Record retention and the paperless office.

• Author: Wolfe, Joseph

Protect Your Firm (Executive Summary):

There are legal liability issues associated with creating, maintaining, and destroying electronic documents. To protect yourself and your firm:

* Understand the technology you use.

* Establish guidelines for the use of electronic communications, and monitor compliance.

* Implement appropriate controls over the record retention processes your firm employs.

* Consult with an information technology specialist about updating your firm's existing record retention policy to include specific guidance about the use of electronic communications.

After much hype and anticipation, the age of the paperless office is here. Most CPA firms today use technology to render client services, communicate internally and externally, and manage and store business data. But are you aware of the potential risks associated with creating, maintaining, and destroying electronic documents? To protect yourself and your firm, it's important to understand the technology you use, to establish and update guidelines for the use of electronic communications, and to implement appropriate controls over the record retention processes your firm employs.

Common Electronic Communication Methods

Some of the tools commonly used by CPA firms include:

* Telephones

Generally speaking, telephone conversations are not saved electronically on computer storage devices; however, they can be recorded. Federal law (The Electronic Communications Privacy Act) permits recording if at least one party to the call has given consent, but state law varies. Most states allow recording provided that at least one party to the conversation consents to the recording, but some states require the consent of both parties prior to recording. Before recording or retaining a copy of any telephone conversation, be sure to consult with your attorney regarding applicable state laws. Voicemail is another popular workplace technology. CPAs use both firm and client voicemail systems to send and receive information relevant to client engagements. Relying on voicemail as documented evidence in rendering client services is not recommended. Voicemail is a handy means of exchanging information quickly, but it is not particularly secure. Notwithstanding the client's implied consent to be recorded by leaving a voicemail message, the possible application of federal and state privacy laws, along with a CPA's duty to maintain client confidentiality under the AICPA Code of Professional...