Document retention policy - Benefits are company has a valid legal defense against accusation of willful destruction of document and helps to conform with one of the section 1519 of SOX requirements.
I decided to separate this policy from the other policies due to the emphasis given to this policy under section 1519 of SOX. The term document is generic to include E-Documents such as e-mail and web pages.
Following are the key drivers for document retention and destruction policy:
1. If a company does not have a schedule of document retention and destruction, the opposing party can accuse the company of selective, willful destruction of documents and hence evidence. The jury might even award the case against a company
2. A schedule of document retention and destruction can help prevent damaging documents becoming available in future litigation.
3. SOX 1519 imposes criminal penalties: "Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title imprisoned not more than 20 years, or both."
These are the guidelines that can be followed before establishing document retention and destruction program:
Industry standards - Get inputs from others in similar trade for inputs about the retention time frame
Governmental requirements - As an example IRS can audit tax records up to 7 years
Possible litigation - If a company foresees a possible litigation, documents relevant to those litigation should be preserved for a reasonable time period.
Cost of retention and destruction program - Weigh pros and cons of spending too much money on the program vs. risks if this is not done.
Thought #6: When you destroy a document, what additional step do you need to perform?