ACCOUNTING PRINCIPLES AND PRACTICES OF LOCAL AND STATE GOVERNMENTAL UNITS HAVE EVOLVED FROM THE NATIONAL COUNCIL OF GOVERNMENTAL ACCOUNTING (NCGA) AND THE COMMITTEE ON GOVERNMENTAL ACCOUNTING AND AUDITING OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA). A RECENT REVIEW OF THE FINANCIAL REPORTS OF 46 AMERICAN CITIES REVEALED THAT MUNICIPAL ACCOUNTING PRACTICES DID NOT CONFORM TO THE GUIDELINES SET FORTH BY THE NCGA OR THE AICPA. HOWEVER, A REVIEW OF THE LITERATURE INDICATED THAT THESE GUIDELINES WERE NOT BASED ON WELL ARTICULATED GOALS OR SUBSTANTIED THEORIES. THEORISTS HAVE FAILED TO IDENTIFY THE USERS TO WHOM MUNICIPAL FINANCIAL REPORTS SHOULD BE DIRECTED AND HAVE NOT RECOGNIZED THE VARYING AND OFTEN COMPETING NEEDS OF CITY MANAGERS, INVESTORS, CITIZENS, OTHER MUNICIPALITIES, AND RESEARCHERS. THE APPENDED BIBLIOGRAPHY ILLUSTRATES THE ABSENCE OF EMPIRICALLY SUPPORTED THEORETICAL STUDIES ON MUNICIPAL ACCOUNTING. THE 45 ARTICLES AND REPORTS WHICH ARE REPRESENTATIVE OF CURRENT RESEARCH DISCUSS PRACTICES BASED ON PERSONAL EXPERIENCES AND SURVEYS OR SIMPLY SUGGEST CHANGES. ACCOUNTING RESEARCH SHOULD IMMEDIATELY IDENTIFY THE USERS OF MUNICIPAL FINANCIAL REPORTS, THE TYPES OF DECISIONS THEY MAKE, AND THE KINDS OF INFORMATION THAT THEY REQUEST. SURVEYS WOULD BE USEFUL, BUT ALL METHODOLOGIES USED IN COMMERCIAL ACCOUNTING CAN BE APPLIED TO THE MUNICIPAL FIELD, INCLUDING AGGREGATE MARKET STUDIES, TIME-SERIES RESEARCH, AND BEHAVIORAL TECHNIQUES. FOOTNOTES ARE PROVIDED. (MJM)