Business documents are retained in storage long after their current lifetimes. Such retention can be for recording history. However, the major reason for document retention is for complying with statutory regulations. These regulations are proliferating in response to different kinds of scams and risks, and making life difficult for businesspersons.
1. Financial documents need to be maintained for specific periods such as seven years after the expiry of the financial year. Minutes of company board meetings and members registers need to be maintained for the life of the company, and probably even longer if investigations are likely. These are just some examples of document retention to comply with statutory requirements until recently.
2. The scope has been substantially extended by recent legislations like the Sarbanes Oxley Act. Under the requirements of this act, practically every kind of document has to be maintained so that top managers can prove that they had made arrangements to ensure the accuracy of published financial statements.
3. Documents like emails, records of instant messages, internal memos and audit working papers will have to be maintained. The company will also have to ensure that none of the documents are altered or deleted once investigation or litigation has begun or even considered possible.
4. Considering that businesses mostly maintain documents electronically these days, and that electronic documents are easily alterable, regulations have imposed an obligation to institute adequate controls against such alterations. Companies also have to include a discussion of these controls in the annual reports they publish.
5. The controls typically include restricting access to documents to authorized employees, maintaining an audit trail of all modifications made and exercising adequate version control where multiple versions of a document exists. SEC has specified that stockbrokers must maintain electronic documents in non-alterable and non-erasable formats.
6. Documents are also created and retained to prove that companies have complied with applicable regulations. There are general and industry specific regulations that stipulate maintenance of specific records in specified formats and their retention for specific periods.
7. Document retention also involves a responsibility to maintain confidentiality of the records so maintained in cases where they contain personally identifiable information (about employees, customers, etc) under regulations such as HIPAA.
8. Document retention obligations make it necessary to implement best practices for archiving and maintaining current documents, so that desired documents can be quickly retrieved, and also to reduce the costs of document retention while meeting statutory obligations.
9. Electronic documents can face readability problems if they are preserved for long periods. File formats in which they were created and applications that created them can become obsolete and no longer supported. New applications and media might use very different file formats and not be able to read them. It is necessary to convert old documents into new formats or take some other step to maintain document readability.
Documents typically need to be maintained for several years (or for ever) to meet statutory obligations, document discovery requirements or record history. Preservation of electronic documents poses certain problems such as ensuring their authenticity and preserving their readability.