Today, I would like to share with you ‘The 10 Best Practices, which serve as guiding principles for designing a robust Delegation of Authority (DoA) within your organisation. These practices have been meticulously curated based on extensive research, practical experience gained from working with numerous clients, and insights from industry leaders.
So,without further ado, let’s dive right into it.
1. Tailor the DoA for Different Expense Types
Rather than creating a one-size-fits-all DoA, consider customising it for different expense categories. For example, advertising expenses may have a different approval threshold than travel expenses. This approach allows for a more nuanced control mechanism.
2. Department-Specific DoA
Recognise that different departments may have varying levels of expenditure authority. Tailor the DoA to reflect these variations, ensuring that each department’s approvals align with its specific needs and budget.
3. Fewer Levels of Authorisation
When determining the number of approval levels, strike a balance between spend and control. In non-exceptional cases, consider reducing the number of approvals required. This approach fosters efficiency while maintaining accountability and audibility of expenses.
4. Define the Exception Approval Framework
Exceptional expenses require stricter approval processes. Identify and track exceptions through automated systems or checklists. By creating checklists that capture specific criteria, you can quickly identify exceptions and route them through a separate deviation workflow.
5. Cross-Departmental DoAs
In situations where approvals involve multiple departments, establish clear guidelines for cross-departmental authorisation workflows. This ensures that approvals for expenses spanning different departments are appropriately handled.
6. No Budget, No Approvals
Avoid entertaining expenses for which there is no budget allocation. Implement a system that prevents such expenses from entering the approval process, maintaining financial discipline within the organisation.
7. Address Auditor Requirements
To comply with auditing standards, ensure auditors have access to the DoA policy. They should be able to review invoices to verify adherence to the policy and understand how exceptions were approved. Building transparency and auditability into the DoA process helps gain the confidence of auditors and the Board of Directors.
8. Contingency Planning for Unavailable Approvers
Account for situations where the designated approver is unavailable. Implement a process for temporary reassignment of approval authority on a case-by-case basis, ensuring that such reassignments are auditable. This prevents potential misuse of approvals during an approver’s absence.
9. Streamline Approvals without Compromising Diligence
While tighter control is important, it’s crucial to facilitate faster approvals. Implement tools and technologies that allow approvers to review and approve expenses efficiently. Mobile apps or email-based approvals systems can save time by providing relevant information and enabling quick decision-making.
10. Regular Review and Refinement
The DoA should be static; it should evolve with changing business requirements. Establish a quarterly review process to assess the effectiveness of the DoA, identify any bottlenecks or inefficiencies, and refine the approval process accordingly.
Conclusion
Designing an effective Delegation of Authority is crucial for efficient expense management and accountability within organisations. By implementing these ten best practices, you can create a robust DoA framework that saves time, ensures thorough scrutiny, and enhances control. Embrace technology solutions like Expenzing’s software platform to simplify and automate the DoA process, and unleash the full potential of your organisation’s expense management capabilities.
