In 2007, The General Assembly passed the “Local Government Instances of Fraud Reporting Act” (Section 8-4-501, Tennessee Code Annotated). This act provides that public officials “with knowledge based upon available information that unlawful conduct has occurred shall report the information in a reasonable amount of time to the office of the Comptroller of the Treasury”
The act defines “public entity,” “public official,” “reasonable amount of time,” and “unlawful conduct.”
Provisions The act provides that “The comptroller shall have the power to prescribe the method of making such reports.” Therefore, we have prepared a Fraud Reporting Form to be used by public officials.
The Governor signed the act on May 22, 2007, and it is now in effect as law.
Paragraph 7 of the Contract to Audit accounts includes the following provisions for reporting fraud:
Any reasonable suspicion of fraud, such as defalcation, misappropriation, misfeasance, malfeasance, embezzlement or other illegal acts shall be reported by the auditor, in writing immediately upon discovery, to the Comptroller of the Treasury, State of Tennessee, who shall under all circumstances have the authority, at the discretion of the Comptroller, to directly investigate such matters. If the circumstances disclosed by the audit call for a more detailed investigation by the auditor than necessary under ordinary circumstances, the auditor shall inform the organization's management and those in charge of governance in writing of the need for such additional investigation and the additional compensation required therefore. Upon approval by the Comptroller of the Treasury, an amendment to this contract may be made by the organization's management and those charged with governance and the auditor for such additional investigation.
In order to comply with this requirement, the auditor should describe the suspected fraud in as much detail as possible. If known, information about the names and positions of suspected individual(s) involved, dates, amounts, records involved, how the fraud was discovered, etc. should be included. All instances of fraud, regardless of materiality, should be reported.
Please send this information to our office via one of following:
Attention: Contract Review
1500 James K. Polk State Office Building
505 Deaderick Street
Nashville, TN 37243-1402
Phone: (615) 401-7841
Fax: (615) 741-6216