Preparing a budget compliance report

You will need to be able to calculate and record the costs of products and services so you can inform the board or senior management.

Determine costs

You will need to write a fully-costed budget compliance statement. These may be for production, materials purchases, materials usage, labor usage, overheads or costings. They may also relate to a master budget.

Seek cost information advice from all sections of your organization.

Identify variances against budget and prioritize them for review and decision-making.

You will find that a simple year-to-date system might not tell you much if income and expenditure follow a distinct cycle. Besides, you might have several cycles going on at once.

Your reports need to be free of errors and comprehensive.

Then review costing system integrity Do a variance analysis: find out the reasons for any difference between actual and applied overheads costs.

Use your variance analysis to review the way you assigned costs. Was it effective and accurate?