Which document is the starting point for the annual audit? (Alternate wording)

• A. Statement of Budgetary Resources (SBR).
• B. Government-wide Financial Report.
• C. Balance Sheet.
• D. Operating Statement.

Answer: (A)

In federal financial reporting, the starting point for the annual audit is the Statement of Budgetary Resources. This document records budgetary activity—the appropriations received, the obligations created, and the current status of budgetary resources for the period. Auditors rely on the SBR to verify that funds were obligated and expended in accordance with law and the enacted appropriations, establishing the budgetary foundation for the rest of the financial statements. Once the budgetary baseline is established, the accrual-based statements (such as those in the government-wide financial report) are prepared and reconciled to the SBR to present a complete view of the government’s financial position and operations. The other statements describe the financial results on an accrual basis, but they derive from and are tied back to the budgetary information captured in the SBR, making it the essential starting point for the audit.