Question

What is the relationship between variance analysis reports and system integrity?

Answer #1

Variance analysis is the quantitative investigation of the difference between actual and planned behavior. This analysis is used to maintain control over a business.

System integrity is state of a system where it is performing its intended functions without being degraded or impaired by changes or disruptions in its internal or external environments.

To ensure costing system integrity, you need adequate and
effective controls in place to ensure the quality of any data
gathered and recorded in the system so that any information
extracted from the system for variance analysis purposes is
accurate and complete.

If not, then any analysis carried out will be inaccurate and
unreliable. If used, inaccurate decisions could be made by those
relying on the information produced by the analysis carried,
therefore undermining the performance of the organisation as a
whole.

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