Principle of Retention
An organization shall retain its information for an appropriate time, taking into account all operational, legal, regulatory and fiscal requirements, and those of all relevant binding authorities.
Business and government create enormous quantities of records each business day. To control the growth of these records, an organization needs a program to help maintain and destroy records that are no longer needed. Records retention programs specify the length of time business records must be retained. The retention program is based on the concept that information has a life cycle, which is the time period from the creation of a record to its final disposition.
Records document an organization’s business operations and are essential to effectively managing that business. The ability to properly and consistently retain records is especially important today, as most records being created and stored are in electronic form.
Organizations make retention decisions based on the content and purpose of records. Retention periods are determined by following these requirements:
- Legal and regulatory – Federal, state, local, and even international laws mandate the retention of records and information for a specific period of time. To comply with these extensive laws and regulations, an organization must conduct legal research in consultation with legal counsel to determine all records retention requirements. Laws and regulations establish the minimum retention period for those records to which they pertain. Failure to comply with laws and regulations may result in costly penalties and loss of legal rights.
- Fiscal – Records that have financial or tax value must be retained to ensure the timely payment of obligations and the proper receipt of receivables, as well as to support the organization’s financial audits and tax returns. Legal research and consultation with legal counsel must be completed to satisfy fiscal retention requirements.
- Operational – Once legal, regulatory, and fiscal requirements have been established, an organization must determine how long records are needed to satisfy its business needs. This is usually determined by interviewing the person(s) most knowledgeable about the operational value of each record type.
- Historical – Records that depict the history of an organization should be preserved for the life of that organization. Examples of historical records include articles of incorporation, bylaws, charters, and board of directors’ minutes. Historical records normally constitute a very small percentage of an organization’s total records volume.
Once its records retention requirements are determined, an organization must conduct a risk assessment to determine the appropriate retention period for each type of record. Retention decision makers must be aware that the presence or absence of records can be either helpful or harmful to the organization. Therefore, to minimize risks and costs associated with records retention, it is essential to immediately dispose of records after their retention period expires.