TN Code § 7-82-401 (2021)
2021 Tennessee Code|Title 7 - Consolidated Governments and Local Governmental Functions and Entities|Chapter 82 - Utility District Law of 1937|Part 4 - Audit and Rates|§ 7-82-401. Audited Annual Financial Report — Accounting Manual — Books and Records

   The commissioners of each utility district shall cause an audited annual financial report to be made of the books and records of their district. The comptroller of the treasury, through the department of audit, is responsible for determining that such audits are prepared in accordance with generally accepted governmental auditing standards, and that such audits meet the minimum standards prescribed by the comptroller of the treasury.   In all counties and districts, the comptroller of the treasury shall prepare a uniform audit manual as is required to assure that the books and records are kept in accordance with generally accepted accounting principles and that the minimum audit standards prescribed by the comptroller are met. The manual shall not be applied to invalidate obligations contained in bond resolutions or other debt contracts, nor to modify any substantive legal powers or requirements applicable to utility districts.     The audits shall be prepared by certified public accountants, public accountants or by the department of audit. In the event the governing body of the utility district shall fail or refuse to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or public accountant or direct the department to prepare the audit, the cost of such audit to be paid by the utility district.   The comptroller of the treasury is authorized to modify the requirements for an audit as set out in this section for utility districts whose activity, in the comptroller of the treasury's judgment, is not sufficient to justify the expenses of a complete audit. Furthermore, the comptroller of the treasury is authorized to direct the department of audit to make an audit or financial review of the books and records of utility districts.   Within ninety (90) days after the close of the fiscal year of each district organized and operating under this law, the commissioners of the district shall publish in a newspaper of general circulation, published in the county in which the district is situated, a statement showing:  The financial condition of the district at the end of the fiscal year;   The earnings of the district during the fiscal year just ended;   All travel and related costs or expenses where any portion of such costs or expenses is paid by the district or any entity or entities, public or private, associated with the district, including, but not limited to, travel for commissioners and employees;   A statement of the water rates then being charged by the district; and   A brief statement of the method used in arriving at such rates.     A copy of such annual statement and audit shall be filed with the county mayor or mayors where publication is required in accordance with this section and § 7-82-608.   Audits performed by the internal audit staffs of the utility districts shall be conducted in accordance with the standards established by the comptroller of the treasury pursuant to § 4-3-304(9).    Any utility district that is a financially distressed utility district shall be subject to the supervision and evaluation of the utility management review board created pursuant to part 7 of this chapter.   A government joint venture that supplies or treats water or wastewater for wholesale use only to other governments shall not fall under the jurisdiction of the utility management review board for the purpose of reporting negative change in net position annually, but shall be referred to the board if the government joint venture is in a deficit or default position as described in subdivision (g)(3).   For the purposes of this chapter, “financially distressed utility district” means a utility district, and its system or systems, that, as shown by the audited annual financial reports, has either a deficit in total net position, is in default on an indebtedness, or has a negative change in net position for two (2) consecutive years without regard to any grants, capital contributions, or excluded non-cash items. For purposes of this section, “change in net position” means total revenues less all grants, capital contributions, and expenses, but without reduction for any excluded non-cash items. For purposes of this section, “excluded non-cash items” means any non-cash charges arising from changes to or the implementation of pension and other post-employment benefit standards promulgated by the governmental accounting standards board.      Utility districts operating public water systems shall include in their audited annual financial report the utility district's water loss in the manner as prescribed by the utility management review board. Failure of the utility district to include the schedule required in this section constitutes excessive water loss and the utility district shall be referred to the utility management review board. Within sixty (60) days from the time that a utility district's audit is filed with the comptroller of the treasury, the comptroller of the treasury shall file with the utility management review board the audited annual financial  report of any utility district operating a water system whose water loss is excessive as established by rules promulgated by the utility management review board.   For the purposes of subdivision (h)(1), “utility district” includes agencies, authorities, or instrumentalities of government created by private act having the authority to administer a water or wastewater facility.     By February 1 of each year, the comptroller of the treasury shall provide a written report to the speaker of the house of representatives and the speaker of the senate listing the average annual water loss contained in the audited annual financial report for those utility districts described in subsection (h).