The unprecedented mounting population pressure in the urban areas of India has brought the issue of efficient urban governance to the centre stage of policy planning. Large scale reforms are being ushered into the urban sector. Unfortunately, the unprecedented phase of accounting reforms witnessed in India during the past two decades have been sporadic, insufficient and have completely overlooked the special needs of small towns in India. They have focused too much on the conversion of accounting systems from "Cash Based Single Entry", to "Accrual Based Double Entry", and too little on urgent reforms required in financial reporting.