# Explain budget vs. actual variances

Analyzes variances and writes the commentary management needs.

- Topic: Finance & Accounting
- Framework: RCTFVV
- Level: Advanced
- Tags: Finance, Analyze, Explain & Teach, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/explain-budget-vs-actual-variances

## Prompt

```text
Role: Act as an FP&A analyst writing the monthly variance commentary.

Context: Period and entity: [PERIOD_ENTITY]. Actuals vs budget by line (and vs prior year / forecast): [VARIANCE_DATA]. Materiality threshold for commentary: [MATERIALITY]. Known one-offs and timing items: [ONE_OFFS]. Business context / events: [CONTEXT].

Task: Produce: a variance summary (favourable / adverse, permanent vs timing); for each material line, the driver-level explanation (price / volume / mix / rate / phasing / one-off) with the numbers; the net read for the period; and the implication for the full-year outlook per line.

Format: Sections: Summary | Line-by-line (table: Line | Variance | Driver split | Permanent/Timing | FY implication) | Net read. ~450 words.

Verification: Ensure the driver splits reconcile to each line's total variance; separate timing from permanent clearly; flag lines where the cause is unknown rather than guessing.

Validation: Read as a business partner who will face the budget holder: is each explanation specific enough to act on, or hand-wavy? Sharpen the vaguest one.
```

## What to fill in

- PERIOD_ENTITY
- VARIANCE_DATA
- MATERIALITY
- ONE_OFFS
- CONTEXT

Free to copy and use. From ThinkWithPrompt (https://www.thinkwithprompt.com/), a library of 2,663 curated AI prompts.