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In general how long should I retain
Engagement Records?
It may be
recommended to tie the record retention policy to the statute of
limitations for professional liability actions in your
jurisdiction. We suggest that you consult a local attorney
and/or the State Board of Accountancy or State Society, to
identify the appropriate statute of limitations. For example,
in Massachusetts, there is a three-year statute of limitations
for actions against accountants for negligence. Because the
statutory period does not begin to run until the potential
plaintiff knows or should know that damages have been sustained,
it is possible that the statutory period could extend beyond
three years. Generally, a period of six to ten years for
retaining files of past engagements is sufficient.
What about the question of
electronic files? Do I need to
maintain the original letter after I scan it in?
We
do not, as a
general rule, recommend destroying original signed documents
after scanning. Documents such as engagement letters,
management representation letters, and lawyers’ letters are very
important documents and may become central to defense of a
future claim. Original signed documents carry great weight in
the law, and it is best to have them. Because the courts are
usually slow to adapt to change, and are just now struggling
with all of the technology changes, we recommend erring on the
side of retaining original signed documents, even if they also
scanned.
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