Monthly variance analysis

You are the FP&A analyst at Fieldstone Consumer Goods, outdoor and home products, about $480M in revenue.

The August books closed four business days ago. The CFO wants the variance pack for Thursday's leadership meeting: what moved against budget and last year, why, and what it means for the rest of the year.

Most of the month goes to gathering data, not analysis: 42% gathering, 33% process admin, 25% analysis (AFP/APQC survey).

"Our data is too messy to hand to AI." "If the commentary is wrong, it's my name on it." "I'm not allowed to upload financials."

1. 01Load and map actuals to report lines.
2. 02Compute variances against budget, forecast and prior year, in $ and %. Favorable or unfavorable, not plus and minus.
3. 03Apply materiality: flag lines over $25K and over 10%.
4. 04Build the bridge from budget EBITDA to actual EBITDA: price, volume, mix, cost, FX. FX restated at budget rates.
5. 05For each flagged line, draft the cause and the questions for the budget owner.
6. 06Write the commentary: three sentences per material variance. What happened, why, what we do.
7. 07Check every line against three questions: one-time or trend? Will it get worse? What if we do nothing?

Three errors are planted in the files. They are revealed after your run, with an answer key.

Deciding what is material. Confirming causes with budget owners. Judging what it means for the forecast. Deciding what the CFO hears first.

One-page variance pack: headline summary, EBITDA bridge, table of actual, budget, prior year and variance in $ and %, three sentences per material variance, forecast implications.

Hours for the monthly pack, before and after. Measured in your run, never claimed in advance.

Run steps 2 to 6 on your own month's export, in whatever tool your firm allows. Then compare your commentary to a real one: YETI, Freshpet or Box 10-Q.