Imagine you are a financial analyst tasked with conducting a variance analysis for your company. What steps would you take to identify and investigate significant discrepancies between budgeted and actual financial results? '

• My company the only expense or overhead is personal salary - that is the major projector of our finances thus I am not going to specifically just focus on my company as it would not be a good example.
• A variance analysis for the company, I would take the following steps to identify and investigate the discrepancies between budged and actual financial results. The first step I would take was to review the original budget, forecast and all the assumptions under which the original budget was created. Then review the actual budget i.e. where the financial status is currently, and then do comparison between the original and actual. Then ensure that the data submitted was accurate and without error (i.e., reviewing how the data was put together and ensure that there is no errors in the thought process). Review the significant differences and especially focusing on key factors that were important for overall performance. Then I would figure out why this was occurring (root cause) and what steps can be taken to ensure it does not happen in the future.

How do external factors, such as changes in market conditions or regulatory requirements, influence the accuracy of budgeted financial projections? What measures can organizations take to mitigate the impact of external factors on budget performance?

• First, is to develop contingency plans for the different potential changes in either regulatory requirements, overall market, and other situations based off previously years. Although it is impossible to plan for each situation, we can reflect on the company past, what changes have caused mis aligned in the past, what changes did we make to adjust for these? Do we have anything that we know is upcoming that we need to avoid? I.e., do we know of major changes in the market or economy that could cause major overall changes in financials, such as, would an election cause a change. Second, is risks, in project management my entire job is to figure out how to set up ways to navigate risk, how do you build a buffer into the budget, and how do you think ahead of things that could potentially lead you astray. For example, no one could have predicted COVID-19, but companies that had risk mitigation in place were able to pivot and ensure they stayed successful. What categories can a company develop based on their position in the market and overall product, in best figuring what potential risks could occur. I think here mainly of car companies, they have simple things that could be easily thought ahead, such as shortage of supplies, shipping issues, and too low or high of demand, what plans can they make ahead of time for each of these scenarios that way they aren't always left scrambling. Lastly, I would ensure that there is a flexible budget, you can't always plan for BEST case, you need a to consider WORST case, and meet somewhere in the middle.

Discuss the role of management accounting techniques, such as flexible budgeting and variance analysis, in facilitating better decision-making and performance evaluation within an organization. Provide examples to support your arguments.

• I think management is key in keeping on target with the financial plan, the best point of success is ensuring that each department is tracking the plan and it has been communicated on down. My current comapny, we lost a big contract suddenly even though it was committed by the government for several years, instead of just cutting jobs, across our sector, our management instead cut back on other expenses. Such as SPOT bonus', travel, training, hiring new people, and even allowed us to cut dead weight (personal that was not performing with little to no justification). This allowed them to compensate for the lost of the contract without essentially cutting out good people and still allowed them to get work down. This in my head is flexible budging. You project, and plan but know ways to cut without impacting your overall comapny.

Reflecting on your own experiences, can you share any instances where an organization effectively managed to align actual financial performance with budgeted expectations? What strategies or practices contributed to their success?

• I am going to be honest and say that all the companies I have worked for have not either been good at financial management and/or I am not involved because it is above my pay grade. First, the military and I could not even begin to tell you the finances involved there. Second, the start up, they had horrible financial performance as a result of them spending too much money on research and development and never producing a single product because the CEO could never pick a swim lane. Thus, over time the comapny never made money and eventually went under. They were continuously raising money, spending money, and never producing a product. They had a good product, with solid projects, but could never get the science off the ground and thus tanked. My current company, all of the finance is dependent on salaries and I do not high enough to really know what happens with the finances.

How can I reply to this and keep the conversation going. Im still confused from the reading on variances and budgeting.