Localized reading guide
variance-analysisPurpose, usage and source
Decompose financial variances into drivers with narrative explanations and waterfall analysis. Use when analyzing budget vs. actual, period-over-period changes, revenue or expense variances, or preparing variance commentary for leadership.
Source retrieved:
- Source repository
- anthropics/knowledge-work-plugins
- SKILL.md
finance/skills/variance-analysis/SKILL.md- Repository stars
- 34,049
- Repository updated
- 2026-10-30
- Categories
- Business
- Last collected
License: License file needs review
Workflow excerpts are reading aids, not executable instructions from Codez. No third-party Skill was run to produce this page.
The purpose and workflow passages below are upstream material, organized and translated for reading. They are distinct from the separately labeled Codez editorial analysis.
What this Skill does
Decompose financial variances into drivers with narrative explanations and waterfall analysis. Use when analyzing budget vs. actual, period-over-period changes, revenue or expense variances, or preparing variance commentary for leadership.
How the upstream workflow works
When to Use Each Comparison
Actual vs Budget: Annual performance measurement, compensation decisions, board reporting. Budget is set at the beginning of the year and typically not changed. Actual vs Forecast: Operational management, identifying emerging issues. Forecast is updated periodically (monthly or quarterly) to reflect current expectations. Forecast vs Budget: Understanding how expectations have changed since planning. Useful for identifying planning accuracy issues. Actual vs Prior Period: Trend analysis, sequential performance. Useful when budget is not meaningful (new business lines, post-acquisition).
Upstream passage · L233 ↗Price / Volume Decomposition
The most fundamental variance decomposition. Used for revenue, cost of goods, and any metric that can be expressed as Price x Volume. Three-way decomposition (separating mix):
Upstream passage · L15 ↗Total Variance = Actual - Budget (or Prior)
Volume Effect = (Actual Volume - Budget Volume) x Budget Price
Price Effect = (Actual Price - Budget Price) x Actual Volume
Mix Effect = Residual (interaction term), or allocated proportionally
Verification: Volume Effect + Price Effect = Total Variance
(when mix is embedded in the price/volume terms)Requirements and setup
No short requirements passage was selected from this file. This does not mean the Skill has no dependencies. Check the repository setup instructions and referenced files.
Limits and quality checks
Narrative Quality Checklist
Good variance narratives should be: [ ] Specific: Names the actual driver, not just "higher than expected"
Upstream passage · L141 ↗Variance Analysis
Important: This skill assists with variance analysis workflows but does not provide financial advice. All analyses should be reviewed by qualified financial professionals before use in reporting. Techniques for decomposing variances, materiality thresholds, narrative generation, waterfall chart methodology, and budget vs actual vs forecast comparisons.
Upstream passage · L7 ↗Start with a safe trial
- Check the supported host and the repository installation instructions. Keep the Skill directory and its referenced scripts, assets and documentation together; SKILL.md alone may omit dependencies.
- Give the agent your real input, desired output and acceptance criteria. Invocation syntax and available tools depend on the host; this site does not assume a universal install command.
- Try the source workflow in a disposable project or on a copy. Review operations that change files, remote services or billable resources before allowing them.
- Validate the output against the source quality checks and your own requirements. A successful trigger or a high repository Star count does not establish a correct result.
Read further in the source
- Variance Analysis
- Price / Volume Decomposition
- Rate / Mix Decomposition
- Headcount / Compensation Decomposition
- Spend Category Decomposition
- Setting Thresholds
- Recommended Threshold Framework
- Investigation Priority
- Narrative Quality Checklist
- Common Narrative Anti-Patterns to Avoid
- Concept
- Text-Based Waterfall Format
- Bridge Reconciliation Table
- Waterfall Best Practices
- When to Use Each Comparison
- Forecast Accuracy Analysis
- Variance Trending
Related Skills
Translation and scope
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- Source retrieved
- Source commit
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467db7de3fb118550d013409254e2d4a9f87385a661e154655bf3431919b0ba1