Field notes · Firm management
Before interpreting a WIP variance, ask three questions
A budget comparison is a useful signal. It becomes a working explanation when the team can show what sits behind the number.
The short answer
Before interpreting a WIP variance, check whether the recorded time is complete, which position rates were applied and whether the work changed after the budget was set. A calculated variance describes a comparison. It does not, on its own, establish a billed margin or a cash loss.
Use one calculation, then ask what it means
In the sample shown on the Tax Workflow page, WIP is $2,690 against a $2,500 budget: a $190 difference, or 7.6% of the budget. These are illustrative figures. They show the comparison without claiming a measured result for a firm.
The next step is to explain the inputs. A complete time record and the rate by position are important for reproducing the number. A reviewer should be able to see the comparison without guessing which version of the budget was used.
Three questions for the engagement owner
These questions are an internal analysis method, not an accounting recognition policy. They help the owner discuss the work with the team and decide what needs clarification.
Is the time record complete?
Check the relevant dates, missing entries and whether the recorded work belongs to this engagement.
Are the rates and budget comparable?
Identify the position rates and budget version rather than mixing amounts prepared on different bases.
Did the work change?
Record additional requests, missing inputs or changes in the engagement before concluding on the variance.
Turn the signal into a decision
An explanation may lead to a better handoff, a revised staffing plan or a discussion about the next engagement. Keep the decision separate from the calculated figure so that a later reader knows what was observed and what was decided.
Tax Workflow connects recorded time, position rates and the budget comparison. The WIP guide develops the broader method and the glossary clarifies the term. Use the actual engagement record before making a billing or management decision.
Common questions
Does a positive variance automatically mean a cash loss?
No. The comparison needs context, including recorded work, the budget and billing decisions.
Are the $2,690 and $2,500 figures real firm results?
No. They are the sample figures used to explain the product workflow.
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