What is an Exception Report?

An exception report is a document that states those instances in which actual performance deviated significantly from expectations, usually in a negative direction. It excludes all events in which actual performance was roughly as expected. The intent of this report is to focus management attention on just those areas requiring immediate action.

Examples of Exception Reports

Here are several examples of exception reports that an accounting department might issue:

Expense variances report. A report could point out those instances in which expenses were higher than the budget.
Production variances report. A report could note where production levels were lower than the production plan.
Customer complaints report. A report could identify those instances in which customer service personnel were unable to settle a customer’s complaint on the first contact.
Stock discrepancy report. A report could highlight mismatches between physical inventory counts and accounting records.
Unapproved timesheets report. A report could itemize all timesheets not approved within a pay period.

In all cases, these reports identify specific instances in which there are issues that management should correct.