Records Management Implications of the Sarbanes-Oxley Act

For Public Companies:
The Act requires the following procedures to be implemented; demonstrating their implementation will require the involvement of the records management programs of public companies:

• Audit committees of issuers must establish procedures for the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal controls, and auditing.

• Management is responsible for establishing and maintaining an adequate "internal control structure and procedures for financial reporting" and must include in the annual report an assessment of the effectiveness of the internal control structure and procedures. An issuer's outside auditor must attest to and report on management's assessment.

In addition, the various reporting and governance requirements imposed on publicly traded companies and their officers suggest that it would be a good practice to maintain thorough records concerning companies' efforts to comply with the reporting and governance features of the Act.

For Registered Public Accounting Firms
The Act requires the following provisions to be implemented in the records management programs of registered public accounting firms:

• Audit work papers and other information related to any audit report in sufficient detail to support the conclusions of that report must be retained for at least seven years.

In addition, the Act requires the auditors to evaluate the records management programs of the client firms to provide reasonable assurance that:

• All records that accurately and fairly reflect the transactions of the issuer are included.

• The transactions are recorded in a manner to permit preparation of financial statements in accordance with GAAP, documenting any material weaknesses in the controls.

Criminal Actions
Title VIII of Sarbanes-Oxley: Corporate and Criminal Fraud Accountability Act of 2002 makes it a felony to knowingly destroy or create documents to impede, obstruct, or influence any existing or contemplated federal investigation.

Title IX of Sarbanes-Oxley, also known as the White Collar Crime Penalty Enhancements Act of 2002: Makes it a crime to tamper with a record or otherwise impede any official proceeding.

Minimum Retention Schedules

DOCUMENT TYPE	RETENTION PERIOD
Accounts Payable Ledger	7 Years
Accounts Receivable Ledger	7 Years
Bank Statements	Permanent
Charts of Account	Permanent
Contracts & leases	Permanent
Correspondence (Legal)	Permanent
Employee Payroll Records	Permanent
Employment Applications	3 Years
Inventories of Products	7 Years
Invoices to Customers	5 Years
Invoices from Vendors	5 Years
Payroll Records & Tax Returns	7 Years
Purchase Orders	5 Years
Time Cards & Daily Reports	7 Years
Training Manuals	Permanent
Union Agreements	Permanent

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