Lab 04 · Budget Variance Briefing

Rohit Bansal manages the admin cost center at Helix BioLabs Pvt Ltd, a fictional diagnostics company. It is the first week of the new quarter, finance has circulated the budget-vs-actuals workbook, and Rohit owes his director a variance briefing by tomorrow: what moved, why, and what he proposes to do about it. The sheet looks almost fine at first glance — the bottom line is only slightly over. That is exactly the problem. Small net variances are where big offsetting problems hide, and this sheet has been massaged: one overspend has been partially buried in a catch-all category, and the workbook itself contains arithmetic that does not survive checking. AI will draft excellent variance commentary — on whatever numbers you give it. The numbers are your job.

You will need

• A spreadsheetExcel or Google Sheets, with the data below pasted in.
• A chat AIChatGPT, Claude, or Gemini; Copilot in Excel / Gemini in Sheets if you have them.
• Timeabout 60 minutes.

The workbook

Quarterly figures for the admin cost center, in rupees. Paste into your spreadsheet as-is.

category,budget_q,actual_q,variance_stated,notes
Salaries & contract staff,1850000,1848000,-2000,
Office rent & maintenance,720000,720000,0,
Travel - domestic,240000,318000,78000,Two unplanned site visits
Travel - international,150000,62000,-88000,Vendor audit trip deferred
Office supplies,95000,91000,-4000,
IT & software subscriptions,310000,342000,32000,3 new tool licenses
Utilities,180000,174000,-6000,
Courier & postage,45000,52000,-7000,Festive season volume
Staff welfare & events,120000,119000,-1000,
Miscellaneous & contingency,80000,164000,84000,Reallocated items - see below
TOTAL,3790000,3890000,100000,

The reallocation note that came with the sheet:

NOTE FROM PREVIOUS COORDINATOR (handover email, edited):
- The offsite in Feb ran over, so I moved Rs 38,000 of travel bills
  (hotel + cabs for the extra day) into Miscellaneous to keep the
  Travel-domestic line from looking too bad. Finance said informally
  this was OK as a one-time thing.
- Also parked the Rs 30,000 team offsite dinner overage under
  Miscellaneous instead of Staff welfare.
- Rest of Miscellaneous is genuine contingency spend (printer
  replacement Rs 16,000).
- Btw the international travel saving is timing, not saving - the
  vendor audit trip moved to next quarter, so that Rs 88,000 will
  come back.

Company policy excerpt, for reference:

FINANCE POLICY 4.2 (excerpt): Expenses must be booked to the category
of their economic nature. Reallocation between categories to manage
line-level variance optics is not permitted. Contingency may be used
only for unbudgeted, unforeseeable items approved by the cost-center
head. Variance commentary is required for any line deviating more
than 10 percent or Rs 50,000, whichever is lower.

Steps

1. 1.

   Rebuild the arithmetic before reading anyone's notes. In your spreadsheet, compute your own variance column (actual − budget) and your own totals row. Compare against the variance_stated column and the given TOTAL line, cell by cell. Anything that does not match goes into a discrepancies list. Do this by hand or with formulas — not with the chat AI — because this is the ground truth everything else stands on.

2. 2.

   Check the sign convention. Decide and write down your convention (this lab uses: positive = overspend). Now scan variance_stated for entries that contradict it. A variance table where some lines use "negative = over" and others use "negative = under" is worse than no table — it lets every reader see what they hope to see.

3. 3.

   Unwind the reallocations. Using the handover note, restate the true category actuals: move the buried amounts back where policy 4.2 says they belong. Build a second table — "as reported" vs "restated" — in your spreadsheet. Now compute restated variances. Watch what happens to Travel-domestic and Staff welfare, and what Miscellaneous looks like once only genuine contingency remains.

4. 4.

   Ask the AI to pressure-test your restatement. Paste the original sheet, the handover note, the policy excerpt, and your restated table: "Check my restatement against the note and the policy. Did I move the right amounts? Does my restated total still equal the reported total? Which lines now breach the policy 4.2 commentary threshold? Flag anything in the note that itself violates policy." The restated total must equal the reported total — reallocation moves money between lines, never in or out. If yours doesn't, find the leak before continuing.

5. 5.

   Separate real variance from timing. Go line by line and tag each material variance: structural (spend pattern changed), one-time (event, won't recur), or timing (will reverse next quarter). The handover note hands you one explicit timing item — think through what it does to next quarter's outlook, because a briefing that celebrates a "saving" that is actually a deferral gets its author remembered for the wrong reasons.

6. 6.

   Have the AI draft the commentary — against your restated numbers only. Prompt: "Draft variance commentary for a director-level briefing memo. Use ONLY this restated table and these tags [paste both]. For each material line: what happened, why, structural/one-time/timing, and proposed action. Direct, non-defensive tone. Do not soften the reallocation finding — state it factually with the policy reference." Review every sentence against your table — the AI must not have reintroduced the reported (massaged) numbers anywhere.

7. 7.

   Write the "so what" yourself. The memo's closing section is judgment, not description, so draft it before asking AI to polish: the true run-rate position of the cost center, the next-quarter outlook including the returning deferred spend, the process issue (reallocations against policy) and your proposed fix, and 2–3 specific asks. Then let the AI tighten the prose — "edit for concision, keep every number and commitment exactly as written".

8. 8.

   Assemble and final-check the memo. Structure: three-sentence summary up top (true position, biggest driver, main ask), restated variance table, line commentary, outlook, so-what, and an appendix noting the restatement with the policy citation. Final pass: every number traced to your spreadsheet, sign convention stated once and followed throughout, and nothing in the memo that you could not defend line-by-line in a meeting with finance.

Verify your work

• •
  Your own variance column and totals, with every mismatch against the reported sheet listed.
• •
  A consistent sign convention, stated in the memo, with any source-sheet violations identified.
• •
  An "as reported vs restated" table where restated totals equal reported totals exactly.
• •
  Every material variance tagged structural / one-time / timing, with the timing reversal reflected in the outlook.
• •
  Commentary that uses restated numbers only and names the policy breach factually.
• •
  A memo a director could act on: summary first, asks explicit, restatement disclosed.