Why Chart of Authority Becomes Critical as Organizations Grow
Early-stage companies run on speed and informal approvals. Growth changes the risk profile: more spend, more contracts, more stakeholders, and more exposure. At some point, the CFO needs a system that protects the company without turning the CFO into a bottleneck.
What a Chart of Authority Really Is
A CFO-grade Chart of Authority (CoA) is a structured system that defines who can decide, approve, and sign — by threshold and risk category — with segregation of duties built in.
- Decision authority: who is allowed to decide on spend/commitments.
- Signing rules: who can legally bind the company externally.
- Approval logic: how escalation works when thresholds are exceeded.
- Control design: four-eyes principle and segregation of duties.
Decision Authority vs Signing Rules
Mixing decision authority with signing authority is the fastest route to confusion and audit issues. The clean model:
Decision Authority
Defines who can commit the company internally: budgets, purchases, hiring, projects, and commercial terms.
Signing Rules
Defines who can bind the company legally toward third parties: contracts, PoAs, guarantees, and banking docs.
Segregation of Duties
Ensures no single person can decide + execute in critical transactions without oversight.
How CFOs Introduce CoA in a Developing Organization
1) Map Real Decisions, Not the Org Chart
Start from real flows: purchase approvals, vendor onboarding, contract signing, capex, hiring, and customer discounts.
2) Build a Role-Based Matrix
Your matrix should attach authority to roles and thresholds, making the system resilient to promotions and reorgs.
3) Implement Progressive Delegation
Delegation should evolve with maturity, starting with conservative thresholds and loosening as controls and performance improve.
Using AI to Verify CoA and Signing Rules
AI is powerful as a consistency and verification layer:
- Flags approvals missing for specific threshold/category.
- Detects mismatches between decided vs signed transactions.
- Highlights repeated exceptions and emerging risk patterns.
From Framework to Execution (Inside the Vault)
The Vault module provides the working assets to implement this quickly:
- ✓ Decision Authority and Signing Rules framework.
- ✓ Ready-to-use authority matrix policy and Excel template.
- ✓ Case example of how AI can be used for verification.
- ✓ Format: presentation, eBook (23 pages), and Excel template.