No matter how careful you were in planning your budget, you should expect discrepancies or variances. We can’t predict everything that is likely to happen—particularly in today’s environment of rapid change. Some differences can be ignored if they will correct themselves the following month, but other discrepancies or variances, no matter how small, need to be understood. A difference that seems small in your mind and to your unit could be crucial to the whole organization, especially if other departments are not meeting their budgets. By assessing why discrepancies have occurred, you may be able to reduce their recurrence as well as provide insights to help the rest of your organization.
The control cycle is monthly and begins when you get your hands on spreadsheets that reflect your expenditures and any income received. That spreadsheet covers actual results. It not only alerts you to variances between your budget and your actual experiences but also guides you in taking corrective action if necessary. If no remedial action is possible, then to get back on budget, you will be expected to redo the budget for the remainder of the budgeting period in light of current information.