Reviewed Date: 10/16/2019
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.