Effective financial reporting is a critical tool for accountability and a vital mechanism in ensuring the efficient management of any organisation. The accounting system provides financial information that serves as a basis for organisational decision-making. Over recent years there has been an increasing realisation that municipalities the world over need to generate more reliable and relevant information on their financial status and activities. To do this they will need to overcome obstacles to and prepare for accounting reform (see Boxes 8.1 and 8.2). This requires changes in the way that income and expenditure is recorded and accounts are presented.