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. How can I change my name on my Social Security card?

    Learn what documents are needed to change your name on your Social Security card whether you are a natural-born or foreign ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. Is a private company required to disclose financial information to the public?

    Understand whether a private company is required to disclose financial information to the public. Learn what is required ... Read Answer >>
  5. 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 >>
  6. 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. Personal Finance

    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. Financial Advisor

    Estate Planning Goes Digital: How to Get Started

    Digital estate planning is an important part of the estate planning process given today's tech-centric world. Here's how to create this type of plan.
  3. Financial Advisor

    SEC Audit? How Financial Advisors Can Be Ready

    Your firm may never be audited by the SEC, but you need to be prepared nonetheless. Follow these tips to make sure you're in compliance and organized.
  4. Managing Wealth

    What Documents Do I Need For Mortgage Preapproval?

    The document requirements for mortgage preapproval vary by lender and your individual circumstances, but typically, you'll need to show your income.
  5. Personal Finance

    Protecting Your Financial Documents From Disaster

    Organizing and updating your records regularly can save you a lot of grief in a time of crisis.
  6. Financial Advisor

    How Wealth Managers Can Bridge Digital Tech Gap

    A lack of digital technology offerings puts many wealth management firms at risk of losing significant income due to client attrition.
  7. Markets

    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.
  8. Professionals

    Do's & Don'ts Of Digital Marketing

    Digital marketing is not as scary or as complex as it is often made out to be, but there are certain best practices that you should follow to make it work.
  9. Investing

    Examining A Career As An Auditor

    Stricter government regulations have put auditing professionals in demand.
  10. Investing

    What's an Audit?

    An audit is an objective examination of accounting records that makes sure the records are a fair and accurate representation of the transactions they claim to represent.
RELATED TERMS
  1. Alternative Documentation

    A documentation process designed to expedite loan approval where ...
  2. Accounting Records

    All of the documentation and books involved in the preparation ...
  3. Questioned Document Investigation

    An in-depth look into a document which is being questioned in ...
  4. Internal Audit

    The examination, monitoring and analysis of activities related ...
  5. Closing Statement

    A document commonly used in real estate transactions, detailing ...
  6. Low / No Documentation Loan

    A category of loans which generally fall into the Alt-A sector ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center