Committing the institution's funds to purchase goods and services is part of its budgetary process and therefore should be subject to controls that are, usually, laid down within its Financial Policy and Procedures. There is of course an assumption that there are sufficient funds available within the Cost Centre to pay for the desired goods or services.
The level of authority delegated to staff throughout an institution, to commit funds on its behalf, will depend on the degree of de-centralisation of the procurement activity. In some, the procurement function will be fully centralised and only those employed in the central Procurement Office will have the authority to approve purchase orders (or their electronic equivalents). In others, there will be a more de-centralised structure with nominated staff, at departmental level, having delegated authority to approve purchases up to pre-determined financial levels.
Traditionally, there have been four distinct authority roles involved in the procurement process:
- Budgetary - to approve the use of the Cost Centre's funds ie what is to be purchased and paid for by the named Cost Centre;
- Purchase - to approve the official purchase order;
- Delivery or Goods Received Stage - to acknowledge receipt of and confirm that the correct goods or services have been received; and
- Payment - to approve the final release of funds from the named Cost Centre to pay for the goods or services
However, as e-procurement is implemented there may be a less obvious separation of duties (at least in paper terms). In this modern environment, the creation and authorisation of the electronic order will initiate the transaction. Receipt of the goods/services will be recorded on the purchase order processing/financial system, which will then electronically match with the supplier's electronic invoice. The system will then make payment to the supplier at the appropriate time. 'Paper' signatures will therefore, probably only be evident at, possibly, the budgetary (requisition) stage and at the delivery stage (on the paper delivery note) received with the goods/services.
Note: It is important that staff are aware of their levels of authority in respect of committing funds. Details of each member of staff's authority levels should be held in an Authorised Signatory Database.