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Definition 1

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In order to enhance the efficiency of the authorization task, repeating or similar transactions or their elements may be classified into standard groups and approved beforehand (March and Simon, 1958). Some examples include sales order maximum quantities, price lists, maximum amounts for specific expenses (e.g., per diems for travel expenses, rent), and preapproved customers and their related credit limits. This information is typically stored in easily retrieved files referred to as ‘master files’. With such preapprovals in place, the authorization task becomes a simple check of compliance, which may enhance the consistency of the authorization process. The creation of preapprovals is a specialization of the valuation and decision-making tasks within the asset custody duty, and therefore should be independently authorized.

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