Find the variances for both the revenue and expenditures sides and then discuss two to three problematic areas for the agency. Provide the results of the variances in a table.

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.