A variance report compares actual financial results to budgeted amounts, identifying differences (variances) that require explanation or action. Positive variances (revenues exceeding budget or expenses below budget) and negative variances (the opposite) are analyzed to understand causes. Variance analysis distinguishes between timing differences (spending will occur later), volume differences (more or less activity than planned), and rate differences (costs per unit differing from budget). Regular variance reporting keeps council and management informed about financial performance. Significant variances trigger investigation and possible corrective action. Year-end variance analysis informs future budgeting. Variance reports are fundamental financial management tools, connecting budgets to actual operations and enabling informed decision-making about adjustments needed during the fiscal year.