The process of analysing and explaining differences between actual figures and forecast or budgeted figures.
Broadly speaking, new differences are of three kinds:
- Timing differences, that will reverse in later periods.
- New recurring items.
- One-off, non-recurring items.
Another kind of difference is the reversal of an earlier timing difference.
High quality narrative explanations will include a classification of the variance into one of the groups above.
More broadly, the analysis of differences between any two or more sets of related figures.
Also known as 'comparative analysis' or reconciliation.