The Sarbanes-Oxley Act (SOX), a federal United States law passed in 2002, created new corporate accountability standards to protect the public and stakeholders from fraudulent practices, following high-profile financial scandals such as occurred with Enron Corporation.
The ACT meets its goals by demanding:
- Full financial disclosure
- Consistent policy standards
- Mandatory corporate transparency
- Protection of whistleblowers’ rights
- Reporting to independent external auditing committees
SOX applies to all publicly traded companies, although certain provisions may apply to nonprofit organizations and private companies. Fine and criminal penalties for non-compliance are intentionally harsh.
SOX has its greatest impact on financial and IT departments responsible for the storage of electronic records. Three specific Section 802 rules relate to electronic records management:
- The destruction, alternation, or falsification of records
- A mandatory 5 year retention period for all record storage
- The exact type of records requiring storage, including all business communications and related records
How SOX Affects Records Management
Records management systems effectively help companies comply with SOX by providing crucial control, security, tracking, and reporting of business communications, documents and images.
Keep in mind that SOC regulations are not limited to accounting records. Almost every business operates based on its communications: e-mails, documents, contracts, proposals, memos, invoices and more form the backbone of a company’s business records. It poses several questions about your records management:
- How long must you keep these records?
- When is it permissible to permanently destroy them?
For some businesses, this is an internal decision. For others, SOX mandates time requirements. The company may also be subject to additional state and local laws.
Retaining records as required, or longer, can benefit a business when an issue requires additional history. On the other hand, retaining documents longer than required can pose the risk of litigation if, for example, an organization is sued or audited.
Note: it is illegal to change your document retention policy after litigation has begun, and could be construed as destroying evidence.
Seeking…and Getting…Records Management Help
What’s the best course of action? Develop a thorough records management policy for your organization that both satisfies any legal requirements and complements your business model…and ensure the policy is followed.
Most important of all: If you do not know about, do not understand or do not want to manage your own documents, get immediate help from a reputable electronic records management company like Record Nations, where you can outsource automated records management for consistent retention and destruction of your documents, as well as protecting yourself in case of lawsuit or audit.
Don’t dwell on the details- let our experts help with your Records Storage and Records Management!
Information governance is an ever changing field as federal and state laws require more retention and faster discovery. Our experts will help you maintain your records storage needs regardless of format. We can help you manage your hard-copy records, and even guide you through the transition to a paperless office.
Record Nations has been providing document management solutions for over a decade. Let us help you find the right document storage solution for your business.
To get started, fill out the form on the top right of this page, or give us a call at (866) 385-3706. Within minutes, you’ll have several companies in your area to choose from.