Why International Records?

Most companies we encounter already have a record retention schedule for their domestic operations and it dose not cover the other countries around the world where they do business. Without knowledge of in-country record retention requirement how can compliance with the law be assured?

What exactly is record retention?

• Operational value, people in the organization need the record to prove or demand payment, for example;
• Fiscal value, the organization needs to demonstrate compliance with tax regulations and the accuracy of returns;
• Legal value, laws and regulations on record retention in every jurisdiction need adherence;
• Historic value, a very small percentage of company records may be of value to future researchers and should be appraised by a professional archivist.

What kind of records?

Business records. All organizations we have ever visited have three basic types of records:

• Records about money.  The way we keep track of the shareholders assets in through records.  Accounting transactions, journals, ledgers, statements, etc.  The majority of a company’s records will fall in this category;
• Records about people.  Every personnel action taken from an initial requisition through termination and superannuation generates a record;
• Records specific to the business of the organization. Consider a manufacturing environment and all the record generated from research and development, patents, fabrication, testing and quality assurance, and then marketing and sales. This process may generate atmospheric pollutants so knowledge of environmental laws is critical.

What about use of computers?

On a sales call once I had an executive tell me that they did not have records anymore that “everything was now on the computer.”  Laws don’t discriminate when it comes to the form of records.  Most countries do allow the use of computers and electronic storage for business records but they often put qualifications on those systems to prevent any tampering.

Can records be moved out of the host country?

Most countries recognize the global nature of business but some countries say that accounting records cannot leave the boundaries of their country.  Others will stipulate qualifications for authorization or notification.

Are there restrictions on the movement of personal data?

In those jurisdictions that have addressed this, any personally identifiable information leaving the home jurisdiction, the destination country must have protection equal to the host country. Other countries place other restrictions, including notification of the data subject by the controller that their information is going to another jurisdiction.

What countries have been researched?

There are 132 country folders in our library with over 4,000 documents. Major economies get researched almost every project. There are handful of countries that only have been research for a single project. Irrespective, all countries in all project get a refresh to make sure that a law in the library is still in effect and has not changed, if a law has been repealed and what replaced it, or is there any new relevant law enacted.

What if some of the countries where we do business in not on the list?

We have ready access to the laws and regulations of virtually every nation in the world. The world wide web had made this largely possible. Additionally, recognizing entrepreneurial opportunities, private companies and individuals are making compilations of single nation or regional laws and regulations. We subscribe a number of those services.

Do we need to do research in every country on our list?

The general rule is that if you are deriving revenue from that country, minimally you must know how long to keep accounting records and tax returns. If you have any employees in that country, you must know how long to keep a record. Some companies prioritize the order in which they develop schedules, doing those countries where they have larger investments and therefore larger risk.

What sources are used for research?

As mentioned the public free internet where governments develop websites of all their laws and regulations is among the most fertile research territory. France and the Netherlands are good examples of government sites. Sometimes it is non-governmental organization such as bar associations or universities, which is the case in Canada and Australia, respectively. In many instances record keeping law is found at the websites of individual agencies of government such as finance, justice or environmental protection, such as in Mexico. International organizations such as the United Nations and the International Labor Organization have developed sites for laws and regulations. And then there are the private entities such as well know names such as LexisNexis and Westlaw, followed by many organizations that are not household words outside of the comparative law research world. The Garant service for Russian law is an outstanding example here. Books and loose-leaf services are purchased or obtained from libraries either through personal visits or interlibrary loan.

How is research approached?

It depends on the source. Many internet sites have powerful search engines attached that allow for searches on key words or phrases. Other simply present a list of laws by year which requires browsing. One of the commercial services we subscribe to provides the exact name of major, mostly business related, laws for over 200 countries. Often, simply placing that exact name in a search engine will yield a direct hit. For library sources uses of indexes/tables on contents leads us to the law where it is scanned for the relevant record retention passage.

What is usually found?

Generally the more developed the economy, the more record retention related law and regulation can be located. No country in the world has anything approaching the sheer volume of retention rules as does the United States. For example, the Environmental Protection Agency has over 800 retention requirements; the Department of Labor nearly 200.

For the rest of the world, we always look in the following places:

Company Law/Commercial Code – retention of books and records, accounting support documentation, commercial prescription/limit of action

Tax Code – retention of accounting records or limitation period of additional assessment or application for refund.

Civil Code – General period of prescription or limitation of action; specific periods for product liability, payment of pension and wages.

Labor Code – retention requirements for personnel and payroll records; limit of action or prescription for labor actions

Social Security Code – retention requirements for pension records; limit of action or prescription periods for claiming pension benefits.

Other:
Environmental Acts/Code

• Air, water, soil emission monitoring
• Waste generation, transport and storage

Workplace Safety

• Employee exposure
• Noise
• Accidents/injury

Legislation and rules for specific industries, such as:

Aerospace/Defence
Agriculture/Food Production
Chemicals
Consumer Products
Engineering
Financial Services
General Manufacturing
Legal Services
Mineral Extraction
Other Services
Petroleum/Gas exploitation
Pharmaceutical
Telecommunications

What if a specific law on a specific subject cannot be located?

In many countries there are only very general rules on record retention. For instance a Commercial Code may state that “books and records must be retained for 10 years” and that is it without any definition or qualification. This is interpreted to cover any manner of accounting records in the organization. Another example comes from acts on the protection of the environment. There may not be any mention of emission monitoring records, but only a section on limit of action for violations of the environmental act. These general requirements would be “stretched” to cover areas where legislatures or regulators are silent.

The main product is packaged, practical research, what is that?

See sample. Before we begin the engagement, you will be asked to complete a custom profile describing your business operations, country locations, and other questions to help us guide the research. The full text of the relevant record retention laws are prepared in a MS Word document or other form as specified, prefaced with a summary similar the sample. The retention times and citations can then be directly applied to your existing record retention schedule.

What is a record retention schedule?

See sample. A record retention schedule is an extension of your records management policy. It names the record (official names and aliases, including form number is applicable), has a description of the record, can list examples, has a field for “event trigger,” that is, does an observable event, such as termination of employment start the “retention clock” or does the retention period commence at the end of the year the record was created. The retention time is expressed, usually in years, followed by the legal citation and any comments.

Why not apply our domestic schedule to the rest of the world?

This is what de facto occurs in many organizations but it is a dangerous tactic because retention times in other countries may exceed those in the home country. This could expose the company to risks ranging from not being able to substantiate tax returns to the loss of rights to do business in that country.

What if we do not have an existing schedule?

International Record Retention dot com can help you there. We have developed schedule for scores of companies in a broad variety of industries. We can assemble a prototype for you and you can circulate it among the various stakeholders to apply your own specific terminology, provide examples from your environment and through an iterative process develop a compliant product without taking up a lot of your people’s valuable time. On a rare occasion onsite visits might be required for interviews with records owners in high risk or very complex situations. We have also developed policies for companies many times.

Why do we need a schedule anyway?

There is a well accepted rule of thumb that says that upon implementation, one third of your existing collection of records can be destroyed, one third can be moved to an offsite storage locations and one third will remain in the office. That can mean dramatic savings in storage costs and office space.

One of the largest parts of legal fees today is found in responding to discovery requests. The primary reason is unneeded searching through obsolete records. This true of paper records and particularly true of electronic records and emails. The most effective records management tool ever invented is the shredder and the delete key.

A well prepared and properly implemented record retention schedule demonstrates to all the organizations stakeholders, the shareholders, the staff and management and to outside tax authorities and other regulators that good corporate governance is taken seriously. That management recognizes the value of important information assets and proper stewardship of those assets.

Without a coherent policy and schedule, left to their own devices people in the organizations with either 1) keep everything for ever, or worse 2) destroy records before it is legally allowed to do so.

Look no farther that Arthur Andersen. They knew those Enron records should not have been destroyed but proceeded to violate their own policy and the subsequent felony conviction put them out of business.

How do we resolve retention conflicts between countries?

Some countries say accounting records should be retained 3 years. Other say 5, some 7, one at least 8, several at 10, at least two at 15 and a few for the life of the enterprise. Conflicts are inevitable. Using the above numbers as an example, the company might choose to go with a 10 year worldwide standard and treat the countries that exceed that as exceptions. This is actually what most companies do. Early on, some companies tried to have country unique schedule but those proved too unwieldy to administer.

What about sub-national jurisdictions?

On our countries researched list you will notice Canadian provinces and Australian states and territories listed. Similar to the situation in the US, there are retention requirements and limitation of action statutes at the state level and need to be researched and applied. Virtually every nation in the world of any size is divided into states, departments, provinces, regions, prefectures, etc. We have research many of those sub-national jurisdictions and have yet to find any retention requirements. We are starting to some emerge from the Scottish Parliament and the Welsh National Assembly, so we now routinely research there as well.

How current is this research?

We refresh our library for every project.

How do we keep our schedule up to date?

There are two basic issues here

• new records emerging since the schedule was completed, this is particularly true after a merger or major acquisition, and
• new law and regulation added by a legislature or ministry of government, repeal of old laws or amendments to law. For 12 months after completing our engagement we will forward and changes to the legal landscape to you. And you can send us up to two new records per month during that period for research and schedule recommendations.

What does this cost?

All projects have their own unique characteristics and demands. We have a formula that prices projects on the countries involved, the industry and the scope of ancillary services beyond the research package. All are proposed on a fixed price basis, under a simple contract with terms and deliverable.

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