Tenn. Comp. R. & Regs. 0520-01-02-.13 - FISCAL ACCOUNTABILITY STANDARDS

(1) Data Collection.

(a) The Commissioner of Education (Commissioner), in consultation with the Comptroller of the Treasury, shall prescribe a system of school fiscal accounting for all LEAs which ensures that the expenditure of funds is properly accounted for and safeguarded in accordance with current law and State Board rules, regulations, and minimum standards. The Commissioner shall require such reports from LEAs as are required by federal or state law, State Board rules, or as are otherwise necessary for ensuring fiscal accountability standards.

(b) To ensure proper financial reporting of revenue and expenditures for all public school purposes, the system of school fiscal accounting shall include a standard chart of accounts and audit procedures. The standard chart of accounts shall be the basis for the Annual Public School Budget Document (Budget Document), which shall contain the account codes necessary to ensure the capability for meaningful comparisons of school systems. At a minimum, the Budget Document shall be designed to facilitate year-to-year and agency-to-agency comparison, as well as adequately indicating the sources and uses of all funds received by each LEA, and sufficient revenue account codes to differentiate between federal, state and local revenue.

(c) The report of actual expenditures shall be the Annual Public School Financial Report (Financial Report) and shall include sufficient information to allow an LEA by LEA comparison of budgeted and actual expenditures. The Financial Report shall, at a minimum, be designed to facilitate year-to-year and agency-to-agency comparison, as well as adequately indicating the sources and uses of all funds received by each LEA, and shall differentiate between federal, state and local revenue when reporting actual revenue for the prior year and estimated revenue for budget purposes.

(d) The Department of Education shall establish procedures for collecting and verifying required data inputs for use in determining allocations through the state's K-12 education funding formula.

(2) Reports & Documents.

(a) Within thirty (30) days after the beginning of each fiscal year, each LEA shall submit to the Commissioner, on a form provided by the Department of Education, a complete and certified copy of its entire school budget for the current school year.

(b) On or before October 1 of each year, each LEA shall submit to the Commissioner a correct and accurate financial report of public school revenues and expenditures for the school year ending on June 30. The Commissioner shall require such reports and maintain such documents as will allow a comparison of the state's K-12 education funding allocations with actual expenditures for each school system.

(c) The Commissioner shall provide to the State Board on or before October 1 of each year a report of ADM for each LEA for the previous school year.

(d) The Department of Education shall prepare and report to the State Board final allocations of the state's K-12 education funding formula for each LEA prior to the start of the school year.

(3) Review and Verification.

(a) The budget submitted by each LEA will be reviewed by the Department of Education to ensure that state funds are not being used to supplant local funds and that each school system has appropriated funds sufficient to fund its local share of the state's K-12 education funding formula.

(b) Revenue derived from local sources must equal or exceed prior year actual revenues -excluding capital outlay and debt service, and adjusted for decline in average daily membership (ADM).

(c) The Department of Education shall verify that funds generated in the state's K-12 education funding formula are being budgeted for eligible expenses, inclusive of any legal requirements that restrict fund usage. The Commissioner shall advise the State Board of all LEAs which fail to meet these minimum standards by January 15 of each year.

(d) Each LEA shall provide to the Commissioner or a designated representative copies of all LEA related audit reports, including those made by governmental or independent public accountants.

(e) The Department of Education shall conduct review and follow-up procedures to ensure that audit exceptions are evaluated and appropriate actions are taken. The Commissioner shall notify the State Board of any material and significant findings which reflect on the ability of the LEA to provide a quality education or which indicate that progress toward satisfactory resolution is not being made.

(4) Audit.

(a) An Internal Audit Section will be maintained in the Department of Education for the purpose of testing and evaluating LEA administrative and accounting controls, compliance, and financial and program accountability for state and federally funded programs, and for compliance with State Board rules, regulations, and minimum standards. The Internal Audit Section shall make such full and limited scope audits as it deems necessary under the circumstances, and special audits as requested by responsible government officials. The audits will be performed in accordance with standards for the professional practice of internal auditing and with generally accepted governmental auditing standards.

(b) To provide reasonable assurance that attendance and financial reports are reliable and accurate, the Internal Audit Section shall conduct audit procedures for the review and testing of the attendance accounting system. The Internal Audit Section shall review such programs as necessary to provide reasonable assurance that funds are properly accounted for and safeguarded in accordance with current law, applicable federal standards, and State Board rules, regulations, and minimum standards. Audits shall include evaluating program objectives, grant performance and accountability to determine that each LEA has a system in place to ensure compliance with program regulations and guidelines.

(c) The Commissioner shall be advised of all audits, including a summary of the scope of the audit, the findings, recommendations, management comments, and conclusions including a determination as to the adequacy of corrective action planned or implemented. The State Board, Director of Schools, and representatives of the Comptroller's Office shall be provided copies of all audits conducted.

Notes

Tenn. Comp. R. & Regs. 0520-01-02-.13

Original rule filed November 3, 1993; effective March 30, 1994. Amendment filed June 30, 1995; effective October 27, 1995. Amendments filed August 11, 2017; effective November 9, 2017. Amendments filed August 28, 2023; effective 11/26/2023.

Authority: T.C.A. §§ 49-1-201, 49-1-210, 49-1-302, and 49-3-316 and Public Chapter 966 of the Public Acts of 2022.