Question

All organisations need to have effective policies and procedures in place controlling the approval and authorisation for purchasing assets. However, not all of these policies and procedures are the same. Identify and explain (100 to 120 words) why some organisations would have different policies and procedures to achieve the same results.

Answer 1

Assets are very important part of balance sheet of an organization so there is a need to control approval and authorization for purchasing assets in every organization. But they cannot be same for all the organizations. Approval and authorization policies may differ among organizations because of nature of assets, quantum of assets frequency of purchasing an assets are different par organization.

Assume a organization where assets purchasing can be a regular process for the business such as in a transport business etc. and in a business like any kind of trading business there is no regular need to purchase assets. So in both cases the controlling policies for approval and authorization will be different. Size of business organization will also impact the approval process for purchasing assets in a relatively small organization controlling policies can be simpler than bigger. In bigger originations a separate department for this can be exist and in smaller organizations this work can be done by general management or by owners. Controlling policies can be differ on cause of internal policies a organization follow. These can be more complex in a decentralized organizations and can be less complex in a centralized organizations. Difference can be due to purchasing policy a organization adopt such as a tender route or a direct purchase route.

So on the base of above discussion we can say that to achieve the same result the controlling policies for approval and authorization for purchasing assets can be different from organization to organization.