Financial consolidation is the process of combining financial data from several departments or business entities within an organization, usually for reporting purposes.
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To consolidate is to join things together. In finance, the process includes importing data, mapping general ledgers to a single chart of accounts, normalizing the consolidated data and producing reports called consolidated financial statements. How often the finance department performs financial consolidation varies from company to company, often hinging on regulatory requirements.
Depending on the complexity of the process and the company's preference, finance managers can use Microsoft Excel spreadsheets, modules in corporate performance management or enterprise resource planning software suites, or specialty software for financial consolidation. Many experts advise against using Excel for the consolidation because spreadsheets don't facilitate collaboration, which in turn, can lead to a high probability of errors.
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