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Authority Matrix Brief 

​By Mansour Bakr, PHRi, SHRM-CP
Posted 21 January 2018
​Revised 22 September 2018

Introduction
The inputs in developing a robust Internal authority matrix will be prepared on the basis of the organization structure, core & support business processes. The financial and operational authorities will be developed to consider the need for operational flexibility and internal control.
 
The authority limits will require adjustments to account for evolving operational needs. Definition of the authority limits are required at this stage, especially as a company is in the start of establishing an Internal authority matrix.
 
General Guidelines
The authority matrix is subject to the following general guidelines and principles:

• For any transaction that is not covered under the authority matrix, advice must be sought from the board committee.
• The approving authority cannot approve transactions which directly benefits him/her. For example, the approving authority’s expenses claims i.e. item for his/her own use. These transactions must be approved by the approving authority’s immediate superior.
• In case of joint approval authorities, the responsibility of each person is absolute.
• The authority matrix provides the overall authority limits applicable to a company. The detailed implementation of the limits should be in accordance with a company policies & procedures.
• Any amendments, revisions or additions to the authority matrix shall be effective only upon approval by the board of directors.

Principles of Authority Matrix
A critical challenge in is to delegate only to the extent required to achieve objectives. The delegation of authority is subject to the following basic principles:
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• Authority matrix is comprehensive and covers pertinent matters across all sections (departments & divisions) within a company. The authority matrix provides delegation of authority to authorized personnel to hold them responsible and accountable both for recommendation and approval functions. However, this should not hinder the flow of operations and should maintain a degree of desired control.
• The authority for approval is confined to the line function of an officer’s direct responsibility.
• Delegated authority should not be further delegated unless it is provided for in the authority matrix.
• The authority limits should be subject to the application of established policies and procedures of a company.
• Expenditure commitment should not be fragmented or split to avoid the limits imposed.
• Periodic review should be carried out to take into account material changes to operations, organization structure. The review should be based on level, volume and significance of routine expenditure to ensure efficiency of operations. Where applicable, caps imposed on each individual’s authority limits, consistent with the assigned authority and responsibility.

Authority Interactions Types
There are four main types of authority interactions as illustrated below.

Exhibit 1: Sample Authority Interactions Types

Authority Matrix Example
The below is a sample authority matrix that defines a basic procurement process.

Exhibit 2: Procurement Authority Matrix Example

RACI Matrix
A responsibility assignment matrix, also known as RACI matrix describes the participation by various roles in completing tasks for a project or business process. It is especially useful in clarifying roles and responsibilities in cross-functional or departmental processes.
 
RACI is an acronym derived from the four key responsibilities most typically used: Responsible, Accountable, Consulted, and Informed.

​Below are the standard definitions for R-A-C-I to expand on the business interface process chart.

Exhibit 3: R-A-C-I Definitions

RACI Example
Lets further understand RACI with an example. A trading company in physical raw sugar defined their core business process activities to provide clarity about the roles and responsibilities of stakeholders for each key task as illustrated below.

Exhibit 4: Physical Raw Sugar RACI

Once the physical raw sugar RACI has been defined and approved, the trading company mapped the physical raw sugar key activities to illustrate the flow of the process. This will allow the company to focus on the work rather than on job titles or hierarchy.

Exhibit 5: Physical Raw Sugar Process Map

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