Setup a delegation of authority

Why set up a delegation of authority? 

A delegation of authority is established to determine who is responsible for approving various levels of purchases and expenses within a business. Usually, a matrix of approvers is created and documented as part of policies in a business.  

How to set up a delegation of authority? 

Who’s involved? 

The delegated authority cascades through the entire business, which is from the Board to the executive team, down to senior manager to the teams they manage. Everyone in the business operates within the rules and responsibilities set by your level of delegated authority.  

Here are the steps to setup a delegation of authority at your business: 

1. Document a delegation authority policy: 
   1. Clearly state the purpose of the Delegation of Authority Policy and outline its scope. Explain why delegation is necessary and the areas or levels to which it applies. 
   2. Define different levels of authority. This may include top-level executives, managers, department heads, and other relevant roles. Specify the decision-making powers associated with each level. 
   3. Clearly outline the process for delegating authority. Specify who has the power to delegate authority and the criteria for selecting individuals or roles to receive delegated authority. 
   4. Clearly define the responsibilities of individuals or roles to whom authority is delegated. Specify any limitations or restrictions associated with the delegated authority. 
2. Set up a delegation of authority matrix: 
   1. Identify all of the different levels of authorisation within your business, such as line managers, department heads, and the CFO or CEO. 
   2. Set threshold limits for each level of authorisation. For example: 
      1. Orders for goods and services up to $1000 – Project Manager provided within budget; 
      2. Orders for goods and services up to $5000 – Program Manager; 
      3. Orders for goods and services up to $25,000 – CEO; 
      4. Petty cash expenditure – Up to $50 – Project Manager; 
      5. Petty cash expenditure – over $50 – Finance Manager; 
   3. Determine which expenses fall under the responsibility of each department. 
   4. Specify any expenses that require multiple approvals at any level, such as expenses related to a specific project that involves several departments. 
   5. Document everything in a clear and easy-to-read table or flow chart. 
      
      Note: The delegation of authority matrix can be set up in Wiise as an approval workflow to streamline the approval process.  
3. Training and Communication:
   1.  Communicate the established policy to all employees involved in the approval process. 
4. Audit and Compliance: 
   1. Set regular reviews of delegated authority for compliance and effectiveness.  
   2. Make sure the delegation of authority aligns with legal and regulatory requirements.  
   3. Maintain audit trails for approval workflows to track decision-making processes and ensure compliance with established procedures. 
5. Breaches and issues: 
   1. Address issues and identify measures to protect sensitive information.  
   2. Resolve disputes and outline procedures for escalating issues to higher levels of authority.  

How do I use it? 

Once an approval workflow is set up in Wiise, when users raise purchase orders to purchase anything, they will be allowed to release the purchase order only if it has been approved by their approver. This workflow sets an internal control within the business where team members must explain purchases and managers must approve them.   

What’s next? 

Now that you’ve documented the delegated authority policy, you can look into setting up the approval workflow process in Wiise.  

Need more help?  

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