1. Introduction

It is widely known that the recent deterioration in the fiscal condition of local governments has triggered an attempt to raise awareness among residents of the severity of the situation through the introduction of corporate-style accounting and the release of financial statements such as balance sheets. And in addition to balance sheets, local governments have also started releasing administrative cost calculation statements, which are equivalent to corporate income statements. There therefore seems to have been a rapid expansion in financial disclosures by local governments. At the same time, starting with the announcement in March 2003 of “Public Accounting Conceptual Framework,” a theoretical foundation for financial reporting by local governments and other public sector organizations is gradually being laid down.