By Tara M. Melick, CPA, Supervisor
The current landscape of business lends itself to a mindset that organizations need to be more diligent than ever in safeguarding important documents, which includes having a sound record retention policy. Not ensuring the retention and protection of important financial records possesses a wide range of legal and financial implications that can pose many risks to an Association, yet keeping documents for too long can be a waste of resources and space.
According to IRS Publication 583 there is no law dictating what documents should be kept in hard copy form. Any requirements applicable to hard copy records are also applicable to electronic storage. There may be a legal reason to keep physical copies of certain documents, and this can be determined on a case by case basis. The most important aspect is that there is a backup plan no matter what storage option is utilized.
Why is record retention important to an organization, and particularly an Association? Aside from being a sound business practice, having a record retention policy can support regular operations as well as special situations such as annual audits and transition of Board members or professionals/ vendors. These events and circumstances can be made efficient and painless when a comprehensive collection of Association financial records is easily and readily available.
Two of the most common records retention questions we receive are:
1. Which records do we need to retain?
2. How long should we keep our records?
Events are sure to arise that lend themselves to seeking situation-specific professional advice for record retention questions and concerns, such as when the potential of litigation or arbitration exists. However, absent of these situations, there are some specific guidelines an Association can use to retain and dispose of records.
