Characteristics of information for decision making
Information for internal decision making should meet a number of characteristics.
Accurate information is that recorded correctly from the original transaction.
Complete information is one where all transactions have been recorded, with no transactions are missing or purposely omitted.
Reliable information is that which is both accurate and complete, consistently, so that it can be relied upon for decision making.
Relevant information is that which is useful in the decision making process (and is highly dependent on the decision being made of course!)
Timely information is that which is produced so that it is available when decisions need to be made.
Information that managers need to make decisions on a daily basis in a business must meet all of these requirements. Accurate and complete information, that then becomes reliable, is the product of strong systems of internal control and accounting systems. Where information for decision making is incomplete – managers may not make the best decision for the business. Decision makers must decide what information is relevant to their needs, a common deficiency in decision making is simply accepting whatever reports your business’s information systems provide, rather than considering what information is really useful in the decision making process and trying to obtain it. If information is not provided in a timely manner, managers may not be able to react to the changes in the industry or moves by competitors quickly enough – resulting in lost customer share, declining revenues and declining profits.
Therefore, if you’re making decisions in a business – as an accountant, as a marketing executive, as a supply chain manager – it is wise to keep these characteristics in mind when evaluating the information available to you to support decision making.