Delegation of authority
Delegations of authority in an agency establish who is empowered to make decisions and to take action on behalf of the organisation. Typical examples of activities that may rely on delegated authority can range from signing contracts that commit the agency to significant expenditure, to approving leave or petty cash payments.
Many allegations of corruption reported to the Commission involve the misuse of delegated authority.
Improperly exercising authority can constitute corrupt conduct as defined by the Independent Commission Against Corruption Act 1988.
A risk assessment of delegated authority in a public sector agency may identify some or all of the following corruption risks:
- An employee using delegated authority to make a decision for corrupt purposes.
- An employee acting outside their delegation for corrupt purposes. Examples include the use of delegated authority to:
- grant a development approval which will benefit the employee, relative, or someone with whom they are otherwise connected
- award a contract to a contractor in exchange for a bribe
- discontinue enforcement action in exchange for a bribe.
Managing corruption risks
As a minimum your agency should:
- Introduce a policy and procedures covering the use of delegated authority.
- Include in the policy sanctions for any breach of the policy and procedures.
- Review the policy every two years.
- Refer to the use of delegations in all relevant corporate documents such as codes of conduct.
- Train all employees with delegated authority in the policy and procedures.
- Ensure that the policy includes a requirement for records to be kept of all decisions taken under delegated authority.
- Include the use of delegations in the agency's internal audit and corruption risk management processes.
Risk management strategies
Following your risk assessment of delegating authority, you should consider the following risk management strategies:
- Notifying, in writing, of delegation levels to any affected employees, committees and teams.
- Establishing a register, available to the public, of delegations that demonstrates who is acting on delegated authority and for what purpose.
- Ensuring that the delegations system provides for automatic reporting of decisions made under delegated authority.
- Ensuring that the delegation system includes processes to:
- verify whether a delegation is current
- check that temporary delegations are properly authorised, notified, recorded and archived
- remove delegations that are no longer needed and store superseded delegations for future reference
- Reviewing delegations regularly, in accordance with any applicable statutory requirements (for example, in the case of local government, within 12 months of each election), to ensure that they are appropriate to the capabilities, qualifications and needs of the positions to which they apply
- Introducing a process to audit and review the performance of delegated functions and ensure compliance with operating procedures
- Establishing a system to check that financial payments are processed and:
- the person approving the payment has delegation to do so
- the delegated officer has not been involved in a transaction they authorised.
|Case study 1|
In 2007, the ICAC investigated the behaviour of a manager at an agency who was able to influence tendering decisions to favour a particular air-conditioning maintenance company. The selected company then entered into subcontracts with companies controlled by the manager.
The manager also used his delegated authority as contract superintendent to give approval for "extra services" to be done under the contract, which resulted in additional payments to the contracted company and additional financial benefits to himself.
He also approved invoices submitted by the contracted company, knowing that his own companies would in turn receive a portion of the payments made by the agency. The manager similarly used delegated authority to certify invoices relating to ventilation grilles, submitted by a second company with which he had a "profit-sharing" arrangement.
Ultimately, the manager was able to approve more than $22,000 in payments that exceeded his level of delegation. This was made easier to achieve and harder to detect because there was confusion among other managers about whether the signing of a contract by the chief executive officer meant the limit was not relevant to expenditures within the contract budget, or whether appointment as a delegate of another position-holder carried with it the financial delegations held by the delegating officer.
There were also multiple delegations in place – one for purchases using a purchasing card, and another for purchases made by other means.
|Case study 2|
In 1997 the ICAC reported an investigation of a council health and building surveyor who had solicited bribes. He had improperly asked for $40,000 from a property developer in return for the approval of plans submitted to the council. He also solicited $20,000 from another property owner in return for not issuing a demolition order affecting the property.
In both cases the surveyor falsely represented the bribes as payments required for the decisions to be processed by his supervisors. His managers were unaware of the arrangement.
The council was able to establish that because the surveyor's position did not have any delegated authority, he could not have fulfilled the promises he made in relation to the approval of the plans. However, the property owners had no way of knowing that was the case.The ICAC has since recommended that publicly accessible delegation registers be established in council offices to enable people who submit applications to a council to understand who has the relevant authority.
Frequently asked questions
How can a delegations system be improved to reduce the risk of corruption?
A well-designed delegations system will:
What are appropriate accountability controls on delegated authority?
All decisions made under delegation should be recorded in some way. It is important to ensure that a convenient process is in place for recording decisions especially for employees, such as enforcement officers, who work out of the office. Records should also be in an auditable format so that reviews of decisions made using a delegated authority can be reviewed to check for irregularities.
Delegates often need access to resources such as finance or equipment or confidential information. This access should be commensurate with the level of authority and updated if there are any changes.
It is also essential to ensure that employees are not in a position to misrepresent their level of authority. Ensuring delegation levels are widely known to everyone involved in decisions will help to reduce this risk.
- Good Conduct and Administrative Practice: Guidelines for State and Local Government, NSW Ombudsman
- Treasurers Directions, NSW Treasury
- Manual of Delegations to Department Heads, NSW Department of Premier and Cabinet, 2004.
Relevant ICAC investigations
- Wollongong City Council – allegations of corrupt conduct in relation to development applications, approvals and other matters - part three (Operation Atlas) (October 2008)
- RailCorp - corrupt conduct associated with air-conditioning contracts (Operation Persis) (June 2007)
- Roads and Traffic Authority & RailCorp - investigation into defrauding the RTA and RailCorp in relation to provision of traffic management services (Operation Quilla) (December 2006)
Public Finance and Audit Act 1983 (NSW)
NSW Treasury, www.treasury.nsw.gov.au
NSW Department of Premier and Cabinet, www.dpc.nsw.gov.au
Related topics on the ICAC website