ARCHIVED - Horizontal Internal Audit: Delegation of Financial Authorities in Large Departments and Agencies

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Best Practices

As per the Audit Charter, the audit team also undertook to identify and promote best practices.  In this regard, the audit team reports the following:

Risk-based Management of Account Verification 

One department utilizes an approach whereby a risk profile is established for the various programs and expenditure types.  The requirement for pre-payment account verification is based on this risk profile.  Monitoring of payments made is based on statistical sampling.  The results of this monitoring are then used to update the applicable risk profiles.   This approach allows the department to maintain its service level in transaction processing, but without unduly compromising control.

The above-noted approach contrasts with that of many departments whereby all transactions are reviewed with the same focus, or there are no monitoring reports or follow-up on issues.  The risk-based strategy enables management to focus limited verification resources, to identify problems, and provide solutions to issues identified.

Delegation Instruments and Specimen Signature Records  

Delegation instruments are most effective when they clearly communicate all authorities and their accompanying limits.  The instrument should be designed to strike an appropriate balance between lending itself to being succinct and efficiently changed, while at the same time including sufficient detail.  Over-reliance on specimen signature records to capture detail diminishes the visibility of the overall configuration of authorities, as well as visibility, accuracy and the ease of updating.    A best practice was to reserve much of the detail for specimen signature records, but to ensure that these records are scanned and captured as electronic records available for routine central review. 

Digital Specimen Signature Records  

As noted above, specimen signature records must be made available when and where they are required to validate transactions.  A good practice is to have the digital images of specimen signature cards available to employees doing account verification.  Without a digital image, employees sometimes make copies of signature records, and these copies may not be up-to-date.  An electronic approach with access to digital images of the specimen signature records would increase the efficiency of the instruments and reduce the risk of transactions being processed without proper approval.  A central approach would also reduce the administrative effort required to keep the information current.

Effective Communication

It is good practice to provide a central point of communication for delegated authorities, as well as a web resource on the intranet, dedicated to delegation matrixes, policies and procedures.   This practice also provides for ease of updating the information.

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