Ten Things You Should Know About Document Retention

Business documents are retained for several purposes such as complying with statutory requirements, providing decision support information, recording history, demonstrating compliance with regulations and meeting document-discovery needs in litigation. Retaining electronic documents for long periods faces some special problems.

1. Government regulations require that certain documents, such as accounting records, be retained for specified number of years. New regulations such as Sarbanes Oxley Act (SOX) have extended the scope further, making it necessary to retain practically all kinds of documents to authenticate the accuracy of published financial information.

2. Other regulations require documents to be maintained to show that the business is complying with regulations. For example, many kinds of records need to be maintained about employees and the calculation of their pay if you employ people.

3. In litigation, claims are proved by producing relevant documents. If care had not been taken to preserve these documents, genuine claims might not be enforceable in a court of law. On the other hand, if all documents had be retained in a manner that enables quick retrieval, the claims can often be settled without going to court through document discovery process.

4. Audit is another situation where production of documentary evidence becomes necessary. The auditors can be auditors checking the accuracy of financial statements or regulators checking that the company has complied with regulatory requirements.

5. While regulatory compliance as above is at best an unavoidable necessity, document retention for providing decision support information is a critical requirement affecting the very success of the business. Without relevant information about past performance and other aspects, business managers can easily make wrong decisions.

6. Historical records can help a company build its brand. For example, old facts about the Coca Cola Company might be used to recreate nostalgia and a favorable impression about the company in the minds of prospective customers.

7. The types of documents that need to be maintained to meet the requirements are varied. They range from transaction records such as invoices and purchase orders through e-mails, correspondence, chat message records and market study reports to audit working papers and registers in standard formats that record specific happenings, such as industrial accidents.

8. Document retention has been made far more affordable and manageable by Information Technology. Electronic documents can be stored in little space, and organized in a manner that enables retrieving any particular document amazingly quick compared to retrieving paper documents from the filing section.

9. Document retention policies must be so framed that privacy of personally identifiable information about individuals is maintained in a confidential manner. Regulations like HIPAA make such confidential maintenance compulsory and make any failures punishable.

10. Retention of documents also involves their eventual disposal when they have expired. Retaining every kind of document indefinitely can prove expensive and a sheer waste of resources. There is also the issue of electronic documents created by legacy systems unreadable as the systems that created them are no longer in use or supported. Hence, periodic conversion of old data into current (or other readable) formats is an additional task that will need to be attended to. Tagging documents by their expiration date and automatic disposal of expired documents can save a great deal of trouble.

Regulatory requirements, audit requirements, management information requirements and recording of history all require that documents be maintained for specific periods or even forever. Document retention policies need to be decided upon and implemented on the ground to meet the varied requirements at affordable costs.