Month End Glossary

Delegated Financial Authority

Delegated Financial Authority (DFA) is the authorization given to individuals or positions within an organization to approve certain financial transactions, within predefined limits.

Delegated Financial Authority (DFA) refers to a system in which specific financial decision-making powers are transferred from one level of an organization to another, often from senior management to individuals or teams at lower levels. DFA typically includes predefined limits regarding the amount and type of transactions that can be approved, ensuring accountability and control.

For example, an organization's CFO might delegate the authority to approve expenses under $10,000 to department managers, while larger expenditures may still require higher-level approval. Another common use of DFA is in managing procurement, where departmental staff are given specific limits to streamline the process without constant oversight from higher management.

DFA is crucial in maintaining operational efficiency as it prevents the bottlenecking of financial decisions. It also establishes accountability, as the delegation is usually accompanied by documentation, such as policies and approval mechanisms, that ensure clear boundaries. Organizations frequently review DFA levels to align with operational changes, audit requirements, or regulatory compliance.

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