ACCA Performance Management (F5) Certification Practice Exam

How reliable is external information generally considered to be?

1. Very reliable

2. Somewhat reliable

3. Not very reliable

4. Highly precise

The correct answer is: Not very reliable

External information is generally considered to be not very reliable due to several factors. First, external data is often gathered from a variety of sources, including third parties, government publications, and media outlets, each with its own methodologies and potential biases. This variation can lead to inconsistencies in the data's accuracy and timeliness. Furthermore, external information may lack the rigorous internal controls that organizations apply to their data collection processes. This absence of oversight can result in errors or outdated information. Additionally, the context in which external information is collected may not align with the specific needs of an organization, making it less applicable or meaningful. While some external sources may provide valuable insights and reliable information, the general consensus in performance management is to treat such information with caution, recognizing the inherent limitations that come with relying on third-party data. In contrast, highly reliable or precise data is typically derived from internal sources where organizations can implement quality controls and directly manage the data collection process, making internal data a preferred choice for critical decision-making.