Prepared by Posh. Updated 7 October 2026. Illustrative arithmetic and preparation guidance. Accountant review is required for actual accounts, classifications and conclusions.
State the convention
Use a declared convention: variance amount = actual minus budget. Invented revenue: actual 12000 AUD, budget 10000 AUD, variance +2000 AUD. With a positive nonzero budget, variance percentage = (actual minus budget) / budget × 100 = 20%. Label both periods and the basis.
Direction depends on the question
A positive amount is not automatically good. Revenue above budget and expenses above budget answer different questions. An expense overrun may reflect planned timing, a changed scope or an error; arithmetic alone does not decide which. Negative budgets need an explicit interpretation rather than a guessed favourable/unfavourable label.
Handle zero and missing budgets
If budget is zero and actual is 300 AUD, show +300 AUD and percentage undefined. Do not show infinity or 100%. A missing budget is unknown, not zero. If currency or basis differs, obtain a comparable input or show the mismatch.
Separate observation from explanation
Observed: September revenue increased by 2000 AUD against its budget. Proposed: a campaign may have contributed. Needed evidence: dated campaign and conversion data, comparable periods and the preparer’s explanation. Do not turn correlation or a matching number into a proven cause.
End with an action
Name the evidence owner and due date. Review cutoff, one-off items, reversals and source revisions. Confirm whether the change affects a decision now or merely moves activity between periods. Keep the amount, percentage, missing evidence and next action visible.