A delegation of authority (DoA) is a document, usually approved by the board, that sets who in the company may approve which decisions and up to what amount. It covers payments, purchases, contracts, hiring, budgets, write-offs and capital spending, and it is applied in daily work through an approval matrix.
What is a delegation of authority?
Authority starts with the board. The board keeps some decisions, such as large borrowings, acquisitions and the annual budget, and delegates the rest to the chief executive, who passes parts of it to other managers. The DoA writes that chain down: for each type of decision, who may approve it, up to what amount, and who must be consulted first.
In practice the DoA becomes an approval matrix, often set up in the ERP or a workflow tool, so each request reaches the right approver. The guide to the approval matrix and segregation of duties shows how to build one.
How is a delegation of authority structured?
| Decision | Finance manager | CFO | CEO | Board |
|---|---|---|---|---|
| Supplier payment | Up to 100,000 | Up to 1,000,000 | Up to 5,000,000 | Above 5,000,000 |
| Capital expenditure | Up to 50,000 | Up to 500,000 | Up to 2,000,000 | Above 2,000,000 |
| Receivable write-off | None | Up to 50,000 | Up to 250,000 | Above 250,000 |
| Budget change | None | Moves within the approved total | Up to 5% of the total | Above 5% of the total |
A good DoA also sets rules beyond amounts: a request may not be split to stay under a limit, nobody approves their own request, approvers act only for the companies they are responsible for, and any temporary delegation during leave is written down with its dates.
How does a delegation of authority work in practice?
Why does a delegation of authority matter?
It makes accountability clear. Staff know who can say yes, approvers know their limits, and auditors can test each approval against a written rule. Without one, approvals depend on who happens to be in the office. It works together with segregation of duties and the four-eyes principle.
Keep it current. Review it at least yearly and whenever the organisation changes, version each change, and make sure the systems apply the same limits as the document. A DoA that lives only in a PDF is not enforced.
Questions people ask
What is the difference between a delegation of authority and an approval matrix?
The DoA is the governing document: which decisions the board delegates, to whom and with what limits. The approval matrix applies it to daily transactions, request by request, often inside a system.
Who approves the delegation of authority?
Usually the board, on the proposal of the CEO or CFO, since the authority being delegated is the board's. Changes should go through the same approval and be dated.
What happens when an approver is on leave?
The DoA should allow a temporary delegation, in writing and for set dates, to someone who could approve at that level anyway. A delegation should never raise anyone's limit or let a person approve their own request.