All transactions must have appropriate authorization systems in accordance with the instructions and criteria established by the organization's management, the definition of authority will be linked to an adequate communication of responsibilities.
The level of authority will normally depend on the nature of the transaction and its importance based on the volume of operations of the entity, the authorization allows the realization in specific situations of transactions or tasks included in the operating cycle of the organization, involving decision-making powers.
Authorization procedures will act at all levels, for which it is necessary to clearly define the responsibilities for each functional area of the organizational structure (sales, purchasing, production, accounting information systems, among others).
Hence, it is advisable to reflect in writing (procedures manual) the authority in relation to, for example, approval of contracts with suppliers, operating and banking agreements, approval of investments, etc.)
In this sense, the authorization systems will be based on a series of precepts under which the rules of action and execution will be defined. These precepts will be represented as obligations, restrictions and prohibitions depending on the type of tasks or acts existing in the organization's operating system, being important factors to create control awareness within the entity.