Coach Reports - how accurate are potential ratings?

This has no doubt been explained before, but after 30 mins of searching I can't find anything on it.

Can coach reports be wrong, likewise can scout reports be wrong? Can coaches report players to be worse than they actually are? I know they can report them to be better than they turn out, but can it work in reverse?

I have several young players in my Barcelona team that have 3 star potential or 2.5 star potential but I'm reluctant to get rid of them. What I'm saying is; if I keep these players and nurture them with match experience and training can they ever be the Puyol's, Xavi's and Villa's of the future or will they always just be decent La Liga players as they are reported to be by my coaching staff?

As an example Jonothan dos Santos, rated 3 star potential looks to be developing much better than Thiago, rated as 3.5 star potential. Will dos Santos ever turn out to have 3.5 star ability or above or is he destined never to be any better than his current 3 star potential?

Yes, coach reports can be very wrong because they're based on CA and PA. A low CA player can perform at high level if he has all the right attributes for his position and role in the team. For example, Chicharito's CA indicates him to be an average player, worse than Berbatov and Rooney, but his high speed and finishing attributes make him the perfect poacher.

The only way that scouts can be wrong about CA and PA is if they have low Judge Ability and Judge Potential attributes.

3 star potential is basically "as good at the average player in your first XI", so those players could be the new Puyols.

Coaches and scouts can both underrate and overrate players- as well as CA and PA, they use reputation, I believe, which will obviously mean that young players can be slightly underrated in potential compared to internationals in ability. Also, if you have a youngster who plays for Mozambique regularly, he might be overrated compared to your young Spanish player.

Finally, as athos said, players can often perform above their CA if they have the right attributes.

It clearly works the other way.

A 150 player with Consistency, Determination, Natural Fitness and other favourable hidden attributes will be rated higher than a 175 with poor mental/hidden attributes. After all, that's where the scout report comes from.

The stars are merely a guide, the content gives you key info especially after several scouted matches. From there you basically monitor the player, watch a couple of his games, decide to dive in etc.

If the stars or scouting were linked directly to CA/PA you'd be looking at Premier Manager or some other rubbish designed for simplicity.