishonest acts.  T.C.A. §§ 9-3-301, 9-3-302.  If a public servant, with intent to deceive, to knowingly misrepresents information to an auditor, this action constitutes a Class C misdemeanor.  T.C.A. § 39-16-407.

Counties with one or more audit findings must submit a corrective action plan to the comptroller setting out the actions taken or to be taken to address the findings.  The plan must include contact information for the person responsible for the corrective action, the corrective actions taken or to be taken and the anticipated completion date.  If a county disagrees with an audit finding, the plan should include the reasons and justifications for the disagreement.  T.C.A. § 9-3-407.