Internal Accounting and Reporting

T.C.A. § 9-3-401 et seq., known as the Local Government Modernization Act of 2005, requires that local government accounting and reporting comply with generally accepted accounting principles. Penalties or restrictions may be assessed at the discretion of the comptroller’s office for noncompliance with the act. What this means for governments is they must follow accounting standards established by the Governmental Accounting Standards Board (GASB). In order to record the new fund balances in the internal accounting system, new account numbers must be established. Depending on the type of software used in each government this may have to be done with assistance from software vendors. MTAS recommends that governments consult with their software vendors and independent auditors prior to making any adjustments to fund balance in the accounting system. It may be necessary to create a separate spreadsheet or file to reclassify fund balances and maintain supporting documentation for your classification decisions and make the fund balance adjustments at year end. The recommended municipal chart of accounts can be located on the Comptroller of the Treasury website at https://comptroller.tn.gov/office-functions/la/resources/chart-of-accounts/municipal-chart-of-accounts.html

As presented by the Comptroller of the Treasury, Division of Local Government Audit in the Audit Manual:

"Effective July 1, 2022, the comptroller’s office started maintaining the municipal uniform chart of accounts that had been maintained by MTAS for many years. It is not mandatory for municipalities to use the municipal uniform chart of accounts maintained by the comptroller’s office. Beginning with the audit year ending June 30, 2023, incorporated municipalities are required to convert their audited accounting information into a standard format using a Microsoft Excel tool developed by our office (i.e., Municipal Chart of Accounts Crosswalk). This information is required to be submitted annually to the comptroller’s office by each municipality’s audit firm. The municipal uniform chart of accounts and resources for the crosswalk tool are available at Local Government Audit’s Municipal Chart of Accounts Page."

The full audit manual may be found on the Comptroller's website at https://comptroller.tn.gov/office-functions/la/resources/manuals.html