Beyond Governance on the importance of Authorised Signatory Management: Q&A
Why does Authorised Signatory Management matter? To answer this question, we decided to speak to a number of corporate executives from different industries and get their perspective on the topic.
In today’s post, we speak to Erika Percival, CEO at Beyond Governance, to learn her view on the role of authorised signatory management in the modern corporate world. Beyond Governance is a UK-based corporate governance consultancy that specialises in providing flexible strategic and tactical governance solutions.
Why is signatory management so critical for corporate governance and risk management?
Signatures are used as governance tools within businesses and provide accountability; signatory signs on behalf of themselves as well as the company. As a business grows, the business owner or Board will not have the capacity to approve every single item.
That is why it is important to have a delegated authority policy in place which sets monetary and materiality levels at which designated individuals from set departments have the authority to sign off on. In certain areas, where you have more exposed risk, you would expect there to be extra checks in place, such as the use of joint signatures or escalation of signatures to more senior roles in the business.
Having a clear line of who is able to sign what document also allows for a more streamlined audit to take place. If the accountability is transparent and widely understood, then internal controls within a company are effective.
What is Authorised Signatory Management?
And why it matters now more than ever…
What’s the role of technology in modern corporate governance? How can companies drive digital transformation?
This is particularly poignant, especially given the pandemic situation. If you are not operating digitally, you are not operating. Given this move, it is essential that your existing governance framework is reviewed so that checkpoints are in the appropriate place. The risks faced by the company are now different so it may be a case of adding in extra assurance measures in places where risks were previously low.
E-signatures help provide an easily accessible log of who has signed off what and the use of wet signatures is likely to decline, this will be of particular use as we enter a new working world where it is likely that there will be more remote working and fewer colleagues in the office. To allow this to take place, companies need to amend their constitutional documents and internal processes and policies to allow it. Whilst this is progressive, the surrounding laws, particularly those surrounding tax, may not have changed. It is, therefore, important to ensure that all bases are covered when implementing new digital processes and there are no holes in your governance framework.
What about e-signatures? How can companies ensure all e-signers are appropriately authorised?
Companies need to ensure that they have a delegated authorities policy that has been approved at Board level and one which is readily available for all employees and regularly kept up to date. It should be clear on monetary limits, whether there is a different approval process when using new providers and be considered in line with a company's risk appetite (e.g. something smaller in value may require Board approval if there is a greater risk associated with it). When choosing a provider the Board will need to make sure that the system which records the signatures is compliant with EU and UK electronic signature laws to ensure that they are legally binding.
What are the risks of failed signatory management for businesses?
Failed signatory management is usually down to failure ineffective communication and can indicate wider corporate governance failings. This could result in companies being tied into contracts which are of no benefit and potentially result in employees abusing their position which could result in the company being criminally liable for items such as fraud, bribery as well as individual directors being found guilty for not acting within their duties under the Companies Act 2006.