Document Retention Policy

HM&M Document Retention Policy

 

This document retention policy contains a general description of the documents and records that are produced or obtained by Huselton, Morgan & Maultsby, P.C. (the Company) and its employees, and outlines what records are to be retained and how long to keep them. The design and implementation of this policy is important in complying with professional, legal and regulatory requirements, managing liability risk to the firm, facilitating future engagements and managing storage cost of those documents.

The law requires the Company to maintain certain types of records, usually for a specified period of time. Failure to retain those records for those minimum periods could subject you and the Company to penalties and fines, cause the loss of rights, obstruct justice, spoil potential evidence in a lawsuit, place the Company in contempt of court or seriously disadvantage the Company in litigation.

The Company expects all employees to fully comply with any published records retention or destruction policies and schedules, provided that all employees should note the following general exception to any stated destruction schedule: If you believe, or the Company informs you, that Company records are relevant to litigation, or potential litigation (i.e., a dispute that could result in litigation), then you must preserve those records until Legal Counsel determines the records are no longer needed. That exception supersedes any previously or subsequently established destruction schedule for those records. If you believe that exception may apply or have any question regarding the possible applicability of that exception, please contact an Owner.

For all practice areas, the files and records which this policy addresses encompass both paper documents and files and records maintained electronically on other storage media. This would include, for example, electronic data on tape, computer hard drives and servers, personal digital assistants, and portable data storage devices, such as flash drives, hard drives, hard disks, floppy disks, and backup tapes. Electronic data includes, but is not limited to, e-mail and other electronic communications, word processing documents, spreadsheets, databases, calendars, telephone logs and voicemail, contact manager information, Internet and computer usage files, and network access information.

Most client services such as bookkeeping, or the preparation of financial statements and tax returns, are performed on a periodic and recurring basis. Some services are performed only on an “as requested” basis. In any case, when a client service is completed, original client records used by the firm during the course of an engagement should be returned to the client and not retained in the firm’s workpapers and files. If the accountant believes that an item needs to be retained for engagement documentation purposes, the firm should make a photocopy or electronic copy of the original for the file. Clients should be informed of their obligation to maintain original client records and should not be led to believe that the firm assumes any responsibility to maintain them. Only final versions of documents from completed engagements or the latest version of documents from uncompleted engagements should be kept in workpaper files. At the time an electronic document is updated, the prior version should be overwritten or deleted from all media storage devices where it may reside, including hard drives, network drives, portable media, and e-mail folders.

Definition of Firm’s Engagement Records – Engagement workpapers and files typically consist of the firm’s original workpapers, records of staff, and client communications regarding the engagement, correspondence with clients and third parties pertaining to the engagement, copies of the work product provided to the client, and copies of client documents. Absent a contractual agreement with a client (e.g., in an engagement to provide expert consulting services to an attorney where the attorney requires the CPA to turn over all workpapers at the end of the litigation service engagement), the firm’s workpapers are the property of the firm. Engagement records may exist in electronic form, such as e-mails and electronic documents, and may be stored on computer hard drives, personal digital assistants, disks, backup tapes, and network servers. These records typically include metadata and may exist in network databases accessible to many users.

The attached schedule identifies various practice areas of the firm, a description of the engagement workpapers and files, and describes the retention method and media for each. While minimum retention periods are suggested, the retention of the documents identified and of documents not included in the identified categories should be determined primarily by the application of the general exception affecting document retention noted above as well as any other pertinent factors and circumstances.

Files shall be reviewed for destruction on an annual basis. The destruction procedure will be to shred or incinerate all paper files in a manner that will maintain client confidentiality. The paper files may be destroyed on site or offsite and may be facilitated by an outside vendor, i.e. Iron Mountain. Electronic files and records will be permanently deleted from, overwritten or rendered unreadable on all portable data storage devices, computer hard drives, and network servers, and the method used will verify that duplicate files do not exist.

Summary of Retention Policy and Media for Engagement Workpaper Files and Documents

Practice Area

Type of File

Description of Documents and Records

Retention Period

Retention Method


Accounting and Attestation 

Audit Engagement Workpaper Files which include:

Audit programs and other planning documents, trial balances, journal entries, various schedules, confirmations, checklist, copies of important documents, specifics of test performed

10 years

Electronic Media

 

Audit Engagement Permanent Planning Files which include:

Audit programs and other engagement acceptance and administration documents, going concern memo

Existing Clients: Permanent
Former Clients: 10 years

Electronic Media

 

Review Engagement Workpaper Files which include:

Review administration and other planning documents, trial balance reports, journal entries, various analyses, schedules, copies of important documents, and other schedules

10 years

Electronic Media

 

Compilation Engagement Workpaper Files which include:

Compilation administration and other checklist, trial balance reports, journal entries, copies of important documents, various other schedules

10 years

Electronic Media

 

Other Accounting and Consulting Engagement Workpaper Files which include:

Engagement administrations and planning documents, checklists, various schedules, analyses, and copies of important documents

10 years

Electronic Media

 

Client Permanent Files which include:

Client organizational documents, notes receivable documents, debt obligations, lease and other contracts, real estate purchase and sale documents, employee benefit plan documents

Existing Clients: Permanent
Former Clients: 10 years

Electronic Media

 

Client Correspondence Files which include:

Copies of all letters, memoranda, and other information sent to and received from the client not included in other files. This includes emails and faxes not included in other files

10 years

Electronic Media

 

Signed Documents Binders which include:

Engagement letter, copy of issues financial statements, notes, if applicable, and related accountants report, management representation letter

10 years

Paper

Tax Consulting and Compliance

Income Tax Return Workpaper Files which include:

Copies of tax returns prepared, source documents, trial balance reports, journal entries, schedules, analyses, checklists, research documents, depreciation reports, and other important documents

10 years

Electronic Media

 

Payroll Tax Return Workpaper Files which include:

Copies of various payroll reports and forms prepared, checklists, payroll journals, summary reports and records, schedules detailing employee and vendor information, tax deposit records

10 years

Electronic Media

 

Estate and Gift Return Workpaper Files which include:

Copies of tax returns prepared, Last Will and Testaments, Trust agreements, source documents and schedule supporting values, and copies of other important documents

Existing Clients: Permanent
Former Clients: 10 years

Electronic Media

 

Other Tax Return Workpaper Files which include:

Copies of tax returns prepared, source documents, various schedules, analyses, checklists, research documents, and other important documents

10 years

Electronic Media

 

Client Permanent Files which include:

Client organization documents, notes receivable documents, debt obligations, lease and other contracts, real estate purchase and sale documents, employee benefit plan documents

Existing Clients: Permanent
Former Clients: 10 Years

Electronic Media

 

Client Correspondence Files which include:

Copies of all letters, memoranda, and other information sent to and recieved from the client not included in other files. This includes emails and faxes not included in other files

10 years

Electronic Media