Establish the evidence for a performance review
Check the measure and comparison period, then test possible causes against the business records.
Choose the comparison that answers the question
A budget comparison asks whether the unit delivered its plan. A prior-period comparison asks what changed. A comparison with another unit may help examine operating differences, but only if the activities and accounting treatment are comparable.
Before explaining a gap, confirm the period, activities, and organizational boundaries included in the measure. Transferred responsibilities and revised cost allocations can alter the reported result without changing the performance of the underlying activity. A different product mix can also change total margin even when the margin on each product is unchanged.
Reconcile the reports used in the review
Find the source and owner of each measure. Check adjustments and exclusions against the underlying records, and keep the versions used in the analysis. If two reports disagree, establish whether the difference comes from timing, definitions, or a correction.
A material difference that cannot be reconciled limits what the review can conclude. Describe that limit where it affects a finding, so it remains visible when the report is used later.
Test explanations against the pattern of the gap
Break the result into drivers the records can support. A commercial review may separate volume, price, mix, and cost. A service function may need demand, staffing, work mix, and completion measures instead.
An explanation has to account for when and where the gap arose. If managers attribute it to staffing, for example, compare the affected periods and activities with staffing records and workload. Interviews help identify explanations to test; they do not settle which one is supported.
Set a basis for reviewing the response
Each response option should state the operating change, resources, and dependencies it requires. Keep the evidence explaining the gap available alongside the recommendation, especially where several responses remain possible.
Agree measures the business can continue producing, record the starting position, and assign the next review. This remains a management assessment, without an audit opinion or assurance over financial statements.