Structure for Each Variance Narrative (+2)

Structure for Each Variance Narrative

[Line Item]: [Favorable/Unfavorable] variance of $[amount] ([percentage]%)
vs [comparison basis] for [period]

Driver: [Primary driver description]
[2-3 sentences explaining the business reason for the variance, with specific
quantification of contributing factors]

Outlook: [One-time / Expected to continue / Improving / Deteriorating]
Action: [None required / Monitor / Investigate further / Update forecast]

Narrative Quality Checklist

Good variance narratives should be:

• Specific: Names the actual driver, not just "higher than expected"
• Quantified: Includes dollar and percentage impact of each driver
• Causal: Explains WHY it happened, not just WHAT happened
• Forward-looking: States whether the variance is expected to continue
• Actionable: Identifies any required follow-up or decision
• Concise: 2-4 sentences, not a paragraph of filler

Common Narrative Anti-Patterns to Avoid

• "Revenue was higher than budget due to higher revenue" (circular — no actual explanation)
• "Expenses were elevated this period" (vague — which expenses? why?)
• "Timing" without specifying what was early/late and when it will normalize
• "One-time" without explaining what the item was
• "Various small items" for a material variance (must decompose further)
• Focusing only on the largest driver and ignoring offsetting items