Who Can Approve What? Approval Limits and a Spending Matrix

Quick answer: A spending authority matrix is a one-page table that says who may approve a purchase, up to what amount, who approves anything above that, and who stands in when that person is away. Set a few limits by amount, add rules for risky types of purchase whatever their value, and name a backup for every approver. Write it down, have the owner or board sign it, and review it at least once a year.

The problem: one signature for everything

In many growing businesses, one person, often the founder or a long-serving finance officer, approves every purchase. That works while the company is small. Then volume grows, and a ₦15,000 request for printer toner waits in the same queue as a ₦4 million generator. When that person travels or goes on leave, everything stops.

The opposite problem is just as common: limits nobody wrote down. A department head assumes they can spend their own budget, finance assumes otherwise, and the argument happens after the supplier has delivered.

Both cost money: small purchases wait for days, large ones get less scrutiny because the approver is swamped, and when an auditor asks "who authorised this?", the answer depends on someone's memory.

How the public sector handles it

Nigeria's federal government uses the same idea at a much larger scale. As announced by the Bureau of Public Procurement (BPP) on 15 May 2025, revised thresholds mean that only contracts of ₦5 billion and above for goods and consultancy services, and ₦10 billion and above for works, need Federal Executive Council approval. Smaller procurements are handled by ministerial and parastatal tenders boards and by accounting officers, according to their value. The BPP gave its reasons as inflation, changing market conditions and the need to reduce the bottlenecks that delay contract awards, and said the thresholds will be reviewed from time to time, so check the current figures with the Bureau before relying on them.

The Public Procurement Act 2007 defines a monetary threshold as the value limit in naira beyond which an approving authority may not award a contract. The Act applies to federal procurement and to bodies that draw at least 35% of their procurement funds from the Federation's share of the Consolidated Revenue Fund, not to a private company. What follows is general guidance for your own policy, not a statement of what the law requires of your business, but the logic carries over: push routine decisions down, keep large ones at the top, and write the limits down.

How to build your matrix

1. List who can approve

Start with the people who already approve purchases or hold a budget: department heads, the finance manager, the managing director, perhaps the board. Keep the list short: every extra level adds waiting time.

2. Set limits by amount

Give each level a ceiling for a single requisition (an internal request to buy). Three or four tiers is enough for most small and mid-sized businesses. Agree two details in writing:

• What counts towards the limit: the full requisition total, including VAT and delivery, not the price of each line.
• What happens above the limit: the request goes on to the next level, and the lower approver's sign-off means "I support this", not "this is approved".

Guidance from the US Government Accountability Office (GAO), whose internal control standards are known as the Green Book, says management should delegate authority only to the extent needed to achieve the organisation's objectives. In practice, a limit should be high enough that routine purchases never reach the top, and low enough that unusual ones always do.

3. Add rules by type of purchase

Some purchases deserve a second look whatever they cost: capital equipment, IT and software, contracts longer than a year, a first order from a new supplier, anything a director requests. For these, the matrix names an extra approver even when the amount is small.

4. Keep requester and approver separate

Nobody should approve their own request. The Green Book describes segregation of duties as splitting authorising, processing and recording, reviewing, and handling the related assets among different people, so no one person controls a whole transaction. If a department head raises a request, it goes to the next level. Where the team is too small to separate duties fully, the Green Book calls for alternative controls instead, such as the owner reviewing every month's approvals afterwards.

5. Name a backup for every approver

Leave and travel are usually known weeks ahead, so the delay they cause is avoidable. The Green Book expects contingency plans for when someone in a key role leaves without notice. For approvals, that means a named backup in the matrix, ideally someone at the same level or the next one up, never a junior covering for their boss.

Nigeria's federal Financial Regulations are strict on this point for public officers: an officer who has been given control of expenditure may not pass it on, in whole or in part, without the knowledge and approval of the officer who controls the vote (the budget allocation). The private-sector lesson is simple: the backup is chosen in advance by whoever owns the authority, not picked on the day by whoever happens to be in the office.

6. Remember that delegating does not remove responsibility

The Public Procurement Act makes an accounting officer personally responsible for compliance even where duties were delegated, and the Financial Regulations say an officer who delegates a duty is not relieved of responsibility for it. The same logic applies in a business, even though the Act does not: a managing director who gives the finance manager a ₦2 million limit is still accountable for how that limit is used. That is why the matrix should be signed, dated and reviewed, and why someone should check a sample of approvals against it.

7. Write it on one page and review it

If the matrix does not fit on one page, people will not read it. Review it once a year and whenever prices move sharply; as the BPP's reasons for revising the federal thresholds show, inflation can turn a sensible limit into a bottleneck.

An example matrix (illustrative)

The company, roles and naira amounts below are illustrative. Use round numbers that fit your own size and budgets.

Rules by type (any amount):

Decide whether a request passes through every level up to the one with enough authority, or goes straight to that level: passing through is slower but gives each budget holder a say. A limit also only works if nobody breaks one purchase into several smaller ones; see How to Stop Purchase Splitting. If you run a nonprofit or need to tie limits to project budgets, see the spending approval process for nonprofits and NGOs.

How RequisitionPro helps

A matrix on paper is a good start; the hard part is making sure each request reaches the right people in the right order.

Difficulty: requests go to whoever is around. In RequisitionPro, a Company Admin sets up an approval workflow for each department. Every requisition from that department follows the same ordered steps, and each step names its approver: either specific people or a role, such as the department head. The benefit is that your matrix becomes the route: nobody has to remember who approves Finance's requests.

Difficulty: the approver is away. A step can name more than one person, and its approval mode can be set so that any one of them can approve. Naming the approver and their backup from your matrix on the same step means the request does not wait for one person's return. The trade-off: both receive every request at the same time, either can approve it even when the main approver is in, and a rejection by either one rejects the requisition, so agree in writing when the backup should act. The platform does not hand a request to someone else automatically or escalate it on a timer, so keep the backups in the workflow up to date.

Difficulty: amount limits. Be clear about this: RequisitionPro does not route requisitions by amount or apply your naira limits automatically. Every requisition from a department follows that department's steps whatever its total. The limits stay in your policy, and your approvers apply them. In practice:

• Build each department's workflow so its last step is someone whose limit covers that department's normal spending. If the department often raises larger requests, add the next level as a further step; the trade-off is that this person then sees every request from that department, small ones included.
• Ask every approver to check the requisition total against the matrix before approving, and to approve only within their limit or when a higher step follows. If a total is above the last approver's limit, they should not approve it, and should pass it to the next level as your policy sets out.
• Keep the one-page matrix where approvers can see it, and check a sample of approved requisitions against it each month.

Difficulty: chasing a slow approval. While a requisition is pending, the requester can send a reminder to the approver. Reminders are limited in number; for other ways to cut waiting time, see Why Purchase Approvals Take Days.

Each person in the platform has a role (User, Department Head or Company Admin); whoever is named on a workflow step is the approver for that step, so your matrix, not the role name, decides who that is.

Related questions

How many approval levels should a small business have? Usually two or three. Each extra level adds waiting time, so add one only when it brings a real check, such as a budget holder or a second director for very large commitments.

Should limits be per purchase or per month? Start per requisition, because it is easy to check at the moment of approval. Add a monthly or per-supplier total if you see many small purchases to the same supplier.

Can a department head approve anything within their own budget? Only if your matrix says so. A budget says how much a department may spend in a period; an approval limit says how much one person may commit at once. Most organisations need both.

Next step

Watch the "Approval Workflows" video (1:45) on our tutorials page to see how department workflows and approval steps are set up in RequisitionPro.