M12S04 - Retention & ESI - Paths to Success - Part One
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From the MER Conference 2012 Speakers: Christine Burns and Carol Stainbrook Despite their best efforts, many companies haven't been able to devise retention schedules that can be readily applied to both their paper records and electronically stored information (ESI). Retention categories that are too broadly written can lead to excessive retention of needless information, which in turn results in higher recordkeeping and discovery costs. Conversely, retention schedules that are too detailed aren't easy to maintain or use, especially with the proliferation of ESI. Having the right blend of specificity and universality isn't impossible - it just takes understanding some key considerations. This session addresses: - Integrating conflicting statutory and regulatory requirements from different jurisdictions in ways that address different organizations' unique cultures and needs, - Determining when and how to collapse information types into fewer retention categories, - Learning when to limit the number of different retention time periods, - Recognizing different options to handle "event-based" retention periods, and - Balancing IT's seemingly contradictory needs: fewer retention periods that can be applied to broader sets of information and sufficiently detailed retention specifications that can be applied to specific tables of data within large, integrated business systems.
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M12S04 - Retention & ESI - Paths to Success - Part One
- 1. Cohasset Associates, Inc. NOTES Retention & ESI Paths to Success Part One Christine M. Burns & Carol Stainbrook May 7, 2012 1 ESI Friendly Retention Schedules Use Functional, not Detailed Retention Schedules Simplify Conflicting Legal Requirements Consolidate R C lid Retention P i d i Periods Eliminate “Events” Balance Detail Against Simplicity for IT © 2012 May 7, 2012 2 Functional Retention Schedules Streamline Retention Schedules © 2012 May 7, 2012 3 2012 Managing Electronic Records Conference 4.1
- 2. Cohasset Associates, Inc. NOTES Detailed Schedules Include Retention Period Per Document Type Financial Financial Financial Statements Statements Statements Monthly Quarterly Annual Retain 12M Retain 2Y Retain 7Y © 2012 May 7, 2012 4 Functional Schedules Typically Apply To All Records of a Business Process Financial Statements Data & Directories Retain “X” Years or “Max. of X Years” © 2012 May 7, 2012 5 Know Your Laws Simplify Conflicting Legal Requirements © 2012 May 7, 2012 6 2012 Managing Electronic Records Conference 4.2
- 3. Cohasset Associates, Inc. NOTES General Accounting Records: Some Legal Retention Requirements Permanent (General Ledger) 50 Years - General and Subsidiary Wisconsin Ledgers (Domestic Tax + 3 7 Years 3-7 Insurers) U.S. Utility Companies IRS – 3-6 Years; Georgia (Banks) (Per SEC) Worthless Securities Loss Canada Claims – 7 Years Most State Tax Authorities – 3-6 Years © 2012 May 7, 2012 7 General Accounting Records General Accounting Records: Accounts receivables and payables Transactions account entry support Reconciliation of accounts ledgers and sub accounts, sub- ledgers Final accounting transaction reports and data © 2012 May 7, 2012 8 General Accounting Records: Operational Retention Considerations Typically Current with Tax Audits? Must Retain General Ledgers Longer than other Accounting Records? Impact of Escheat Filings? © 2012 May 7, 2012 9 2012 Managing Electronic Records Conference 4.3
- 4. Cohasset Associates, Inc. NOTES Payroll Records: Some Legal Retention Requirements Employment + 2 or 5 Years Current Year + 8 Years British 6 Years or Less Columbia, Minnesota Columbia 3 Years Saskatchewan Other States United States (Federal) © 2012 May 7, 2012 10 Payroll Records Retention Based on Creation Date Payroll Processing Records Salary, merit and status changes Vacation and overtime payment authorizations Employee reimbursements for tuition and/or relocation services Adjustments and manual compensation check support Payroll registers and period-ending reports © 2012 May 7, 2012 11 Payroll Records Retention Based on an “Event” Payroll Deductions & Authorizations Tax status and withholding forms, e.g., W-4s Direct deposit forms Deductions authorizations Defined Benefit Pension Calculation Support © 2012 May 7, 2012 12 2012 Managing Electronic Records Conference 4.4
- 5. Cohasset Associates, Inc. NOTES Payroll Records: Operational Retention Considerations Calculate Pension Benefit? Consider Personal Injury/Property Limitation of Action Periods? Consider Potential Liability Under Lilly Ledbetter Fair Pay Act? Consider Limitation Periods in the Dodd-Frank Wall Street Reform &Consumer Protection Act? Destroy Personally Identifiable When Eligible? © 2012 May 7, 2012 13 General Contracts Obligations + 30 Years British Columbia & Manitoba Obligations + 15 Years Kentucky, Ohio, Ontario, Saskatchewan, & New Brunswick Obligations + 10 Years Illinois, Indiana, Iowa Louisiana, Missouri, Illinois Indiana Iowa, Louisiana Missouri Rhode Island, West Virginia & Wyoming; 6 Years or Less Alberta, Newfoundland and Labrador & Quebec All remaining states and provinces ©0 2 21 May 7, 2012 14 Contract Records Contract records RFPs and Responses Contract Review Records Agreements and Exhibits Amendments Certificates of Insurances © 2012 May 7, 2012 15 2012 Managing Electronic Records Conference 4.5
- 6. Cohasset Associates, Inc. NOTES Contract Records: Operational Retention Considerations Difference Between “Major” and “Minor” Contracts? Are Certificates of Insurance Filed With Contracts? Is the “Active” Period Consistent? Do NDA’s “Expire”? If not, what is a reasonable validity period? © 2012 May 7, 2012 16 Consolidate Retention Limit Number of Retention Periods © 2012 May 7, 2012 17 Establish ONE Retention Period for Internal, Non-Regulated Records X Years Current + X Years No Longer than X After Last Use © 2012 May 7, 2012 18 2012 Managing Electronic Records Conference 4.6
- 7. Cohasset Associates, Inc. NOTES Combine Retention Periods for Longer-term Regulated Records Payroll General G l Accounting Privacy X Years © 2012 May 7, 2012 19 Number of Retention Periods Will Vary, Often Based on Regulations More Regulated Less Regulated Functions or Jurisdictions © 2012 May 7, 2012 20 Lightly Regulated, U.S. Based Only Retention Period Active Use + 3 Years Active Use + 7 Years “Indefinite” “Indefinite” ~ 6 Categories with a Required Minimum and a Not to Exceed Maximum Retention Period “Active Use” Period Varies by Record Type © 2012 May 7, 2012 21 2012 Managing Electronic Records Conference 4.7
- 8. Cohasset Associates, Inc. NOTES Moderately Regulated, Canadian & U.S. Locations Retention Years Record Types 7 Years General accounting records (excluding the general ledger) 10 Years Payroll records Employment + Payroll records - British Columbia, 10 Years Saskatchewan 15 Years General contracts Permanent General ledger © 2012 May 7, 2012 22 New York Based Organization, U.S. Federal & 50 State Jurisdictions Retention Years Record Types 7 Years General accounting records and general contracts 9 Years Payroll-related records, excluding year- end payroll registers d ll i t 50 Years Payroll registers, compensation plan records ©02 21 May 7, 2012 23 Eliminate “Events” Whenever Possible Choose How to Handle “Event-Based” Retention ©1 22 0 May 7, 2012 24 2012 Managing Electronic Records Conference 4.8
- 9. Cohasset Associates, Inc. NOTES Eliminate Event-Based Retention Periods Whenever Possible Tax Audit or Exam Project Completion Termination Updated © 2012 May 7, 2012 25 Consider Change “Until Tax Audit” or “Exam” Alternatives to: Before Using XX Years = Typical “Conditional” Tax Settlement Retention /Exam Cycle Periods: Accounting Use Records Holds for Exceptions © 2012 May 7, 2012 26 Separate Projects by Consider Metadata, Librarie Alternatives s, Folders... Before Using Change “Project “Conditional” Completion Completion” to: Retention Periods: Last Action for Projects Specific Project’s Library or Folder © 2012 May 7, 2012 27 2012 Managing Electronic Records Conference 4.9
- 10. Cohasset Associates, Inc. NOTES Longest Consider Employment Period? Alternatives Before Using Change “Conditional” “Termination” to: Termination Retention Periods: 50 Years (Longest Payroll Employment + 7- 10 Year Period) © 2012 May 7, 2012 28 Establish 3-Year Consider P&P Review Process Alternatives Before Using Change “Until “Conditional” Updated Updated” to: Retention Periods: 10 Years (3-Year P&Ps Review + 7 Year Period) © 2012 May 7, 2012 29 Understand Competing Needs Balance Detail Against Simplicity for IT © 2012 May 7, 2012 30 2012 Managing Electronic Records Conference 4.10
- 11. Cohasset Associates, Inc. NOTES Understand that IT Has Competing Needs Fewer More Periods Detail © 2012 May 7, 2012 31 “Finishing” the Retention Schedule is Just a Beginning © 2012 May 7, 2012 32 Q&A © 2012 May 7, 2012 33 2012 Managing Electronic Records Conference 4.11
- 12. Cohasset Associates, Inc. NOTES Retention & ESI Paths to Success Part One Christine M. Burns & Carol Stainbrook May 7, 2012 34 2012 Managing Electronic Records Conference 4.12