The purpose of this ASOP is to assist Reporting Auxiliary and Service Centers (RASCs) in understanding the requirements of the Quarterly Variance Analysis process. Each quarter, the financial statements of every RASC are reviewed by the Auxiliary Senior Executive Team (ASET). The ASET team is comprised of representative senior administrators from each campus. The Quarterly Variance Analysis is a tool that is used to explain significant variances in the financial statements of each organization reviewed by the ASET committee. It is also used as a tool to explain any variances that impact the university financial statements, which are presented quarterly to the Board of Trustees. The Quarterly Variance Analysis is reviewed by Auxiliary Accounting. After the review and any subsequent follow-up concerns are cleared, Auxiliary Accounting uses the Quarterly Variance Analysis responses to update the ASET committee.

After the close of each fiscal quarter, it is mandatory that RASCs complete the Quarterly Variance Analysis in order to meet financial reporting requirements.

I.   General Timing of the Quarterly Variance Analysis
All RASCs are required to complete and submit the Quarterly Variance Analysis (and required supporting documentation) to their auxiliary consultant by the last day of the month after the fiscal quarter close (Oct. 31, Jan. 31, Apr. 30, July 31)(NOTE: In addition, Bloomington and IUPUI organizations should also send a copy to their campus administrator.)

A reminder will be sent to each organization at the end of each quarter with pertinent instructions, including the deadline for submitting the appropriate data and reports. The Quarterly Variance Analysis Template will be posted on the FMS website in the Auxiliary Accounting section for the organization’s access.

II.   Required Documentation to submit to Auxiliary Accounting

Two types of documents must be submitted:

1. Quarterly Variance Analysis, and


2. Appropriate Financial Statement Reports – in order to complete the
   Quarterly Variance Analysis, specific financial statements must be run. The necessary financial statements are:

1. Income Statement - Comparison to Budget and Prior Year - Object Level Detail – This report will be used for all Income Statement questions/analysis. It will also be used to calculate the amount of materiality.
2. Income Statement - Comparison to Budget and Prior Year - Object Code Detail – Refer to this report to assist in explaining income statement variances. 
3. Balance Sheet – Comparison to Prior Year report, which presents the balance sheet with balances for each object code. One requirement of the Quarterly Variance Analysis is an explanation as to why some object code balances have not changed from the prior year. Note that all negative balances must be explained.       
4. Balance Sheet – Executive Summary report, which presents the balance sheet at object level. Another requirement of the Quarterly Variance Analysis is providing an explanation for all object LEVEL variances to prior year that meet the materiality threshold.  

Please note that all RASCs are required to submit financial statements to Auxiliary Accounting even if there are no variances above the calculated materiality level. In such cases, the financial statements should be sent to the appropriate auxiliary consultant informing them that there are no variances that meet the reporting criteria.

Once the variance spreadsheet is completed, send it along with the four financial statement reports (Income Statement – Comparison to Budget and Prior Year – Object Level Detail, Income Statement – Comparison to Budget and Prior Year – Object Code Detail, Balance Sheet – Comparison to Prior Year, and Balance Sheet Executive Summary), in Microsoft Word format, to the appropriate auxiliary consultant.

In order to assist the RASCs with these requirements, a detailed document is posted to the Auxiliary Accounting website that provides step-by-step instructions on completion of the Quarterly Variance Analysis. Should the RASC have questions when completing the Quarterly Variance Analysis, please refer to this document. If there are still questions after reviewing the document, please contact the appropriate auxiliary consultant.

III.  Appropriate Variance Explanations

The explanation of variances should be as detailed as possible. Appropriate explanations will provide details of WHY the variance occurred.

• If the variance is mainly related to a transaction(s), then please indicate the relevant amount(s), and / or other details specific to the transaction.
• If the variance is related to a change in business conditions/operations, then please note the change and quantify the effect, if possible.
• If the variance was due to an accounting error, please provide as much detail possible for the related transactions.

If explanations are not sufficient, the RASC will receive follow-up questions from the consultant.

Examples of Appropriate Explanations –

1) Accounts Receivable

Actual	Prior Year	Variance
$400,000	$325,000	$75,000

Explanation – In the fiscal year, we began doing business with ABC company. On 06/30, this company had a $63,500 Invoice outstanding.

2) Accounts Payable

Actual	Prior Year	Variance
$250,000	$500,000	($250,000)

Explanation – We purchased a $200,000 machine in May FY06, the invoice for which was not paid until FY07.

3) Sales & Services

Actual	Budget	Variance
$50,000	$40,000	$10,000

Explanation – Increase in occupancy across campus in room & board. Increase in meal plan rates.

4) Supplies & Expenses

Actual	Budget	Variance
$2,500,000	$3,000,000	($500,000)

Explanation – Received unexpected discounts of 15% on supplies purchased for X program.