What is the purpose of variance reports in ICMR?

• A. To gauge employee satisfaction
• B. To analyze differences between expected and actual outcomes
• C. To summarize budget planning
• D. To provide a historical overview of transactions

Answer: (B)

The purpose of variance reports in the context of Intercompany Matching and Reconciliation (ICMR) is to analyze differences between expected and actual outcomes. Variance reports help organizations identify discrepancies in financial records, allowing for a clearer understanding of how actual financial transactions deviate from planned or expected projections. This analysis is crucial in ensuring that intercompany transactions are accurately recorded and reconciled, maintaining the integrity of financial reporting within an organization.

By highlighting these differences, variance reports enable companies to investigate the causes of discrepancies, leading to improved accounting practices and enhanced overall financial accuracy. This process is essential for effective decision-making and financial governance within organizations that operate in a multi-entity structure, where accurate intercompany accounting is particularly vital.