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ACCA Strategic Professional · Strategic Business Leader · Internal control and management reporting

Kallis Logistics reports delivery performance to its board using a dashboard that only displays on-time deliveries percentage, which has stayed at 96%. Internal audit finds that drivers mark deliveries as 'on time' once they reach the depot gate, not the customer. Customer complaints are rising. Which weakness in management reporting does this best illustrate?

The dashboard relies on a measure that is unreliable and not valid. Recording arrival at the depot gate as on time does not reflect customer delivery, so the 96% is misleading. Management information must accurately represent the underlying performance it claims to measure.

  1. AA measure that is not reliable or valid, because it can be manipulated and does not reflect the true underlying performanceCorrect
  2. BExcessive frequency of reporting to the board
  3. CA lack of comparability with prior periods
  4. DUse of too many non-financial indicators

Explanation

The measure is defined in a way that does not capture what customers experience, so the reported 96% misrepresents performance. The issue is the integrity and validity of the data, not frequency or comparability, since the measure is consistently applied each period. Boards need information that is accurate and truly reflects the objective being monitored.

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