Budget Variance Analysis Checklist

Variance analysis on an open period produces noise — late AJEs from the close team will keep moving the numbers. Confirm the controller has locked the period in NetSuite / Sage Intacct / QBO (close date set, password applied) before pulling actuals.

Use the board-approved annual budget plus any mid-year reforecast that has been formally adopted. If FP&A maintains a working forecast in Vena / Cube / Mosaic, pull the locked snapshot — not a draft scenario.

Export the trial balance and departmental P&L at the same level of detail as the budget — usually account × department × class. Tie the exported total to the GL trial balance before doing anything else; if these don't match, every downstream variance is wrong.

Compute actual minus budget for each revenue stream — product, service, recurring, one-time. Where possible, decompose the variance into price vs. volume so commentary is actionable rather than just "revenue was $X under budget."

Compare COGS by component — materials, direct labor, freight, fulfillment. A revenue beat that comes with a margin miss usually means discounting or input-cost inflation, and the commentary needs to call that out separately.

Roll up actuals vs. budget for each department owner — Sales, Marketing, R&D, G&A. Watch for headcount-driven variances (open req filled early, severance, bonus accrual true-up) since these usually dominate G&A swings.

Send each department owner the flagged lines for their cost center with a 48-hour turnaround. Require root-cause language — "timing of vendor invoice" or "delayed hire start date" — not just "under budget." Karbon or TaxDome can route the request and track responses.

Separate variances that will reverse next period (a vendor invoice that hit in July instead of June) from permanent ones (a renegotiated SaaS contract). Forecasts should only be adjusted for permanent variances; tagging timing items prevents over-correcting the reforecast.

Identify legal settlements, M&A costs, restructuring charges, and other items that should be called out separately in commentary. Boards and lenders usually want to see adjusted EBITDA with these stripped out.

Lead with the three to five drivers that explain most of the consolidated variance — not a line-by-line account walk. Each driver gets one paragraph: what happened, dollar impact, timing vs. permanent, and what (if anything) is being changed.

Standard pages: consolidated P&L (actual / budget / variance / variance %), department roll-up, headcount bridge, KPI dashboard (DSO, DPO, gross margin, cash runway), and the driver narrative. Fathom or Spotlight Reporting will generate most of the standard pages from the GL feed.

Push permanent variances into the remaining forecast periods — adjusted run-rate revenue, renegotiated contract pricing, revised hiring plan. Leave timing variances alone; they self-correct. Snapshot the prior forecast version so the bridge is auditable.

Run the updated P&L through the 13-week cash model in Float or Dryrun. Check covenant headroom (DSCR, fixed-charge coverage) and confirm runway against the board-set minimum. Flag any covenant risk to the CFO same-day.

Send the final deck and commentary to the CEO, board, and lender (if required by the credit agreement reporting covenant). Post to the board portal or shared drive with the right permissioning — variance packages contain unreleased financial detail.

File the variance workbook, commentary memo, and deck in the period's workpaper folder (SmartVault, ShareFile, or your audit binder). Auditors routinely request management's variance analysis as evidence of monitoring controls under SOC 1 / ICFR walkthroughs.