Approvals & Authorizations (Preventive)

Approval/Authorization Requirements:

  • Written policies and procedures
  • Limits to authority
  • Supporting documentation
  • Question unusual items
  • No "rubber stamps"
  • No signing of blank forms

Definitions

Authorization is the delegation of authority that may be general or specific. Giving a department permission to expend funds from an approved budget is an example of general authorization. Specific authorization applies to individual transactions: it requires the signature or electronic approval of a transaction by a person with approval authority. 

Approval of a transaction means that the approver has reviewed the supporting documentation and is satisfied that the transaction is appropriate, accurate and complies with applicable laws, regulations, policies and procedures. 

  • Approvers should review supporting documentation, question unusual items and make sure that necessary information is present to justify the transaction. Most are reviewed on a post-audit basis. 
  • Signing blank forms should never be allowed.

Levels of Approval

Approval authority may be linked to specific dollar levels. Transactions that exceed the specified dollar level would require approval from a higher authority. A department's approval levels should be specified in a departmental policies and procedures manual or an accountability matrix.

  • Under no circumstance should an approver tell someone to sign the approver's name on the approver's behalf. 
  • Similarly, under no circumstance should an approver with electronic approval authority share the password with another person. 
  • To ensure proper segregation of duties, the person initiating a transaction should not be the person who approves the transaction.