The short answer
A delegation of authority (DoA) matrix is the table that sets who can approve spending and commitments, and up to what amount. It lists approval limits by role, usually split by type of spend such as operating costs, capital purchases and contracts.
In a group, the matrix also has to say which entity each limit applies to. Most groups keep one group-wide policy with entity-specific limits where they differ, and set limits by position rather than by person so the matrix still works when people change roles.
What goes in a delegation of authority matrix
A good matrix answers four questions for every decision: what kind of spend it is, who can approve it, up to what limit, and in which entity.
Types of spend
Operating costs, capital purchases, contracts and leases, plus any category you treat separately, such as IT or marketing.
Positions, not people
Give limits to roles, such as finance manager or CFO, rather than named people. The matrix then holds when someone leaves or changes role.
Limits
Set a limit per transaction, and an annual limit per category where you need one. Say whether amounts include GST.
Budgeted and unbudgeted spend
Many policies allow higher limits for spend already in the approved budget, and lower ones for spend outside it.
Entities
In a group, each limit applies to one entity or to all of them. Write that down rather than leaving it to custom.
A delegation of authority matrix template
This example is a starting point for a group with several operating entities. The amounts are illustrations only, exclude GST, and should be set with your board.
| Role | Operating, in budget | Operating, outside budget | Capital | Contracts |
|---|---|---|---|---|
| Department manager | $5,000 | $1,000 | Not delegated | Not delegated |
| Entity general manager | $25,000 | $10,000 | $10,000 | $25,000 |
| Group finance manager | $50,000 | $25,000 | $25,000 | $50,000 |
| CFO | $250,000 | $100,000 | $100,000 | $250,000 |
| CEO | $1,000,000 | $250,000 | $500,000 | $1,000,000 |
| Board | Above CEO limits | Above CEO limits | Above CEO limits | Above CEO limits |
Where an entity needs different limits, such as a newly acquired business with a smaller budget, add rows or notes for that entity instead of writing a separate matrix.
Principles that keep the matrix working
The table is only half of it. These principles stop it being worked around.
No one approves their own spend
A request always goes to someone other than the person who raised it, even when they hold enough authority.
A delegate’s limit never exceeds their manager’s
Authority flows down. Nobody should be able to approve more than the person they report to.
Don’t split purchases to fit under a limit
Treat one purchase broken into several smaller requests as one purchase, and approve it at the level its total needs.
Record temporary delegations
When an approver is on leave, name who acts for them, with what limits and until when.
Keep an approval record
Electronic approval works, as long as it records who approved, when and under which limit.
Review it regularly
Check the matrix at least once a year, and whenever the structure changes, such as when you add an entity.
Why it gets harder with every entity
When each entity sits in its own system, you end up maintaining a separate delegation of authority for each one.
The policy says one thing, the approvals happen somewhere else, and nobody checks the two against each other.
The matrix lives in a document
The policy is a PDF, and approvals happen by email or in each entity’s system. Nothing checks that the approver had the authority.
Limits drift between entities
A change made in one entity’s setup doesn’t reach the others, so the same role ends up with different limits across the group.
Nobody can see the whole picture
Finding out who can approve what across the group means asking each entity.
One rules engine for the group with Derive
Derive turns your delegation of authority into approval policies. Who can approve what, and up to which limits, is set per entity, amount or category in one rules engine, and approvals route by entity, amount or category.
Finance gets a view of who approves what across the group, and every request shows its budget impact before anyone approves it.
Read more about procurement and budgets.
