Budget Preparation Review

Review the initial budget assumptions and parameters.

Ensure all revenue and cost centers were included in the budget.

Confirm that the budget was approved by the appropriate authority.

Data Collection

Gather all relevant financial data (actual vs. budgeted figures).

Ensure the accuracy and completeness of the financial data collected.

Variance Identification

Identify variances between actual and budgeted figures.

Categorize variances as favorable or unfavorable.

Highlight variances that exceed a predetermined threshold (e.g., 5% or 10%).

Variance Analysis

Analyze the causes of significant variances.

Determine if variances are due to changes in volume, price, efficiency, etc.

Evaluate the impact of these variances on overall  financial performance.

Reporting and Documentation

Document each identified variance and its cause.

Prepare a variance report summarizing the findings.

Include recommendations for action or adjustment in the report.

Review of Action Taken

Review actions taken in response to previous variance findings.

Assess the effectiveness of the actions in mitigating on the variances.

Continuous Monitoring

Establish a process for ongoing monitoring of budget variances.

Schedule regular reviews to stay ahead of potential issues.

Communication

Ensure effective communication of variance findings to relevant stakeholders.

Discuss the implications of variances in management meetings.

Process Improvement

Identify areas for improvement in the budgeting process based on the analysis.

Implement changes to enhance financial planning and control.