Download Material Variance Explanation Form Preparation Guide and more Lecture notes Finance in PDF only on Docsity!
Prepared by Department of Finance, Fiscal Systems and Consulting Unit 10/22/
Material Variance Explanation Form
Purpose
The Material Variance Explanation Form identifies and provides an explanation for material variances between prior year and current year expenditures, revenue, and transfer in/out balances. The Material Variance Explanation Form is required for all funds.
Reference Documents
Pre-Closing Trial Balance, Report No. 7 from the prior year (PY).
Pre-Closing Trial Balance, Report No. 7 from the current year (CY).
Analysis of Change in Fund Balance, Report No. 9 for Fiduciary Funds Outside the Centralized Treasury System from the prior year.
Analysis of Change in Fund Balance, Report No. 9 for Fiduciary Funds Outside the Centralized Treasury System from the current year.
SAM section 7981
Finance Year-End Training – Presentation - Session 2, Material Variance Explanation Form
Chart of Accounts Crosswalk of Accounts to Legacy Accounts – Department Use (Finance, FI$Cal Resources for Accounting web page)
State Controller’s Office (SCO)Year-End Financial Reports Procedure Manual (Budgetary/Legal)
Year-End Reporting Checklist
How to Prepare
The Material Variance Explanation Form is available on the SCO website:
- The Material Variance Explanation Form is available at the SCO website: https://www.sco.ca.gov/ard_reporting.html
- Enter the Fund Number, Agency Code, Contact Name, and Contact email.
Prepared by Department of Finance, Fiscal Systems and Consulting Unit 10/22/
How to Prepare (continued)
- Use the Prior Year (PY) Report No. 7 to fill in the PY Expenditure Legacy Uniform Codes Manual (UCM) general ledger account (GL) 9000, PY Revenue GL 8000, Prior Year Transfer In GL 9811, and PY Transfer Out GL 9812.
- Use the Current Year (CY) Report 7 to fill in CY Expenditures GL 9000, CY Revenue GL 8000, CY Transfer In GL 9811, and CY Transfer Out GL 9812.
- The form will automatically calculate the variance amount and variance percentage.
- Based on the calculation, a message will appear to identifying whether the variance is material and whether it requires an explanation. An explanation is required if a variance amount equals or exceeds $1 million AND the variance percentage equals or exceeds 10%. When either CY or PY balance is zero, variance percentage is inapplicable, and no explanation is needed.
Important Notes/Tips
Use the PY and CY Report No. 9’s to fill in the PY and CY amounts for the Fiduciary Funds outside the Centralized Treasury System.
If a variance explanation is required, provide a detailed explanation for the applicable nominal account type(s).
Submit this form to the SCO with the fund’s year-end financial reports, even if all amounts are zero.
If a fund has multiple sub-funds, agencies are required to submit only one Material Variance Explanation Form at the main fund level, not per sub-fund.
Prepared by Department of Finance, Fiscal Systems and Consulting Unit 10/22/
For illustration purposes, attached is a sample of Report No.7 - Current Year.
Current Year’s Report No. 7
Prepared by Department of Finance, Fiscal Systems and Consulting Unit 10/22/
For illustration purposes, attached is a sample of the Material Variance Explanation Form.
