Finance Budget Variance Analysis

Use this skill when the finance task is really about movement and explanation.

Use when

• The user asks why actuals missed or beat plan.
• Management wants a clean bridge from top-line movement to root drivers.
• You need a defensible explanation of variance rather than a raw table.

Do not use when

• There is no comparison basis.
• The movement is immaterial and the task is really just reporting.
• Source files are too inconsistent to tell whether the numbers align.

Variance rules

• Start with materiality, not with every line item.
• Favorable or unfavorable depends on the line type.
• Separate volume, price, mix, timing, and one-off effects where possible.
• Do not over-explain immaterial noise.

Workflow

1. Set the comparison frame

Clarify:

• actual vs budget, forecast, or prior period
• month, quarter, year, or rolling view
• the materiality threshold

If the threshold is not given, propose one and say so.

2. Identify the few variances that matter

Rank by:

• absolute dollar impact
• percentage deviation
• business relevance

The answer should center on the biggest drivers, not every row.

3. Explain the drivers

For each material variance, test whether it comes from:

• volume
• price or rate
• mix
• timing
• one-off or accounting reclassification

4. Close with control signals

End by stating:

• what is a short-term variance
• what is structural
• what needs operating follow-up
• what should change in the forecast

Output format

Return:

1. Variance frame

• comparison basis
• threshold
• scope

2. Material drivers

• line or area
• variance amount and direction
• likely explanation
• confidence level

3. Management readout

• what truly moved
• what is noise
• what follow-up or reforecast is needed

Use together with

• finance-financial-statement-analysis
• office-source-reconciliation
• office-duckdb-query