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Excel is highly addictive. It’s easy, it’s familiar, and it works…up to a point. However, using spreadsheets for complex processes like financial close and consolidation leads to all manner of problems—it’s time consuming, difficult to audit, and doesn’t provide the real-time reporting CFOs and other stakeholders need to make timely decisions about the business.

We could write a dissertation on each one of these issues, but for now let’s focus on one of the most grievous: spreadsheets are highly error-prone.

Deloitte defines close and consolidation as “the process that corporations use on a monthly or quarterly basis to reconcile, translate, eliminate, consolidate, and report financial information.” Growing companies that rely on spreadsheets to accomplish these tasks are practically guaranteed to find their financial statements riddled with errors.

A 2008 analysis of multiple studies found that close to 90% of spreadsheets have errors. “Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells,” notes Ray Panko, a professor of IT management at the University of Hawaii and author of this analysis. “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.”

What makes these errors so problematic is that they are difficult to identify. “Even significant errors may go undetected because formal testing in spreadsheet development is rare and because even serious errors may not be apparent,” Panko writes.

Even worse, errors are rarely even looked for. In Accounting Today, former CFO and budgeting/forecasting guru Alan Hart discusses the lack of “risk-mitigating” controls for spreadsheets, which leaves crucial financial statements at risk for significant errors.

“In my work in internal audit and financial reporting consulting, I constantly run into organizations—many of which are fairly large and complex—that put too much trust in results produced by an array of homegrown spreadsheets,” Hart writes. “This is especially true for spreadsheets entrusted with producing consolidated financial statements and preparing annual corporate budgets and various forecasts. I have advised managers of the need to disclose such material weaknesses, and I have witnessed several occasions when the external auditors insisted on making such disclosures.”

Forward-looking companies should set aside spreadsheets in favor of innovative, cloud-based ERP and accounting solutions. Consolidations are fast and automated, so finance can close the books more quickly. For multiple companies, the software produces detailed journal entry report for every financial consolidation, providing auditability. The financial statements are ready when they’re needed, and they’re free of the errors that accompany spreadsheets—giving you confidence in the data that you share with both internal and external stakeholders.