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Report title: XYZ Agency Variance report 2013-2014
Introduction:
The XYZ Agency, a local government agency provides a variety of services for the community. I am the new finance manager and budgeting administrator. My task is to get familiar with the agency’s budget and programs. This report aims to analyze, examine, and propose the agency’s budget for the next five years, starting with the year 2013-2014. This report will discuss the problematic areas of the agency and focus on variances from both revenue and spending. It will include the table with the result of all variances, and two recommendations for policy action in each area.
Criteria 1: Variance Analysis
Table 1: Analysis of Revenue Variance 2013-2014
| Revenue | Budgeted Sum | Actual amount | Variance |
|---|---|---|---|
| Revenue from taxes | $5,000,000 | $4,800,000 | $200,000 |
| Grants | $1,500,000 | $1,600,000 | $100,000 |
| Charges | $500,000 | $450,000 | $50,000 |
| Total Revenue | $7,000,000 | $6,850,000 | $150,000 |
Table 2: Analysis of Expenditure Variance 2013-2014
| Expenditure | Budgeted Sum | Actual amount | Variance |
|---|---|---|---|
| Salaries | $2,500,000 | $2,600,000 | $100,000 |
| Benefits | $500,000 | $550,000 | $50,000 |
| All Supplies | $1,000,000 | $1,100,000 | $100,000 |
| Let me know if you are interested in renting | $500,000 | $450,000 | $50,000 |
| Total Expenditure | $4,500,000 | $4,700,000 | $200,000 |
As you can see, there’s a $150,000 negative variance in revenue and $200,000 positive variance in expenditure. This indicates that agency’s revenue performance has been below average and its expenditure performance has been above average.
Criteria 2: Policy Recommendations and Problematic Areas
Problematic Area 1 is Tax Revenue
- A negative variance of $200,000. The tax revenue has been a problem for the agency.
- Policy Recommendation 1. Implement aggressive tax collection campaigns to raise revenue. It can be accomplished by reminding taxpayers, visiting taxpayers at their doors, or increasing the penalties for noncompliance.
- Policy Recommendation 2: Increase the number of businesses operating within the agency’s jurisdiction. By offering incentives and streamlining procedures for opening businesses, this can help to increase the number of companies that set up shop within the agency’s jurisdiction.
Problematic area 2: Expenditure
- This positive variance is due to the fact that the agency outperformed its expenditures, which has resulted in an increase of $200,000.
- Policy Recommendation 1. Reduce expenditures by implementing cost-cutting measures. You can do this by cutting back on employees and reducing supplies.
- Policy Recommendation 2, Increase revenue to match expenses. You can do this by following the above policy recommendations to increase tax revenue, and finding other sources such as fees and grants.
Conclusion:
The XYZ Agency is underperforming in terms revenue, but has outperformed when it comes to expenditure.
