TN Code § 9-3-404 (2021)
2021 Tennessee Code|Title 9 - Public Finances|Chapter 3 - Local Governments|Part 4 - Local Government Modernization Act of 2005|§ 9-3-404. Penalties and Restrictions for Failure to Implement Accounting and Financial Reporting Standards

 If a local government fails to implement accounting and financial reporting standards as required by the GASB, as determined by the comptroller, the following penalties or restrictions may be imposed on the noncomplying local government:    The local government shall not be eligible for economic and community development grants funded by the state and administered by the department of economic and community development as mutually agreed upon by the comptroller and the commissioner of economic and community development, and bank excise tax and Hall income tax revenues that are collected and distributed by the state shall be reduced to an amount agreed upon by the comptroller and the commissioner of revenue, but not to exceed five percent (5%) of the total amount due the local government in any fiscal year, until the local government is in compliance with accounting and financial reporting standards required by the GASB;   If a school district, defined as a county, municipal or special school district or system, fails to comply, the school district shall not be eligible for certain state funded education grants administered by the department of education until the school district complies with accounting and financial reporting standards required by the GASB. The comptroller and the commissioner of education shall mutually agree to the categories of grants subject to this restriction; and   If a county highway department fails to comply, the comptroller and the commissioner of revenue shall agree on an amount whereby the funds that the county highway fund would otherwise receive from state gasoline tax proceeds as allocated pursuant to § 67-3-901 shall be reduced. After such amount is agreed upon, the department of revenue shall make the reductions from the monthly allocations of gasoline tax proceeds to the county. The amounts so reduced shall be held in reserve by the department of revenue and allocated to the county upon the county becoming compliant as determined by the comptroller;     The comptroller shall provide the local government with a list of professional accounting firms available to assist in implementation of the work plan. The local government shall provide funds for the cost of this assistance. If the local government fails to provide funds for the cost of this assistance, such cost shall become an outstanding legal obligation of the local government. If the local government fails to pay the cost, the state shall pay the cost and the local government shall be required to reimburse the state; and   In those county governments that fail to implement accounting and financial reporting standards required by the GASB, the comptroller shall review and evaluate the county's financial management system and make a recommendation to the county's legislative body on how to improve the financial management system to facilitate compliance with accounting and financial reporting standards. The county legislative body shall act upon the recommendation of the comptroller within ninety (90) days of notification.