A:

According to Sarbanes Oxley Act (SOX), companies are required to keep all documents that contain information about a company's policy or performance. Any document relevant to the auditing process that contains information about a company that can be represented with words or numbers is considered a document that must be retained for auditing purposes. To emphasize this point, section 802 of the act stresses that document retention rules applies to all of a company's e-mail, e-mail attachments, and documents retained on computers, servers, auxiliary drives, e-data, web-sites, as well as hard copies of all company records. Generally accepted accounting principles (GAAP) also require that companies retain business records.

Under SOX,
there are four key components that must be met to ensure that digitally stored documents meet document retention policies. Those components are:

  • The documents, including emails must be 'tamper proof'
  • Digitally stored documents must be password protected, read-only and cannot be deleted
  • The digital documents that are stored must be encrypted and digitally signed
  • The digitally stored documents must have the ability to be audited by a third party, and have search capability.

The American Institute of Certified Public Accountants, an organization that is integral to setting the GAAP, also has certain suggestions regarding appropriate controls for digitally stored documents. Copies of emails and other digital copies used during the course of business should be retained both digitally and in hard copy. When documents are stored digitally, it is required that proper internal controls be exercised. Some required internal controls are that the IT personnel responsible for storing digital documents must be independent, and hard copy of security logs must be stored.

For more on SOX and auditors, see An Inside Look At Internal Auditors.

This question was answered by Chizoba Morah.

RELATED FAQS
  1. Where can I get a company's prospectus and/or financial statements?

    These types of company documents have become increasingly accessible with the advent of the Internet. Most companies have ... Read Answer >>
  2. How can I change the information on my Social Security card?

    Discover the process of filing for a name change on your social security card, the documentation required for the request ... Read Answer >>
  3. What should I do to prepare for an IRS audit?

    Find out how to prepare for an IRS audit, what kinds of audits you might face and what kinds of habits you should develop ... Read Answer >>
  4. What real estate documents need to be recorded?

    Learn how recording documents on real estate transactions, such as deeds, mortgages, easements and taxes, help ensure proper ... Read Answer >>
Related Articles
  1. Managing Wealth

    Pros/Cons of Storing Estate-Planning Papers Online

    Digital storage takes the hassle out of keeping track of estate-planning paperwork, but there are a few significant drawbacks.
  2. Retirement

    4 Estate Planning Documents You Need to Have

    Here's the lowdown on the four essential legal documents you need – right now – to have in place before you die.
  3. Retirement

    Healthcare Documents You Need In Place Right Now

    If you become incapacitated, here are some documents that should be in place to say who is authorized to speak on your behalf.
  4. Small Business

    Employer? Steps To Fill Out Immigration's I-9 Form

    Step-by-step, here's how you and the employee you've hired fill out this required form from the U.S. Citizenship and Immigration Services.
  5. Personal Finance

    Here's Your Checklist for a Financially Fit 2017

    Take control of your finances and incorporate these tasks into your financial routine.
  6. Taxes

    What To Do If You Get Audited

    If you're in the minority of those that get audited, find out how to prepare and how to handle the process.
  7. Retirement

    How to Manage Money for Someone with Alzheimer's

    Alzheimer’s disease affects more than 5 million Americans, and approximately one in three seniors will die with dementia. Proactive planning is essential.
  8. Taxes

    How to Avoid the 6 Most Common Tax Audit Triggers

    These are the most common scenarios that can trigger the IRS to audit a tax return.
RELATED TERMS
  1. Accounting Records

    All of the documentation and books involved in the preparation ...
  2. Closing Statement

    A document commonly used in real estate transactions, detailing ...
  3. LLC Operating Agreement

    An LLC Operating Agreement is a document that customizes the ...
  4. Low / No Documentation Loan

    A category of loans which generally fall into the Alt-A sector ...
  5. Form 3

    A document that must be filed with the Securities and Exchange ...
  6. Notarize

    The act of officially certifying a legal document by a notary ...
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  3. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  6. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
Trading Center