Level Of
Authorization( 20-80 rule；2005-2009
)
2023/11/20 remark：
Key points of LOA format：
(1)Control Document: my
former employer, PwC, taught we auditors that control document is a thing to
keep managers’ approval records of daily operation activities; it is also a
required document for communication in work processes. Thus, in my creativity,
I defined it as one of the required columns in this chart and everyone would
know what document they need to use to keep the approval record of their
managers’ approval signature.
(2) Definer: it means
work role and responsibility owners/ work Owners; in my work experience in
below A company and career history after A, I found that in policies and work
process design, once the work roles and responsibilities are defined ( ex: similar to ball players’ roles and
responsibilities are defined), then, the work process (ex: ball passing process) are [almost] completed
the definition.
In all the policies discussion meetings, people/departments involved
would raise related issues, I define this column in this chart accordingly ß- it means it is not only my work efforts but also my colleagues’ work
contribution resulting in this work outcome😊 .
Different work culture/environment would have different work roles and responsibilities
definition of the same specific works objectives:
- Please refer to: #RnR #Overdue #AR and#CreditLimit #Approver
Should you still have other questions,
- Please Ask Me A Question.
- Please also refer to Work Level Definition.
Other explanation:
In below co- working experience with Consulting Company K, I knew my policy
design related work results have been given to some external business management
consulting firms as their service material to their clients, thus, please Consulting
Companies or Consultants who currently or in the past have used my work results
in providing services for your clients…..sponsor this blog
in the amount of part of your consulting service income 😊. Thank you!
2022/12/31 remark：
[Level
Of Authorization Format] and [20-80 rule applied to the analysis work for categorizing
the Level for Authorization], these 2 work results were my personal creation work
achievements when I worked for my former employer during year 2005~2009. [Level Of Authorization Format] was a work
result under my modification work based on an existing template of the company
at that moment, and, regarding the application of 20-80 rule, I was using it
right after I studied it from my #QualityManagement study program when I was the
EMBA student of #NCKU.I remember my manager complimenting me about this because
she brought this work result to Group CFO meeting and shared how our company
was implementing it and that was recognized by all of the meeting attendees…
Today,
I would like to share this and hope everyone is able to use it well and also know
that I am the original creator. I don’t charge anything from you for this sharing,
so, please all the users consulting firms or individual do not charge others
due to this work idea or saying you are the original work creator. Please give
all credit to……….20-80 rule builder, NCKU and my former company. Thank you. 😊
If
viewers benefit from this sharing at work, please forward to more people for
their related work reference. Thank you.
1.
Format：Today is 2022/2/28, some people asked me what
the number at the end of article topics stand for, just like 2005-2009 of this「Level Of Authorization(20-80 rule;2005-2009)；it stands for the timing period I
created those things I shared in this blog, that is, regarding this Level Of
Authorization format(LOA), I
built it up when I worked for Company A during year 2005~2009 when I was
responsible for internal control related works, called Format A below. I hope this information clarify the
confusion if you also have similar questions.
Besides, I
worked for Company T after my resignation from A, and at that moment, T has
already been working with a global reputable consulting firm K in optimizing T’s
internal work process, and K provided T a LOA format as an approval work
documentation advice, and that format is my work result, Format A, mentioned above when I was working for Company A
during year 2005 ~2009；thus, I
believe, including Company A, there are many companies using Format A to build up their own
LOA. I sincerely hope sharing today will help more people and companies a lot
in LOA implementation.
In this
blog, the shared LOA format is named as Format
W, and it’s the first time I post in public source, and the authorized work
level used is the practice listed in Level
of Authorization(Approval ) Chart- Work Level Definition 2005-2009 for your
reference.
2.
20 – 80 rule( or 80-20 rule, or Pareto principle)
This rule, it usually describes 80%
outcome of things resulting from their 20% significant root cause, or,
globally, 80% of wealth is controlled in the key 20% wealthy persons…etc. To
apply this rule in LOA, it describes the 「frequency」or「times」 occurred of the amount or things
happened and corresponding the proper authorized approval 「work level」；for instance：things will be taken as 「general」 or 「frequently happened」 if the frequency of specific amount
incurred or things happened reach 80% in overall situation, and the corresponding
authorized approver level would be working level managers who directly manage
the team( e.g. Manager level), hence, things happened with less frequency but
more amount incurred needs approvers with higher work level than the Managers.
Usually, 20-80 rule is much more effective in defining LOA for EXPENSE approvers and it needs
analysis of expense accounting records in specific work period to collect its
amount incurred and work activities frequency to define proper approval limit
and corresponding approvers’ work level.
Below
assumes the accounting work period is 2021/3/1 -2022/2/28 and the chart
explains the analysis result of 「Account Item – Other Expense」：
It
started to count from the smaller amount in transaction records; above chart
shows the accumulated subtotal will reach 80% of total records when the accumulated
counting result is 80 ( =34+16+13+9+8), and the expense amount is TWD1,000,000
or lower, thus, it belongs to 「general」transaction, it is appropriate to
define Team Leaders as the approvers work level for it, and, when the expense
amount is higher, TWD1,000,001 or higher, a senior work level approver is
required. It needs to define appropriate approvers’ work level corresponding to
expense range.
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#Level of Authorization #LOA #InternalControl #PolicyImplementation #Policy&Processes