A budget variance is the difference between budgeted amounts and actual results—either revenues or expenditures that came in higher or lower than planned. Variance analysis is a key financial management tool: favourable variances (higher revenues or lower expenses than budgeted) are typically good news, while unfavourable variances may signal problems. Regular variance reporting throughout the year allows managers and council to identify issues early and take corrective action. At year-end, variance analysis explains why actual results differed from the budget, providing insights for future budget planning and accountability for financial management.