To document approval authority, list every kind of commitment the organization can make on one page, name the role that approves each kind, name who deputizes when that role is away, and state how each approval is evidenced. That page is the whole thing. Every limit attached to a role is for the organization to set with its qualified advisors and to record in its own documents, not to copy from a template.
This article is general information about process and recordkeeping. It is not accounting, tax, legal or investment advice. How any transaction is recorded, classified or reported is a judgment for a qualified accountant who knows the business. Every limit, threshold and cadence described here is for the organization to decide with its qualified advisors and write into its own documents.
What it means to document approval authority
An approval authority page is a plain list that answers one question for anyone who reads it: before this commitment is made, whose yes is required?
It is a reference document, not a policy essay. The useful version fits on a single page, names roles rather than individuals wherever a role exists, and lives somewhere a new hire can find it without asking. If someone has to interrupt a colleague to find out who signs off on a supplier arrangement, the page either does not exist or is not where people look.
It is also not a description of who does the work. The person who negotiates with a supplier, the person who approves the commitment, and the person who enters it into the records are three distinct positions on the page, and keeping them distinct is the point.
What this page buys you is clarity and a clean record. When a commitment is questioned later, the page plus the approval record shows who was entitled to say yes and that they did. That is a documentation outcome, not a guarantee about anything else.
How to document approval authority step by step
Work in this order. The first draft is an afternoon's work, and it should be built from what already happens rather than from an ideal.
- List the kinds of commitment. Not individual transactions, but categories: supplier arrangements, recurring commitments, one-time purchases, changes to a supplier's payment details, new customer terms, write-offs and adjustments, hiring commitments, and anything that binds the organization to pay in the future. Write them as a reader would recognize them.
- Name the approving role for each one. One role per row. "Operations lead" is a role; "management" is not, and a reader cannot act on it.
- Decide where limits apply, then record them elsewhere. Some kinds of commitment will carry a ceiling above which a different role approves. Those ceilings are for the organization to set with its qualified advisors. Put them in the organization's own authority document and have the page point to it, so the page itself stays readable.
- Name the deputy for each approving role. This is the row people skip, and it is the row that gets tested the first time someone is on leave.
- State how the approval is evidenced. For each kind of commitment, say what counts as proof the approval happened and where that proof is kept.
- Name an owner for the page. One role, responsible for keeping it accurate and for reissuing it when the organization changes shape.
- Date it and version it. Keep superseded versions rather than overwriting. The version history is what shows the page is in use.
Where the page should live
Put it with the other standing finance documents, not in a folder that only the finance function opens. The people who need it most are the ones about to commit the organization to something, and they usually sit outside finance.
Give it a name that someone would guess. A page nobody can find is functionally the same as a page nobody wrote.
What makes an approval authority page usable
The difference between a page people use and a page people route around is almost always specificity.
| Clear enough to use | Not clear enough | |
|---|---|---|
| The commitment | "A change to a supplier's bank details" | "Supplier changes" |
| The approver | A single named role | "Finance" or "management" |
| The deputy | A named standing deputy, recorded in advance | "Whoever is available" |
| The evidence | A stated form of approval kept in a stated place | "Approval on file" |
| The limits | A pointer to the organization's own authority document | Silence, or a number nobody agreed |
Read each row aloud and ask whether a new employee could act on it alone. If the answer is no, the row needs rewriting, not a longer policy around it.
Who deputizes, and how that gets recorded
Every approving role needs a standing deputy written down before it is needed. Deciding in the moment is how commitments end up approved by whoever happened to be at a desk.
Record the deputy by role, and record the condition that activates them: the approving role is unavailable. Avoid open-ended arrangements where a deputy holds authority permanently alongside the primary role, because the record then cannot show which of them actually approved a given commitment.
If a deputy approves something, the evidence should make that visible. A record that shows the deputy's approval and the reason the deputy was acting is a complete record. A record that shows only "approved" leaves a question that nobody will be able to answer later.
Where a kind of commitment has no sensible deputy inside the organization, write that down too, along with what happens instead. "Held until the approving role returns" is a legitimate answer and a far better one than an unwritten workaround.
How an approval is evidenced
Evidence is the part most organizations leave implicit, and it is the part that matters when someone reads the file months later.
Pick one form of evidence per kind of commitment and stick to it. A written approval in a message thread, a signature on the request, or an approval recorded in whatever system holds the request are all workable, as long as the page says which one applies and where it is kept. Mixing forms is not a problem; leaving the form unstated is.
Three qualities make evidence hold up: it names the approver, it is dated, and it is attached to the specific request rather than to a general arrangement. A standing verbal understanding fails all three.
Exceptions deserve their own line on the page. State how an exception is requested, who may grant it, and where the exception itself gets recorded. Without a written exception route, people quietly work around the page, and the page stops describing what actually happens. Anything touching employment terms, discipline or monitoring of staff belongs with an employment attorney and the organization's HR advisors rather than on this page.
How to document approval authority so it stays current
Give the page an owner and a review cadence, with the cadence set by the organization and recorded in its own documents. Log the date of each review and what changed, even when nothing changed.
Four events should trigger an off-cycle look regardless of cadence: a role on the page changes hands, the organization adds a kind of commitment it did not previously make, an approval happens outside the page and nobody is sure whether it was allowed, or a review of the records turns up a commitment with no traceable approval. The last one is the most informative, because it usually points at a row that was written for a situation the organization no longer has.
Keep the page short as it ages. The temptation is to add a row for every unusual case that has ever come up. A page that grows past what a reader will scan gets replaced by asking a colleague, which is the problem it was written to solve.
An approval authority page does not make decisions better. It makes it possible to see who made each one, which is what turns a pile of commitments into a record someone can follow. If you want a starting structure to adapt, the Free Resources page on this site is the place to begin.