Depending on the type of transaction involved, authorisation of financial transactions can be done either electronically, through the financial system, or by signing paper documents which are then processed by finance/administrative support staff. The principles relating to authorisation of financial transactions apply to both electronic and manual approval processes, however the delegation of authorisation responsibilities and the processes involved, covered later in this procedure, are different. For the purposes of this procedure note, we shall refer to individuals that have been delegated responsibility for approving financial transactions as Authorised Approvers.
Responsibility for financial activities rests with the Head of the relevant Spending Unit (HoSU), however the HoSU is able to delegate the authorisation of financial transactions to other appropriate staff.
To improve internal control, where a process involves a number of different stages then these should be carried out by different individuals wherever possible. For example, where an order has been raised by one individual and the subsequent invoice shows a higher value that requires separate approval (i.e. exceeds the tolerance), then the invoice should be approved by a different individual. Normally in the case of invoice processing, the finance support staff would follow up invoice value differences, which provides this additional control.
An over-riding principle in relation to any financial transaction is that an individual must not authorise transactions in which s/he has a personal interest, e.g. an expense claim or payroll related adjustment relating to themselves.
Responsibilities of the HoSU
In delegating responsibility, the HoSU can restrict the scope of an individual’s authorisation rights:
- to certain types of transaction (e.g. purchases, expenses, payroll costs)
- to specific spending units, projects or chargecodes
- by limiting the value of individual transactions that can be authorised by the individual*
*A default maximum limit will apply to delegated Authorised Approvers, above which the transaction should be approved by the HoSU (or a nominated alternate for this purpose). This limit is currently £50,000.
In delegating authorisation rights and setting the restrictions, the HoSU must ensure that the delegation of responsibility is appropriate, taking into account the individual’s level and range of responsibilities in relation to the financial transactions they will be authorising. The HoSU must remember that ultimate responsibility for expenditure incurred by staff acting under delegated authority rests with the HoSU concerned, and so appropriate supervision needs to be exercised over such individuals.
It is recommended that, where possible, payments relating to staff (e.g. expense claims, attendance at courses/conferences) should be signed by the HoSU or a designated senior member of staff, and not delegated to other staff.
Responsibilities of an Authorised Approver
When you approve any financial transaction you are certifying that the transaction is legitimate, properly being made for the purposes of the University, and that adequate funds are available within the relevant Spending Unit to meet the cost involved. You should take special care to satisfy yourself on the validity of any transactions where the goods or services are of a type not normally incurred by the Spending Unit concerned.
If you cannot satisfy yourself on these points you should not approve the transaction. If you have any concerns you should raise these with the HoSU
Manual approval of transactions
Individuals with delegated authority to approve transactions will need to sign the relevant document (e.g. purchase requisition, expense claim, overtime sheet, etc). In order to enable approval of documents to be checked and verified, by central finance or internal audit, an Authorised Signatory Form (UEA 23) must be completed for the Authorised Approver and forwarded to central finance. This will include an example of the individual’s normal signature and the restrictions on what they can approve. The Authorised Signatory Form must be signed by the HoSU and it will remain effective until it is amended or cancelled by the HoSU.
The HoSU is responsible for advising central finance of any changes. However, periodically central finance will circulate details of current authorised signatories to HoSUs, requesting confirmation or amendment of current details.
Electronic approval of transactions
The finance system allows certain transactions (currently purchase orders) to be approved electronically. When a purchase requisition is entered into the system (potentially input by any system user), it is directed to the relevant Authorised Approvers. The Authorised Approver is then able to verify it is correct and approve the issue of an official order to the supplier.
The system determines the relevant Approvers by reference to the spending unit, project or chargecode included on the requisition, and to the value of the requisition. In order that Authorised Approvers are properly set up on the system, the HoSU must complete and sign a User Access Request Form. This details the appropriate restrictions on approval levels. The form should be submitted to the finance systems team, who will then update the finance system.