Delegated authority document
Procedures for delegating decision-making power to a subordinate.
Delegation of authority means dividing authority and powers downwards to the subordinate.1 The decisions taken regarding delegation of authority should be detailed procedures in a delegated authority document. This document clarifies who has the authority to make decisions, to commit expenditures or to sign legal undertakings on behalf of the organisation.2
PURPOSE & LINK TO INTEGRITY
A delegated authority document prevents confusion about responsibilities.2 If delegated authority is not documented, employees can claim authority to make decisions for corrupt purposes. Employees can act outside their delegation, for example, by granting a development approval that benefits the employee, awarding a contractor, or discontinuing enforcement in exchange for a bribe.3
Having a procedure in place to standardise payment approval will diminish the chances of employees committing any fraud. Transactions for personal benefit are less likely if delegated authority is documented, as this document makes the individual vulnerable to accusations of abuse. In addition, it can act as a control tool, as members of the staff who are not authorised to sign (but did) can be held responsible.
- Does your organisation have a clear organisational structure and job descriptions in place from which delegated authorities can be derived? (Also check tool Job descriptions)
- Does the delegated authority include payment authorities? If yes, are payment procedures in place and incorporated into the delegated authority document? (Also check tool Payment procedure)
The delegated authority document should include instructions for duties such as:2
- Placing and authorising orders for goods and services
- Signing cheques
- Authorising staff expenses
- Handling incoming cash and cheques
- Accessing the safe and petty cash
- Checking and authorising accounting records
- Signing legal undertakings.
Available to all personnel, it should show who has to be involved for which decisions. This document also should act as a control measure for financial transactions and other important decisions: if the required signatures are not on the paper, the documents are not valid.
In case of illness, holidays or other absences, this delegated authority document does not give room for any exception or excuses such as “I had to decide, and you were not here”.
Leaving the delegated authority document in a drawer will not lead to its intended success. Furthermore, personnel with particular tasks (e.g. paying out money) should receive additional training on different procedures of expenditures and decision-making structures. These persons can identify misconduct when they see that expenditures don’t have the required signatures, and refuse to carry out the transaction until all requirements are met. This procedure can be supported by means of a document with which the staff members can crosscheck the authenticity of the signatures.
The delegated authority document should be reviewed every year in order to make sure that it still fits current needs. Breach of delegated authority should be dealt with appropriately.2
KEY GUIDING DOCUMENTS
Management Study Guide, no year, Delegation of Authority, Management Study Guide, http://www.managementstudyguide.com/delegation_of_authority.htm, accessed 29.10.2015
MANGO, 2012, Financial Management Essentials – A Handbook for NGOs, Management Accounting for Non-governmental Organisations (MANGO), UK, https://www.mango.org.uk/Pool/G-FME-Handbook-Jan-2015.zip, accessed 07.12.2015
ICAC, no year, Delegation of Authority, Independent Commission Against Corruption (ICAC), Australia, http://www.icac.nsw.gov.au/preventing-corruption/knowing-your-risks/delegation-of-authority/4895, accessed 03.12.2015
Public Health Seattle and King County, no year, Delegations of authority, Public Health Seattle and King County, USA
UN, 2004, Delegation of authority and accountability, United Nations (UN), Switzerland
- Management Study Guide, no year, Delegation of Authority, Management Study Guide, http://www.com/delegation_of_authority.htm, accessed 29.10.2015
- MANGO, 2012, Financial Management Essentials – A Handbook for NGOs, Management Accounting for Non-governmental Organisations (MANGO), UK, https://www.mango.org.uk/Pool/G-FME-Handbook-Jan-2015.zip, accessed 07.12.2015
- ICAC, no year, Delegation of Authority, Independent Commission Against Corruption (ICAC), Australia, http://www.icac.nsw.gov.au/preventing-corruption/knowing-your-risks/delegation-of-authority/4895, accessed 03.12.2015