How To Use The Budget To Actual Report

3/11/22

How to use the budget to actual report

The budget to actual report is a core financial report.  It helps to highlight financial trends that measure mission impact.  Overspent accounts invite a decision point - scale back spending or reallocate resources?  When an activity is generating mission driven results, increasing the plan (budget) permits that activity to continue.   

Budget to actual reports help create communication between leadership, the finance/business function, and the program/ministry leaders.  It creates a feedback loop that facilitates discussions about funding needs and shifting priorities. 

It’s not just overspending!  Underspending is another critical part of budget to actual reviews.  It communicates when a planned activity is not happening.  This view of the finances can advise leadership to dig deeper and understand what may be standing in the way of that mission objective. Maybe things have been pushed to the back burner and they need to be brought to the forefront or resourced to make them a reality.  

Lastly, the budget to actual report is an incredibly helpful fraud detection tool.

If the bank reconciliations are being done, then everything that's come out of the bank must be recorded as a debit in the accounting somewhere.  This could show up as overspending - an indicator of unauthorized expenses.

The rear-view mirror of finances is a critical guide to ensuring you arrive at the visionary destination.

Are you using the budget to actual report in your financial reporting package? Add it into your monthly reports and see how this can help fuel your mission.