Company Description
Through a declaration, President Sheikh Khalifa Bin Zayed Al Nahyan inaugurated the Emirates Nuclear Energy Corporation (ENEC) in 2009. The core mandate of the corporation entails implementing a program for nuclear energy with the goal of producing safe and clean energy to aid in economic development of all UAE people (ENEC par.1).
The inauguration of the corporation was appropriate, considering that the UAE energy requirement increases at the rate of almost 10%, which is roughly four times the international standard. The corporation is responsible for overseeing prime contractors’ work in all stages of operation.
It also ensures the development of human resource capability in the management of nuclear energy programs across the UAE. The company educates people on the nuclear energy program while providing information on the progress of the project implementation process (ENEC par.3). It forms the arm through which the Abu Dhabi government invests in the nuclear energy sector.
While executing its mandate, soon after the 2009 inauguration, the country’s nuclear energy regulator, the Emirates Nuclear Energy Corporation (ENEC) successfully awarded a USD20 billion bid to a coalition of companies led by the Korea Electric Power. The contract entailed constructing the UAE’s first nuclear power plant in Barakah, more than 300 Kilometers from the capital Abu Dhabi.
The flagship project and the construction of the first reactor of the four scheduled reactors began in 2011. The scheme is scheduled to be operational in 2017. The construction of the second reactor began in 2013. It is expected to be accomplished in 2018 (Dincer and Rosen 11).
The construction of the remaining two reactors has already commenced and will be concluded in 2019 and 2020 respectively (Darwish and Mohtar 109). The capacity of the four reactors is expected to reach 5.6GW, which will play a critical role in supporting the country’s increasing demand for energy.
Problem Statement and Problem Definition
ENEC has already made a significant progress in providing clean and safe nuclear energy through the ongoing construction of nuclear plants. However, in the execution of its mandates as discussed in the background section, it is important for the company to identify and resolve some of internal and external problems that may hinder it from becoming technologically savvy. This paper proposes a solution to one of such problems. The problem is in the finance department, specifically the area of management accounting.
The department utilizes a manual budgeting process. This problem reduces the speed of processing and analyzing budgetary accounting information. The speed of processing and analyzing accounting-related information is critical in making rapid decision during a project execution process and running it upon its full implementation. To solve this problem, ENEC needs to implement an accounting information processing system that does not incorporate manual excel sheets.
Proposed Solution
Management accounting scholars contend that managerial accounting extends to three main crucial pillars. These pillars comprise strategic management, risk management, and performance administration. The pillar of strategic management permits the role of accounting management professional to include making the accounting management professionals strategic partners of the organization they serve (Porteous and Tapadar 26).
Risk management entails discovering structures together with performances that allow the recognition, measurement, administration, and coverage of various risks with the aim of attaining a company’s goals. Performance management focuses on the development of business decision, which makes it possible to manage cutely the performance of a company.
Management accountants utilize their skills and knowledge in the process of preparing and presenting financial and any other decision-related information. This process is accomplished in ways that aid “management in the formulation of policies and the planning and control of its operations” (Porteous and Tapadar 31).
In the execution of the role of management accountants, ENEC encounters challenges due to the use of manual budget system. To resolve the problem, a recommended solution involves designing and implementation of an Oracle application that does not utilize any manual excels sheets.
An emerging question is whether the solution is appropriate for ENEC. The responses to this question may be addressed from the context of value analysis of the solution in six stages. The stages are problem observation, problem definition, idea generation, idea synthesis, idea evaluation, and solution implementation.
Problem Observation
Manual budgeting of an organization, including ENEC, presents significant challenges because of the complexity of the budgeting process. Such a system is time-consuming. Management accountants will have to locate individual budgetary item entries, which may involve perusing multiple documents.
Such information may need to be copied for presentation, which proves quite difficult in a manual budgetary system. Another critical concern of the manual budgetary system is its subjectivity to errors. However, this situation does not imply that the automated budgetary system does not experience the problem of errors such as transposing of figures or erroneous entries due to human faults.
The challenge here is that the manual budgetary system does not possess any internal checks and balances, which can help in tracking and identifying errors. Another important concern for the budgetary system deployed by ENEC is its susceptibility to security threats. The manual budgetary system permits employees to review confidential and sensitive budgetary data.
Although employees may still copy files stored in computer systems in case of the automated systems, measures such as the use of passwords and user identifiers may limit such accessibility. Hence, the manual budgetary systems are highly susceptible to embezzlement and fraud from unauthenticated access. Disgruntled employees can irreparably and maliciously destroy crucial financial budgetary data.
Problem Definition
The main concern for ENEC’s current budgetary system is that although efforts may be put in place to track errors, the organization will need to make rapid decisions. In this process, the use of data and information derived from it cannot be avoided since decisions must be evidence-based. Therefore, for ENEC, decision-making requires budgeting, which is a critical tool employed in managerial accounting to facilitate planning.
Apart from planning, budgeting also facilitates control. For example, in an attempt to cope with operational challenges, organizations use budgeting in their planning for various reasons. For instance, planning provides a framework on which decision-making is pegged in the quest to achieve organizational goals, strategies, and even objectives.
Indeed, Porteous and Tapadar assert that many organizations deploy budgets in the evaluation of divisional managers’ performance and/or tying bonuses to levels of achievement of preset goals (42). How can ENEC make urgent decisions without a fast means of retrieving, analyzing, evaluating, preparing, and reporting budgetary information?
Idea Generation
To address ENEC’s problems, it is recommended that it implements a computer-based application for recording, preparing, and reporting budgetary information. Such a solution should permit users to conduct workforce planning, ensure position-based budgeting, and/or introduce high-tech visibility to ENEC budget development process, its review, and approval processes.
The most appropriate solution is the one, which ensures consistency, uniform, and comprehensive budgeting process across the organization. Such a process is important in ensuring transparency and dependability of the information transmitted to various ENEC’s stakeholders, especially the contractors, the UAE citizens, and the UAE government. An Oracle budgeting system without any manual excel sheets constitutes a good idea.
Idea Synthesis
Oracle budgeting and planning cloud application will permit ENEC to incorporate a state-of-the-art budgeting and planning application, which does not demand investment in CAPEX infrastructures. This strategy can guarantee great functionality of ENEC’s budgeting process while utilizing flexible options that ensure almost absolutely no curve for user learning (Oracle par.3).
The application will warrant reliability and security associated with cloud deployments from Oracle. It will provide built-in applications for ensuring reporting and provision of an important mechanism for management decision-making process. It supports rolling forecasts and best practices in budgeting and planning capabilities of any large organizations such as ENEC.
Idea Evaluation
The proposed Oracle solution has a set of disconnected planning tools. It uses automated spreadsheets in the collection and storage of budgeting information. While the tool meets the concerns identified in the problem identification and idea generation, an emerging question is whether the system has been implemented elsewhere so that ENEC can benchmark from it.
The Commonwealth of Massachusetts needed an application for planning and budgeting system to integrate its decision-making abilities while increasing its visibility for budgeting process. It engaged in partnership with ANF (administrative agency for management and finance) in developing and implementing “Oracle’s Hyperion Financial Planning, resulting in the first successful statewide implementation of Oracle Hyperion Planning/Budgeting” (Accenture LLP US par.2).
The state developed the capability for meeting its budgetary needs. The implication was an all-inclusive, unswerving, and uniform budgeting process that ENEC required. Therefore, the proposed solution is effective for mitigating the challenges posed by the current manual budgeting system deployed by ENEC.
Solution Implementation
The necessary Oracle software can be customized and developed in-house with the permission from the Oracle Company, following the modeling approach shown in figure 1. It can also be sourced from a vendor who can customize it to suit ENEC’s needs.
This option is preferred to reduce challenges associated with new applications and platforms such as system learning and the high probability of the occurrence of bugs that may lead to failure of the system soon or after its implementation. ENEC should source the application from Oracle. The company (Oracle) will also ensure user training so that ENEC can begin using the new system reliably soon after completing the customization process.
Discussion
Protection
Protecting critical information of an organization comprises an important aspect of any computer-based system. Hence, the Oracle planning and budgeting application developed and implemented at ENEC should have security features to ensure the information collected, processed, and stored in it remains the intellectual property of the corporation.
The fact that an Oracle system has in-built algorithms for protecting data and information from an unauthorized accessibility, the proposed system can help in preserving and protecting the corporation’s intellectual intelligence. Hence, the system will guarantee ENEC of accountability and transparency due to the development of policy perspectives based on reliable and dependable planning and budgetary data and information.
Team
After the selection and successful implementation of the new system, work teams are crucial for running the system. This situation requires change management. The system entails the alteration of the processes that employees utilize to carry out budgeting and planning for ENEC. Since many operations that were previously executed by the employees manually or with partial intervention of computers will now be integrated and automated, employees will require retraining on how to use the new system.
Fryling asserts that upon the introduction of any new computer-based system, employees require training on how to share common practices and information throughout an enterprise. They also need to know how to access and produce reports in real time (392). Hence, work teams must be prepared to face and accept change from the past manual budgeting system to the new Oracle system without the labor-intensive excel sheets.
Sources of Finance
The government of the UAE funds the nuclear program that is currently under implementation. ENEC, the government organ in charge of overseeing the implementation process and reporting to both the government and the public on the progress of the nuclear program, has the mandate of implementing new solutions to guarantee smooth running of nuclear programs.
Therefore, the government of the UAE is expected to fund the process of designing and implementing the new solution through ENEC. Alternatively, the cost for the solution can be met from contingency fund that is provided as a resort to mitigating risks such as the introduction of new approaches or work repetition in the execution of a project.
Stakeholder Analysis
ENEC stakeholders comprise people and entities that are influenced by the activities of the corporation. They include the public whom the nuclear power energy installation is being developed for, the government, the primary contractor, and other contractors and the neighborhoods within the location of the construction of the nuclear power installations. All projects are constrained by time and monetary resources (Zekic and Samarzija 101).
Therefore, the stakeholders have a stake in the budget of ENEC since it sets out various monetary allocations to mitigate the likely costs that may be incurred by the stakeholders. For example, the government is interested about accurate and reliable budget for the corporation.
This transparency helps in the allocation of scarce resources to other government projects. Unreliable budget is inappropriate for the government since it may lead to delays in the completion of the project when the government allocates money to other projects, which may not be as urgent as the nuclear power program due to the misguided budget. In the same capacity, constructors need assurance that the budget for the nuclear program will be adequate to complete the work.
Conclusion
Emirates Nuclear Energy Corporation (ENEC) is a government corporation in charge of implementing a government-initiated nuclear program in the UAE. In its management accounting department, there exists a problem of using manual budgeting system. The paper has proposed, analyzed, and evaluated an Oracle computer-based system without manual excel sheets to guarantee automation of management accounting processes, including planning and budgeting.
The system will be in the best interest of the stakeholders. By benchmarking from Commonwealth of Massachusetts, the system is most appropriate for ENEC. The solution ensures speedy, reliability, increased visibility, uniformity, consistency, and comprehensiveness of the corporation’s budgeting process.
Works Cited
Accenture LLP US. Client case study: Commonwealth of Massachusetts: Public service transformation, 2015. Web.
Darwish, Mohammed, and Rabi Mohtar. “Prime energy challenges for operating power plants in the GCC.” Energy and Power Engineering 5.1(2013): 109-128. Print.
Dincer, Ibrahim, and Martin Rosen. Exergy: energy, environment and sustainable development, New York, NY: Newnes, 2012. Print.
ENEC. History, 2015. Web.
Fryling, Meg. “Estimating the impact of enterprise resource planning project management decisions on post-implementation maintenance costs: a case study using simulation modeling.” Enterprise Information Systems 4.4(2010): 391–42. Print.
Oracle. Oracle planning and budgeting cloud service, 2015. Web.
Porteous, Bruce, and Pradip, Tapadar. Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates, New York, NY: Palgrave Macmillan, 2005. Print.
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Zekic, Zdravko, and Luka Samarzija. “Project Management of Dynamic Optimization of Business Performance.” International Business Research 5.12(2012): 99-111. Print.