| | | | | to departments as email attachments |
| STEPS INVOLVED IN REPORTING AND | | | | 4. Distribution: Provide high-level |
| MANAGING OF CONTROLLABLE EXPENSES: | | | | commentary in the email body, for example, "Attached |
| | | | | is the updated Controllable Expenses by Department |
| 1. Identify resource: Generally, a financial | | | | report including May actual. Overall controllable |
| analyst or a senior accountant's responsibilities will | | | | expenses for May were around $116,000 which |
| include this function. Corporate finance and accounting | | | | was $24,000 above the May budget amount. |
| departments are structured differently in different | | | | Bringing the year to date controllable expenses to |
| companies; however, this responsibility should fall under | | | | $1,141,000, $176,000 below the total year budget. The |
| someone who is familiar with both actual and | | | | Full Year Budget column in the report illustrates the full |
| budgeted numbers in the company and who works | | | | year budget amounts by category. The second tab |
| well with other department managers. This person will | | | | breaks out headcount by department. This |
| also have access to GL reporting system (such as | | | | headcount information reflects the employee status on |
| PeopleSoft, essbase or FRX from Epicor, etc.) and | | | | the last day of the month and will not include any |
| should have reasonable amount of expertise in | | | | changes since that date. Please take a few |
| spreadsheet (Excel). | | | | moments to review your department totals to ensure |
| 2. Identification: Identify the controllable | | | | accuracy." |
| expenses by Income Statement categories. Below is a | | | | 5. Importance: There are various kinds of |
| list of most common controllable expenses in a | | | | departmental reports companies are using but a |
| company; however, this is not an all-inclusive list and will | | | | controllable expense report identify the most common |
| vary from company to companya. | | | | expenses in a company that are not essential |
| Education/training expensesb. Consulting | | | | spending for operational continuity. This report illustrates |
| professional feesc. Seminars/trade shows | | | | where you are in comparison with the budget every |
| marketingd. Dues/subscriptione. HR | | | | month and where you can save some extra money if |
| expensesf. Travel & | | | | necessary. Controllable expense report doesn't |
| entertainmentg. Temp Expensesh. | | | | necessarily include all operating expenses or |
| And a column for total controllable expenses | | | | overheads in your company. These are the expense |
| 3. Creation of the report: Use Excel or a | | | | which you and your managers can actually control |
| similar spreadsheet (whichever one used in your | | | | without affecting business flow and activities and |
| company) to create worksheet to show the expenses | | | | overall profitability. Identification of controllable expense |
| horizontally (column headings). Create a line for each | | | | is critical and should be done through discussions with |
| department and you can even roll them up to a | | | | departmental heads. |
| functional total. After the month-end close, gather the | | | | A great report or analysis has zero value if it's not |
| actual for each category and each department from | | | | read by the audience. Ensure that your managers take |
| your financial system and compare them with budget | | | | this report seriously and check with them regarding the |
| for each line. Show variances in both $ and in % as | | | | variances. Know the exact reasons for variances. |
| deviation from budget. Create a similar comparison for | | | | Some variances are timing shift of expenses and |
| YTD (Year-To-Date) by including Jan-current month | | | | hence are temporary, but some other variances are |
| (assuming fiscal year starts from January). If possible, | | | | permanent. Knowing whether a variance is timing shift |
| also add a headcount tab for each department that is | | | | or permanent is the first step of a meaningful variance |
| being reported on. Compare the numbers with | | | | analysis, regardless you are doing it for revenues or |
| month-end financials for accuracy before sending it out | | | | for expenses. |