Document Retention and Destruction Policy
Posted on Wednesday, October 09, 2013
There are only two policies of the Sarbanes Oxley Act of 2002 that are required to be implemented by nonprofit organizations, one of which is a document retention and destruction policy.
A documentation retention and destruction policy describes how, where, and for how long the organization’s documents are kept, as well as, how and when documents are destroyed. It is important that the policy also include a statement that all destruction will be suspended immediately upon any indication of an official investigation or when a lawsuit is filed or appears imminent.
In addition, guidelines for handling electronic documents versus paper documents should be addressed, including the format for saving documents, accessing the information, procedures for backing up information and procedures for archiving documents.
Retention periods vary for different types of documents. Some governing documents may need to be maintained permanently by the organization while monthly statements may need to be kept for only seven years. The organization’s policy should include a list of documents and the length of time the organization should retain each document. Below is a list of some common documents and the suggested period each should be maintained by the organization.
- Contracts (current) - Permanent
- Contracts (expired) - 7 years
- Correspondence - 7 years
- Correspondence (legal and important matters) - Permanent
- Accounts payable ledgers and schedules - 7 years
- Accounts receivable ledgers and schedules - 7 years
- Annual financial statements - Permanent
- Audit reports - Permanent
- Bank reconciliations - 7 years
- Bank statements - 7 years
- Cancelled checks - 7 years
- Donation records of endowment funds and of significant restricted funds - Permanent
- General ledgers and year-end trial balances - 7 years
- Invoices for payments - 7 years
- Journal entries - 7 years
- Tax returns - Permanent
- Time sheets - 7 years
- Application for recognition of tax-exempt status - Permanent
- Articles of incorporation - Permanent
- Board of directors minutes, notes and reports - Permanent
- Bylaws and amendments - Permanent
- IRS Determination letter - Permanent
- Contract agreements - 7 years
- Subaward agreements - 7 years
- Employment applications - 7 years
- Personnel files (current) - Permanent
- Personnel files (terminated employees) - 7 years
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.