The two top-level budgets together essentially cover spending for the entire firm. Other, budgets may exist for areas such as investments, contingencies, or sinking funds, but these usually are quite small relative to the capital and operating budgets. Most budget analysts calculate variance by subtracting the budget figure from the actual spending figure. They publish both numbers because both are helpful, later, for variance analysis.

Beyond the budget, there are a few key reports for owners and managers to keep an eye on. These are especially powerful when looked at graphically and not simply spreadsheet tables. Throughout the year and at important milestones, it tells you where you should be going.

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The main point of this exercise is to help your company get smarter every quarter by paying close attention to the difference between your budget and your actual results. By definition, your budget will be wrong somewhere at some point. A budget is an educated guess on how much you will spend on things your business needs to operate.

A profit-and-loss budget report is considered a budget analysis tool. Budget managers and executives review a final budget at the summary level. This type of management report compares the budget to actual year-to-date numbers as well as forecasts for the rest of the year. It also demonstrates variances between the budget and the previous year’s actual results. The requirements of this Statement are effective in three phases based on a government’s total annual revenues in the first fiscal year ending after June 15, 1999. Governments with total annual revenues of $100 million or more should apply this Statement for periods beginning after June 15, 2001. Governments with at least $10 million but less than $100 million in revenues should apply this Statement for periods beginning after June 15, 2002.

Budget Analysts

Proprietary fund financial statements and fiduciary fund financial statements should be prepared using the economic resources measurement focus and the accrual basis of accounting. MD&A should introduce the basic financial statements and provide an analytical overview of the government’s financial activities. Although it is RSI, governments are required to present MD&A before the basic financial statements. Taking the classic variance analysis one step further, an analyst can compare actuals to the period immediately prior and to the same period the prior year. Analyzing variances in this way will help bring to light potential changes in seasonality and timing changes that can help to correct future forecasts. (As a side note, it’s good practice to write notes on the variances directly on the variance analysis to the right of the data, as in the screenshot below).

Conventional — Conventional occupations frequently involve following set procedures and routines. These occupations can include working with data and details more than with ideas. Selective Attention — The ability to concentrate on a task over a period of time without being distracted. Computers and Electronics — Knowledge budgeting report of circuit boards, processors, chips, electronic equipment, and computer hardware and software, including applications and programming. Law and Government — Knowledge of laws, legal codes, court procedures, precedents, government regulations, executive orders, agency rules, and the democratic political process.

Making a budget is key for managing your money

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Stakeholders may be interested in knowing how budget allocations change from year to year. Remember to take inflation into account when you are comparing data over time. This Guide to Understanding and Using Inflation can help you get started. Ask your contact if there are any line items missing from your data extraction that need to be included in the final data analysis. Review operating budgets to analyze trends affecting budget needs.