Document Retention and Destruction Policy

 

PURPOSE OF THIS TOOL: Certain federal laws prohibit the destruction of certain documents. Not-for-profit organizations should have a written, mandatory document retention and periodic destruction policy. Policies such as this will eliminate accidental or innocent destruction. In addition, it is important for administrative personnel to know the length of time records should be retained to be in compliance.

Document Destruction

The Document Retention and Destruction Policy identifies the record retention responsibilities of staff, volunteers, members of the board of directors, and outsiders for maintaining and documenting the storage and destruction of the organization’s documents and records.

The organization’s staff, volunteers, members of the board of directors, committee members and outsiders (independent contractors via agreements with them) are required to honor the following rules:

  1. Paper or electronic documents indicated under the terms for retention in the following section will be transferred and maintained by (fill in the blank based on the organization’s practices);
  2. All other paper documents will be destroyed after three years;
  3. All other electronic documents will be deleted from all individual computers, data bases, networks, and back-up storage after one year;
  4. No paper or electronic documents will be destroyed or deleted if pertinent to any ongoing or anticipated government investigation or proceeding or private litigation (check with legal counsel or the human resources department for any current or foreseen litigation if employees have not been notified); and
  5. No paper or electronic documents will be destroyed or deleted as required to comply with government auditing standards (Single Audit Act).

Record Retention[1]

The following table* indicates the minimum requirements and is provided as guidance to customize in determining your organization’s document retention policy. Because statutes of limitations and state and government agency requirements vary from state to state, each organization should carefully consider its requirements and consult with legal counsel before adopting a Document Retention and Destruction Policy. In addition, federal awards and other government grants may provide for a longer period than is required by other statutory requirements.


 

 

 

Type of Document

Minimum Requirement

Accounts payable ledgers and schedules

7 years

Audit reports

Permanently

Bank reconciliations

2 years

Bank statements

3 years

Checks (for important payments and purchases)

Permanently

Contracts, mortgages, notes, and leases (expired)

7 years

Contracts (still in effect)

Contract period

Correspondence (general)

2 years

Correspondence (legal and important matters)

Permanently

Correspondence (with customers and vendors)

2 years

Deeds, mortgages, and bills of sale

Permanently

Depreciation schedules

Permanently

Duplicate deposit slips

2 years

Employment applications

3 years

Expense analyses/expense distribution schedules

7 years

Year-end financial statements

Permanently

Insurance records, current accident reports, claims, policies, and so on (active and expired)

Permanently

Internal audit reports

3 years

Inventory records for products, materials, and supplies

3 years

Invoices (to customers, from vendors)

7 years

Minute books, bylaws, and charter

Permanently

Patents and related papers

Permanently

Payroll records and summaries

7 years

Personnel files (terminated employees)

7 years

Retirement and pension records

Permanently

Tax returns and worksheets

Permanently

Timesheets

7 years

Trademark registrations and copyrights

Permanently

Withholding tax statements

7 years

Resources

          National Council of Nonprofits www.councilofnonprofits.org

          BoardSource Record Retention and Document Destruction Policy—Download 4 Samples (E-Policy Sampler) www.boardsource.org/Bookstore.asp?Type=epolicy&Item=1071

          Independent Sector www.independentsector.org/issues/sarbanesoxley.html

          AICPA Management of an Accounting Handbook—2003 and IRS Appendix Document www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/PracticeManagement/PracticeAdministration/ PRDOVR~PC-090407/PC-090407.jsp

          Guide to Record Retention Requirements in the Code of Federal Regulations: Contact the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402-9325 or from CCH, Inc. at www.onlinestore.cch.com

 

* Adapted from National Council of Nonprofits.