How do you tailor variance analysis for different audiences?

1 Understand your audience

Before you start preparing your variance analysis report, you need to understand who your audience is, what their objectives are, and what information they are looking for. For example, senior management may be more interested in the big picture, such as the overall impact of variances on profitability, cash flow, and strategic goals. Operational staff may be more focused on the specific factors that caused the variances, such as sales volume, price changes, or production efficiency. External stakeholders, such as investors, lenders, or regulators, may require more transparency and accuracy in your variance analysis, as they use it to assess your financial performance and risk. Auditors may need more evidence and documentation to verify your variance analysis and ensure compliance with accounting standards and policies.

2 Choose the right level of detail

Depending on your audience, you may need to adjust the level of detail and granularity in your variance analysis. For example, you may need to provide more breakdowns and subtotals for operational staff, who need to understand how each department, product, or activity contributed to the variances. You may need to simplify or aggregate some data for senior management, who may not have the time or interest to go through every line item. You may need to highlight or explain the most significant or unusual variances for external stakeholders, who may not be familiar with your business operations or assumptions. You may need to include more references and sources for auditors, who may need to check your calculations and assumptions.

4 Provide relevant insights and recommendations

Finally, you need to provide relevant insights and recommendations based on your variance analysis results and your audience's objectives. For example, you may need to provide more strategic insights and recommendations for senior management, who may use your variance analysis to make decisions about future plans, budgets, or forecasts. You may need to provide more operational insights and recommendations for operational staff, who may use your variance analysis to improve their processes, performance, or efficiency. You may need to provide more financial insights and recommendations for external stakeholders, who may use your variance analysis to evaluate your financial position, performance, or risk. You may need to provide more compliance insights and recommendations for auditors, who may use your variance analysis to ensure that you follow the accounting standards and policies.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?