Managerial Decision-making and Management Accounting Information
Butterfield, Emma (2016)
Butterfield, Emma
Metropolia Ammattikorkeakoulu
2016
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201603283589
https://urn.fi/URN:NBN:fi:amk-201603283589
Tiivistelmä
Considering the pace of business changes and significant amounts of information available to businesses using modern technology, one prime challenge has become to filter out the valuable information and present it in a manner that makes it useful for managers to take on business decisions. These changed requirements have led management accounting to adapt alongside. This Master’s Thesis is a case study of Tecnotree Group, a global provider of telecom IT solutions, the purpose of which was to explore how the current management accounting reports correspond to the management information needs and to identify how the management reporting could be improved or supplemented, so that the reports would benefit the management and better support informed and efficient decision-making within the organization. More explicitly, the study sought to provide answers to the reports usability, quality, perceived challenges to extract value to support decisions and development directions.
The theoretical framework of the study defines accounting and its main functions, the managerial decision-making process, and the ways in which management accounting information can support decision-making. Additionally, described are the relationship among data, information, and knowledge, the progression of knowledge considering the relevance for a decision setting and the management reporting process, including effective reporting principles and required qualities of useful reports. The main empirical data collection method used was a semi-structured online questionnaire targeted to the Group’s management.
The study results showed that the management saw important to have reports’ financial information available to support decision-making in many areas, and the majority used these regularly on a monthly basis. The results indicated also that the reports affect decision-making and management is likely to act on the basis of the information received. However, in most of the cases only about half of the available information was utilized. The quality of the reports was considered also to be variable. In light of the results, the main challenges perceived to extract value from the reports to inform decisions were related to the availability, consistency, accuracy and user-friendliness. Furthermore, the results indicated that more attention should be put on seeing the financial information as a strategic resource to reach a more holistic understanding of this in the organisation.
The study results suggest more emphasis in management reporting should be given to getting the right information to the right people in time, emphasizing the overall user experience to increase the reports usability in decision-making, considering the important role of high quality, multi-level communication and interaction and also to adding more analysis to the reports, in order to build a more in-depth view to support decision-making.
The theoretical framework of the study defines accounting and its main functions, the managerial decision-making process, and the ways in which management accounting information can support decision-making. Additionally, described are the relationship among data, information, and knowledge, the progression of knowledge considering the relevance for a decision setting and the management reporting process, including effective reporting principles and required qualities of useful reports. The main empirical data collection method used was a semi-structured online questionnaire targeted to the Group’s management.
The study results showed that the management saw important to have reports’ financial information available to support decision-making in many areas, and the majority used these regularly on a monthly basis. The results indicated also that the reports affect decision-making and management is likely to act on the basis of the information received. However, in most of the cases only about half of the available information was utilized. The quality of the reports was considered also to be variable. In light of the results, the main challenges perceived to extract value from the reports to inform decisions were related to the availability, consistency, accuracy and user-friendliness. Furthermore, the results indicated that more attention should be put on seeing the financial information as a strategic resource to reach a more holistic understanding of this in the organisation.
The study results suggest more emphasis in management reporting should be given to getting the right information to the right people in time, emphasizing the overall user experience to increase the reports usability in decision-making, considering the important role of high quality, multi-level communication and interaction and also to adding more analysis to the reports, in order to build a more in-depth view to support decision-making.