Variance
Definition
The difference between an actual result and the reference figure for the same period, expressed in absolute terms and as a percentage of the reference figure. Variances may be favourable or adverse. Revenue variance is favourable when actual exceeds plan; cost variance is favourable when actual is below plan. Every material variance must be explained in the management accounts with a written statement of cause.
Common Misapplication
The most common misapplication is reporting variance only as a percentage without the absolute amount. A ten percent variance on a ten thousand pound expense line is not management significant; a ten percent variance on a one million pound payroll line is. Both the absolute amount and the percentage are required.
FFI Standard Reference
This term is defined and applied in Book 1, Section 1.3: The Financial Reporting Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Variance. https://ffistandard.org/glossary/variance/. 2026.