The Statement of Change in Net Financial Assets (or Net Debt) is a financial statement unique to public sector accounting that reconciles the operating surplus or deficit to the change in net financial assets. Net financial assets (or net debt if negative) measures the difference between financial assets and liabilities, indicating whether a government has resources available to finance future operations. This statement bridges the gap between annual operating results and longer-term financial position by accounting for capital asset acquisitions, amortization, and other non-cash items. Positive changes in net financial assets indicate improving financial flexibility, while negative changes suggest increasing financial pressure. This statement helps assess fiscal sustainability beyond annual surplus/deficit figures.