Commitment Authority Policy
I. Purpose and General – this document derives its authority from the ____________________ Bylaws.
It is intended that the approvals as stated in this policy are for transactions which occur in the normal course of business and for which the individual has direct responsibility. Good business judgment requires that the authority limits indicated should be used prudently and should be reduced in instances where the type of expense is of an unusual, non-recurring or policy-setting type and where an employee is in a newly assigned or unusual situation.
Delegation – the approvals may be delegated to other responsible personnel upon proper witten authority. Delegation of a function does not remove primary responsibility from the delegator. In the event that the designated approver is not available, approvals may be made at the next higher level.
Execution – those who are authorized to approve expenditures or compensation are also authorized to execute (sign) necessary documentation.
II. This plan authorizes approvals depending on the level of expenditure. Designations of those levels are detailed in Exhibit A. This plan authorizes approval from the business individual shop Key Employee and higher.
III. The Key Employee may commit and approve expenditures for capital equipment, products, supplies and services up to designated levels when the following conditions exist:
a. Only authorized vendors and/or suppliers are used.
b. These expenditures are included in an approved program or operating budget. When actual or projected monthly or annual results are below plan, expenditures (capital, operating or salary modification) must be re approved per the commitment authority schedules. Certain conditions may exist where spending may be curtailed even though the budget has been met.
c. The expenditures are made at reasonable and effective costs and conform to Company requirements for quality, serviceability, and program integrity. Only authorized suppliers are to be used.
d. Appropriate overall cost controls are maintained by the Key Person. They begin with ordering from authorized suppliers, using proper receiving procedures, the verification of quality, quantity and invoice prices as well as proper coding of expenses and promptly providing invoices to the payment entity for processing.