In a current fast-paced business environment, every company thrives to reach maximum level of efficiency of operations in every department. When it comes to accounting, efficiency often depends on accessibility and transparency of records, both for internal and external use. Since the cloud based storage became the best alternative for the physical storage due to the ease of use and virtually unlimited space, a lot of businesses chose the strategy of keeping the records indefinitely. However, this strategy may not be the most cost effective, as increasing volume of data needing to be stored drives up the storage providers’ costs, resulting in a larger expense every year.
As a result, implementing record retention policy that fits business needs may be a good tool in reaching the efficiency in record-keeping and help to control costs associated with data storage. A good starting point in creating the document retention policy is to identify all the functional areas within the company. Some functional areas may be divided into more detailed areas that can have different regulatory requirements.
In order to help companies create a document retention policy, the AICPA provided the following table as a sample. It has a listing of the most common functional areas, examples, and suggested retention periods for records. These are general guidelines only; they do not represent legal advice. Because regulations vary by state and industry, please contact your legal expert to ensure compliance with current regulatory requirements.
If you’re interested in establishing a document retention strategy and are a member of the AICPA, you can download a practice aid here. If you’re interested in more information about record retention, do not hesitate to contact us at 818-334-8645. We look forward to hearing from you.