13.2. Authorization of Capital Budget
If capital expenditures exceed authorized limits, special approval by top management is required. A project not meeting expectations or that is no longer appropriate, given current circumstances, may be canceled. It is better to cancel a project if the cost/benefit relationship indicates that the project is no longer viable. If a project is a succession of individual projects, a partial authorization may be made.
Exhibit 13.1 is an illustrative capital budget request schedule form.
An authorization form should be filled out for approved capital expenditures. The reason and purpose of the expenditure should be given. Exhibits 13.2 and 13.3 are illustrative authorization forms.
The amount authorized should be compared periodically to actual costs incurred. In addition, commitments must be recorded and monitored because ultimately the total appropriated amount may be exceeded. The estimated cost to complete also should be noted along with any expected overruns or underruns.
