Why is obtaining approval for transactions important?

Obtaining approval for transactions is crucial because it ensures that financial decisions are authorized and adhere to the organization's policies and procedures. This approval process serves as a control mechanism that helps to prevent unauthorized spending, fraud, and errors in financial management. By requiring permission for transactions, organizations can ensure that expenditures are justified and align with their budget and strategic objectives. This not only protects the organization’s financial assets but also promotes accountability, as it creates a clear record of who authorized each transaction, ultimately strengthening the internal control system. This level of oversight is essential in maintaining the integrity of financial operations and instilling trust among stakeholders.