Auditing Corporate Records

February 23, 2016

document reviewThe broad subject of effectively managing corporate records covers ten topics (1) basics of corporate records management; (2) fundamentals of effective corporate records management; (3) establishing and maintaining a corporate records management program; (4) legal issues involved in a corporate records management program; (5) other issues involving corporate records; (6) considerations for computer files and electronic records; (7) auditing corporate records; (8) managing corporate information and knowledge; (9) developing and implementing a corporate records management practice; and (10) forms and exhibits relating to corporate records.

Lawyer advising clients on auditing corporate record files: What is the value of auditing corporate records?

Ed Dietel:  The benefits of auditing corporate records are many:  First, auditing the records produces the answer to the question of whether the records are being handled in accordance with the corporate record schedule in the normal course of the company’s business so that if questioned in controversies or litigation, the company will have an acceptable answer to whether records that can no longer be found were disposed with properly.  Second, auditing can be an independent evaluation about whether the information contained in the records remains appropriate of whether some remedial action needs to be taken.  Third, the information content can be independently evaluated to determine whether it is in compliance with applicable law, including that of Sarbanes-Oxley.  Fourth, an independent evaluation of the information content can surface other components in the firm who may need that information and to date has not had access to it.  Finally, an independent information content audit may identify previous information that now is incorrect or misleading based on more recent information content and should be appropriately dealt with.

Lawyer advising clients on auditing corporate record files: What is the best process for auditing corporate records?

Ed Dietel:  There is no “one size fits all” process for best auditing corporate records.  What the goal of Chapter 8 Auditing Corporate Records of Developing an Effective Corporate Information, Knowledge Management, and Records Retention Compliance Program is to provide a wide and diverse menu that can be customized to fit whatever are the specific corporate record management situation and circumstances.  The points enumerated there are not just theoretical, but ones that have been used over and over successfully in corporate records audits.

Lawyer advising clients on auditing corporate record files: How often should corporate records be audited?

Ed Dietel:  It depends on the level of resources the company is willing to devote to an audit and how large the corporate records are.  Ideally, the records of each unit of the organization should be subject to a records audit at least every two years, but this also depends on the volume of records being created in each unit.  Some units may have few records any of which may be relatively low in long-term value and not retained for lengthy periods as specified in the corporate records schedule.  Other may be much more voluminous, more important to the corporate survival, have a higher potential for litigation,  and have a much longer retention period.  Those should have a more frequent audit.

Lawyer advising clients on auditing corporate record files:  What may be the most difficult aspect of auditing corporate records?

Ed Dietel:  The most difficult aspect of a corporate records audit is determining what information and knowledge has not been reduced to a corporate record and should have been.  This issue requires that the corporate records auditor have a broad knowledge of each unit’s responsibilities in order to determine what should have been reduced to a corporate record and has not been.  It is the act of searching for the illusive needle in the haystack that is not actually there.

Titles by Ed Dietel