Authorization occurs when a person with a certain level of authority gives permission for an action to take place. Authorization is a key component of the control systems used within an organization. The following are examples of authorization:

  • A payables manager authorizes the expenditure of funds.

  • A human resources manager authorizes the hiring of an employee.

  • A materials manager authorizes the issuance of materials to the shop floor.

  • A department manager authorizes an employee to be given access to the corporate network.

Authorization may be given verbally, via a signature, by the use of a key or key card, and so forth.

Authorization is derived from the power vested in individuals by an organization. Typically, a person is only allowed to issue authorizations if he is also responsible for the outcome of the event. Thus, authority and responsibility are combined in the same person.

Related Courses

Accounting Controls Guidebook