Process Library

Budget vs Actual Review

A monthly review of spend and revenue against budget that explains every material variance and feeds the next forecast.

Finance 6 steps
When to use

Monthly, after the books close, with the budget owner.

Trigger
Runs when: Monthly, after the financial close

The procedure

6 steps

  1. Pull actuals by category and line them up against the budget for the month and year to date.
  2. Flag every variance above the materiality threshold in dollars or percent.
  3. For each material variance, write the cause: timing, volume, price, or a one-off.
  4. Decide whether each variance is a one-time event or a trend that changes the forecast.
  5. Update the forecast for trends and note the assumptions you changed.
  6. Share a short variance summary with the budget owners.
Outputs
  • A budget-versus-actual statement
  • A cause for every material variance
  • An updated forecast with changed assumptions noted
Tools
Accounting systemBudget modelSpreadsheet
Note: Separate timing variances from real ones. A bill that landed a month early is noise; a category running hot every month is signal.
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budget review sop variance analysis process budget vs actual financial review checklist forecast update

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