In April 2006, the Tokyo Metropolitan Government（TMG）implemented the use of accrual basis accounting along with double-entry bookkeeping procedures and applied them to its General and Special Accounts (with the exception of Public Enterprise Accounts, such as Waterworks). These new actions are conducted in addition to traditional Japanese governmental accounting procedures (cash basis accounting and single-entry bookkeeping).
Before their implementation, the TMG established its own accounting standard named the “Tokyo Metropolitan Government Accounting Standard”, in which it stipulated a set of detailed accounting policies and methods essential for carrying out accrual basis accounting and double-entry bookkeeping procedures.
In principle, the standard applies the same rules as the accounting standard used by private-sector corporations, but at the same time it takes into consideration particular elements of governmental accounting as deemed appropriate.
This standard stipulates that the financial statements will comprise a balance sheet, statement of operating costs, statement of cash flow, and statement of changes in net assets, and further stipulates that supporting schedule(s) and footnotes for the these statements will also be prepared.
It adopts the accrual basis of accounting and recognizes certain costs such as depreciation expenses and provisions for various allowances, which are difficult to account for under cash basis accounting
It adopts double-entry bookkeeping procedures, where journal entries are made based on the execution of daily transactions.
It allows for a 2 month adjusting period for book closing to ensure consistency with existing governmental accounting
The classification of assets is in accordance with the current rules stipulated by the Local Autonomy Law. The account titles in the operating costs and cash flow statements adopt the classification category titles used in the TMG budget, providing a better understanding of the relationship of the disclosed items with the TMG budget.
The basic concept for accounting and layout of financial statements, and such, is in line with those of the International Public Sector Accounting Standards (IPSAS).
This is a provisional English version of Tokyo Metropolitan Government Accounting Standard. This material is furnished for the purpose of the reader's reference. If there is any conflict and/or discrepancy between this material and the Japanese original of the Annual Financial Report, information in the Japanese original prevails.
