Answer to Question #79978 in Finance for Hugh Heron

Question #79978
Why might it be necessary to consolidate and/or convert financial data to allow it to be analysed in accordance with organisational requirements? The size of a business and the number of departments has not connection to the question of why might it be necessary to consolidate and/or convert financial data to allow it to be analysed in accordance with organisational requirements?
1
Expert's answer
2018-08-21T10:41:08-0400
To automate the business processes of planning and collecting reports, you should focus on the data transformations generated by these business processes and build their mathematical model. The better the model reflects the real features of data transformation, the easier and cheaper it is to automate. A weak model may not impede automation, however, will lead to unnecessary and progressive resource costs when advancing through the stages of the life cycle of the software product.
We assume that the business process of resource planning generates data transformations with the following two characteristic features:
- redistribution of resource values - from high aggregation levels to low aggregation levels;
- redistribution of values - horizontally within the same level of aggregation from one cell to another.
The business process of collecting reports generates conversions in the opposite direction - the consolidation of detailed data into aggregated ones. Typically, the planner will work with the report from the middle of the structure and deal with a mixture of these two types of data conversions directed in opposite directions. On the one hand, the planner gets top limits on resources and distributes them in more detail to the lower levels of aggregation, which become limits for planners of the next lower level. On the other hand, detailed values are consolidated into aggregate values that are presented for review and analysis by top-level planners.

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