The main purpose of this paper is to offer an inductive theory of Local Government accounting in Portugal, in a comparative-international perspective with the United Kingdom. From an overview of the main features of both countries’ Local Government accounting systems, we have concluded that, despite similarities, some
important differences still remain, namely regarding the importance of budgeting and budgetary control and their infl uence in accounting, and the external
fi nancing providers privileged by local governments in each country, amongst others.
A discussion of possible reasons for those differences is then offered, based on: historical reasons, local government political structure and budgetary process, users of local government financial (including budgetary) reporting information and their needs, proximity to business accounting, and the financing system predominating in each country.