Financial statements are formal reports presenting a municipality's financial position and results of operations, prepared according to Public Sector Accounting Standards (PSAS). The primary statements include: the Statement of Financial Position (balance sheet showing assets, liabilities, and net position), Statement of Operations (showing revenues, expenses, and annual surplus or deficit), Statement of Change in Net Financial Assets (reconciling changes in financial position), and Statement of Cash Flows (showing cash sources and uses). Notes to the statements provide additional detail on accounting policies and specific items. Municipalities must prepare annual financial statements, which are audited by external auditors and approved by council. Financial statements are public documents that citizens, creditors, and other stakeholders can review to assess municipal finances. Understanding financial statements enables meaningful evaluation of municipal fiscal health and accountability.