Building better custom skills for Copilot in Excel

This repo accompanies a follow-up article to How to work with skills in Copilot for Excel.

The goal is deliberately small: test one realistic custom skill, then use the result to explain when a separate reference file is actually useful.

What's included

excel-copilot-custom-skill-deep-dive/
├── README.md
├── article-draft.md
├── sample-data/
│   └── copilot-excel-custom-skill-demo.xlsx
└── skills/
    └── variance-commentary/
        ├── SKILL.md
        └── references/
            └── materiality-rules.md

The example does not include assets/ or scripts/ just because the Agent Skills specification allows them. The point of the exercise is to add structure only when it solves a real problem.

Workbook scenario

The workbook contains a fictional July 2026 P&L for Northstar Software LLC with:

• Actual results
• Budget
• Prior month
• A few management notes
• Formula-driven subtotals and profit lines

Several rows are intentionally chosen to test the skill's rules. Some qualify on dollar variance, some qualify on percentage variance, and one sits exactly at the 10% materiality threshold.

Install the skill

1. In Copilot in Excel, open Settings > Manage skills > Custom skills.
2. Open the OneDrive skills folder.
3. Copy the entire variance-commentary folder from this repo into that skills folder.
4. Return to Excel and refresh the custom skills list.
5. Make sure variance-commentary is available.

Microsoft's current documentation for custom skills is here: https://support.microsoft.com/en-us/excel/copilot/copilot-in-excel-skills

Suggested test

Open sample-data/copilot-excel-custom-skill-demo.xlsx.

1. Optional baseline

Before invoking the skill, ask Copilot something broad such as:

Analyze the budget variances on the P&L Variance sheet and write commentary on the important items.

Save or screenshot the result.

2. Run the custom skill

Then ask:

Run @variance-commentary on the P&L Variance sheet.

Save or screenshot the result again.

3. Compare

Look for these behaviors:

• Did Copilot apply either the $10,000 or 10% threshold?
• Did a line exactly at 10% count as material?
• Did it distinguish favorable revenue and expense variances correctly?
• Did it use management notes when they existed?
• Did it avoid inventing causes when no note was supplied?
• Did it avoid double-counting subtotals as separate drivers?
• Did it leave the source P&L intact?
• Did it create auditable formulas where practical?

Useful check values

These are a few numbers you can use to verify the result manually:

Line item	Dollar variance	Percentage variance	Expected treatment
Subscription Revenue	+$25,000	+5.6%	Material by dollars, favorable
Services Revenue	-$13,000	-10.4%	Material by both, unfavorable
Professional Services Delivery	-$6,000	-10.3%	Material by percentage, favorable
Sales & Marketing	+$17,000	+20.0%	Material by both, unfavorable
Travel & Events	+$9,000	+75.0%	Material by percentage, unfavorable
Professional Fees	+$14,500	+58.0%	Material by both, unfavorable
Other G&A	-$2,000	-10.0%	Exactly at threshold, favorable
Operating Income	-$32,500	N/M	Overall result versus budget

Why the reference file exists

The main SKILL.md contains the repeatable workflow. The separate references/materiality-rules.md contains the more detailed thresholds, favorability logic, and commentary rules.

You could put all of this in SKILL.md. For a small skill, that may be the better choice. The separate reference file is useful here because it gives us something concrete to test: whether detailed supporting rules can live outside the main procedure without turning the skill into one long instruction file.

The broader Agent Skills specification describes references/ as supporting documentation that can be loaded when needed. It also describes scripts/ and assets/ as optional directories: https://agentskills.io/specification

For Excel specifically, Microsoft notes that scripts inside a skill do not introduce a new code-execution mechanism. They remain resources available through tools Copilot in Excel is already authorized to use: https://support.microsoft.com/en-us/excel/copilot/frequently-asked-questions-about-copilot-in-excel

Product-version note

This example reflects the Copilot in Excel skills documentation available in August 2026. Copilot features and UI can change quickly, so check Microsoft's current documentation if the steps no longer match what you see.