Corruption Matters - May 2017 - Issue 49

Delegations of authority: know the pitfalls

Every organisation operates under a framework in which authority to make decisions is delegated to certain members of staff. The right framework can mean good performance and good governance; the wrong one can mean unfettered control and substantial financial damage. But there are ways to address these risks.


Authority and accountability are typically formalised via delegations of authority. These delegations are essential to the efficient functioning of an organisation and allow managers to make quick approval decisions within well-known constraints. There are numerous delegations possible, such as financial (authorising payments), employee-related (approving allowances) and regulatory (issuing fines).

These delegations state which positions have the authority to make decisions and take action on behalf of a public authority. The emphasis here is on “position”; the risk of the public revenue being defrauded by corrupt individuals can be reduced by assigning authority to certain positions in an organisational hierarchy – as opposed to individuals.

Delegation limits provide “containment” structures, which serve to limit the size of the damage due to incompetence or corrupt behaviour. Authority to make decisions at various key points in a process (for example, selecting a supplier and verifying their delivery as part of a procurement process) can also be segregated among multiple positions through a system of delegations. High levels of discretion assigned to a single individual can result in end-to-end control of a process, which can create an unacceptable risk of partiality, bribery or other corruption. 

Senior management and staff involved in developing delegation policies need to be close to the frontline to make sure that delegated authorities are fit-for-purpose for required operations. If staff are too distant or removed from operations, the segregation rules and delegation limits developed in central offices may be unworkable in the field, not suited to operational realities or create complexity and confusion. For example, in an environment where a large number of purchase orders are processed, tightening controls by reducing delegation limits can dramatically increase managers’ workload and might create a tick-and-flick attitude.

Similarly, while there are high-risk decision points that are best controlled by separate individuals, separating every point of potential conflict in a process through the use of multiple delegations might create an unacceptable burden on operations. When managers are knowledgeable about processes, it allows them to identify low-risk points that may be more efficiently dealt with through other means such as the implementation of a program to analyse data patterns or random audits. 

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