Developing monthly management reporting: root cause analysis of reporting problems at Nuclear Services

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School of Business | Master's thesis
Degree programme
89 + 9
Nuclear Services, a business area focusing on the sales of nuclear power related products and services at the Finnish energy company Fortum, has been struggling with errors in its monthly reports. The errors have rendered the reports unreliable, decreasing their value for management use. This thesis analyzes the underlying reasons for the reporting problems, providing suggestions for eliminating them and developing the reporting towards a direction that better supports the business goals of the unit. Reporting is an important management tool for decision support and control. In this study, Man-agement Information System and Management Control System concepts are utilized to analyze the decision support and control aspects of reporting, respectively. Management Control Systems are discussed using the Management Control System package typology of Malmi and Brown (2008). Additionally, suggestions for the implementation will be drawn from the management accounting change literature. This thesis follows the root cause methodology for problem understanding and suggestions for eliminating the root causes. Flow chart analysis and interviews of Nuclear Services project managers and management are conducted for understanding the situation in the unit. Further perspective to the problem is sought with external benchmarking interviews at three reference organizations, conducting project-based business similarly to Nuclear Services. Once the problem has been charted, fault tree analysis is used to find the root causes. Management Control Systems are utilized to conceptualize the suggested controls for root cause elimination. The fault tree analysis indicates three dominant efficiently solvable employee behavior related root causes: unclear reporting process and responsibilities, lack of clear instructions, and that systematic reporting is not expected. The root causes are suggested to be solved using three Management Control Systems, two administrative controls and one cybernetic control. A concrete description of, how the three suggested Management Control Systems could be implemented in Nuclear Services, is also provided along with suggestions for further reporting development in the unit. Related to the management accounting change, a possible gatekeeper role is identified in the re-porting practice implementation process. Additionally, the findings of this thesis suggest that simultaneous dual-purpose utilization of reporting as a Management Information System and a Management Control System could be possible, although no proof for the claim is received. Current management accounting literature is limited regarding reporting practice and reporting problem solving. This thesis illustrates, how the root cause methodology can be applied to reporting problem solving.
Thesis advisor
Malmi, Teemu
Management Information System, Management Control System, Management Accounting System, management accounting change, reporting change, reporting problems, root cause analysis, fault tree analysis