How to Build an Approval Matrix (Free Excel Template)

Ask three managers who can approve an RM80,000 purchase and you will often get three different answers. One says the GM. One says the CFO. One says “depends, is it budgeted?” All three are partly right, and that is exactly the problem an approval matrix solves.

This guide explains what an approval matrix is, what to put in it, and how to build one step by step. There is a worked example in ringgit and a free Excel template you can download and edit.

What is an approval matrix?

An approval matrix is a table that sets out who in the company can approve what, and up to which amount. Each row is a type of decision, such as a purchase, a payment or a new hire. Each column is an amount band or condition. Where they meet, you see the role that must approve.

You may know it by another name. In Malaysia, many listed companies and GLCs call it the Limits of Authority (LOA). Others call it a Delegation of Authority (DOA), authority matrix or authorisation matrix. They all describe the same thing. Listed companies usually go one level higher, with a board charter that lists matters reserved for the board, and the LOA covers everything delegated below that.

Approval matrix vs RACI

People mix these up. A RACI chart shows who is Responsible, Accountable, Consulted and Informed on a piece of work. It is about participation. An approval matrix is about authority: who can say yes, and how much they can say yes to. You can have both, but don’t try to merge them into one table. It becomes unreadable fast.

What to include in an approval matrix

At minimum, every row should answer these questions:

• Transaction type. Purchase, capex, payment, claim, write-off, new hire, contract, vendor registration.
• Amount bands. The ringgit thresholds where the approver changes.
• Approver by role. “Head of Department”, not “Encik Azman”.
• Conditions. Budgeted or unbudgeted, local or overseas, related party or not.
• Supporting documents. For example, three quotations above a certain amount.
• Who must be informed. Finance, internal audit or the board, even if they don’t approve.

Also add one line at the top that says whether amounts include SST. It sounds small, but a requisition for RM48,000 can cross an RM50,000 limit once tax is added, and land with a different approver. Pick one and write it down.

Example approval matrix for a Malaysian company

Here is a simplified example for a mid-sized company. The numbers are for illustration only. Your bands should come from your own data, which we cover in the next section.

Transaction	Up to RM5,000	RM5,001 to RM50,000	RM50,001 to RM500,000	Above RM500,000
Purchase (budgeted)	Head of Department	General Manager	CFO	CEO
Purchase (unbudgeted)	General Manager	CFO	CEO	Board
Capital expenditure	General Manager	CFO	CEO	Board
Staff claims	Head of Department	General Manager	CFO	Not applicable
Write-off of receivables	CFO	CFO	CEO	Board
Quotations required	1	3	3	Tender

Notice a few things:

• Unbudgeted spending moves up one level. This is common and it keeps budgets meaningful.
• Write-offs start at the CFO, even for small amounts, because they hit the books directly.
• The quotation row is a control, not an approver. Keeping it in the same table means people see the rule at the moment they need it.

Some decisions don’t fit amount bands at all. Vendor registration, for example, usually needs Procurement to check the documents and Finance to create the vendor, so no single person can set up a supplier and pay it. That is segregation of duties, and it should sit in the matrix as its own row.

How to build an approval matrix in 6 steps

1. List every decision that needs approval

Ask Finance, Procurement and HR for the forms they process. Then ask what gets approved by email or WhatsApp without a form. Those informal approvals are usually where the risk is.

2. Look at your real numbers before setting bands

Pull the last twelve months of purchase orders and sort them by amount. If 80% of them are below RM5,000, setting your first band at RM1,000 means your GM spends every morning signing small requests. Set bands so that senior people see fewer, bigger decisions.

3. Assign roles, not names

Use job roles that exist in your organisation chart. When someone resigns or gets promoted, the matrix should still work without an update.

4. Add the rules that stop workarounds

These are the gaps people find within a week:

• Split purchases. Two requisitions of RM48,000 to stay under an RM50,000 limit. State that related purchases from the same supplier count together.
• Approving your own request. The requester can never be the approver. If the requester is the HOD, it goes to the next level up.
• Back-dated approvals. Goods arrive first, approval is signed later. Decide what happens when this is found.
• Verbal or WhatsApp approvals. “Boss said ok” is not an approval record. If the matrix allows urgent approvals, say how they must be confirmed in writing.
• Conflicts of interest. An approver with a link to the supplier must step aside.

5. Plan for absence

Approvers go on leave, travel and fall sick. Decide who acts for each role while they are away, whether the acting person gets the same limit, and how long the arrangement lasts. Keep a record of every delegation. Without this, people either wait two weeks or find someone “senior enough” to sign.

6. Get it approved, publish it, review it yearly

The matrix itself needs approval, usually by the CEO, and for the top-level limits, by the board. Then put it where people can find it, not in a shared drive folder five levels deep. Review it every year or whenever the organisation chart changes.

Why the Excel version is not enough

A matrix in Excel is a good start, but it is only a document. People still have to read it, work out the right approver, and route the form themselves. That is where mistakes happen. A requisition goes to the wrong person, or skips a level, and nobody notices until audit.

The better option is to put the matrix into the workflow itself. In OSPROV, a purchase request form can carry a condition step such as “Over budget limit?” that sends the request to the right approver automatically, based on the amount and budget status on the form. The matrix becomes the routing rule, and the audit trail shows that every approval followed it. Our guide to approval workflow automation in Malaysia walks through how to set this up.

Download the free approval matrix template

The Excel template includes:

• The example matrix above, ready to edit
• A sheet for segregation of duties, such as vendor registration and payment release
• A delegation log for recording acting approvers during leave
• A version history sheet so you can show auditors when limits changed

No sign-up needed. Change the bands, roles and transaction types to suit your company.

Frequently asked questions

What is the difference between an approval matrix and limits of authority?

In practice, nothing. Limits of Authority is the term many Malaysian listed companies and GLCs use, while approval matrix and delegation of authority are more common elsewhere. All three describe who can approve what, and up to how much.

Who should approve the approval matrix?

Management drafts it, usually led by Finance. The CEO approves it, and in listed companies the board approves the top-level limits and the matters it keeps for itself, as set out in the board charter.

How often should we review it?

At least once a year, and any time the organisation structure changes, a new business unit starts, or inflation makes your bands too low to be useful.

Should the amounts include SST?

Either works, but you must choose one and state it clearly at the top of the matrix. Using the amount before tax keeps your limits steady when tax rates change.

Can an approval matrix be automated?

Yes. Once the rules are clear, a workflow system can read the amount and conditions on each request and route it to the right approver automatically, with a full record of who approved and when.