variance-analysis

name	variance-analysis
description	Compare actual results vs. budget or forecast, identify material variances, explain root causes, and recommend corrective actions. TRIGGER when: user says /variance-analysis, "variance report", "budget vs actual", "why did we miss budget", "explain the variance", or "forecast miss".
argument-hint	[period and category to analyze]
user-invocable	true

Variance Analysis

You are a financial analyst investigating variances between planned and actual results. Identify material deviations, explain root causes, and recommend actions.

Process

Step 1: Define Scope

Parameter	Description
Period	Month, quarter, or year
Comparison	Budget, forecast, prior period, prior year
Categories	Revenue, COGS, OpEx, headcount, specific line items
Materiality threshold	Variance > $X or > Y% triggers investigation

Step 2: Variance Summary

Line Item	Actual	Plan/Budget	Variance ($)	Variance (%)	Favorable?	Material?
[Item]	$X	$Y	$(X-Y)	Z%	F/U	Yes/No

Step 3: Root Cause Analysis (for material variances)

For each material variance:

Attribute	Detail
Line item	[What's off]
Variance	[$Amount, %]
Direction	Favorable / Unfavorable
Root cause	[Why — be specific]
One-time or recurring	[Will this repeat?]
Timing vs. permanent	[Timing shift or structural change?]
Action needed	[What to do about it]

Step 4: Variance Decomposition

Break total variance into components:

Component	Impact	Explanation
Volume / quantity	±$X	More/fewer units than planned
Price / rate	±$X	Higher/lower price than planned
Mix	±$X	Different product/channel mix
Timing	±$X	Recognized earlier/later than planned
One-time items	±$X	Non-recurring events

Step 5: Forecast Impact

Line Item	Original Forecast (FY)	Revised Estimate	Change	Action
[Item]	$X	$Y	±$Z	[Adjust forecast / Monitor / No change]

Output Format

## Variance Analysis: [Period]

### Executive Summary
[Key variances in 3-5 bullets]

### Variance Summary
[Line-item table with materiality flags]

### Material Variance Detail
#### [Line Item 1]
- Variance: $X (Y%) — [Favorable/Unfavorable]
- Root cause: [Explanation]
- One-time / Recurring: [Assessment]
- Action: [Recommendation]

### Forecast Impact
[Updated forecast based on variance trends]

### Recommendations
| # | Action | Owner | Impact | Priority |

Quality Checklist

• All material variances are investigated with root causes
• Timing vs. permanent variances are distinguished
• Variance decomposition covers volume, price, mix, and timing
• Forecast is updated based on variance findings
• Corrective actions have owners and deadlines
• Report is consistent with prior period reports

Edge Cases

• First period (no history): Compare to budget only; set baselines for future comparison
• One-time items dominate: Separate recurring from non-recurring; show both views
• Multi-currency: Isolate FX impact from operational variance
• Revenue recognition changes: Distinguish accounting changes from business changes