Management Reporting: Budgeting Control
Budgetary Control and Variance Analysis
WHY COMPARE ACTUAL AND BUDGET?
WHAT CAUSES BUDGET VARIANCES?
- Faulty Arithmetic in the Budget Figures
- Errors in the Arithmetic of the Actual Results
- Reality is Wrong
- Differences between Budget Assumptions and Actual Outcome
HOW ARE VARIANCES CALCULATED
FLEXING THE BUDGET
ANALYSING THE VARIANCES
IDENTIFYING THE CAUSES
TAKING APPROPRIATE ACTION
A HIERARCHY OF VARIANCES