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At some point during the life of the association, the amount of files in storage becomes excessive as we continuously add files each year. Should we continue adding files to storage without thinking? Are we being charged for the storage of files?
Maybe you have identified that the growing amount of files is a problem and needs a solution. What files should we keep? For instance, do you need the newsletter from October, 1988? Do you need the grounds contract from 1991? Do you need the insurance policy from 1985? Who should make the decision as to which files to keep and discard? How do we make the decision? These may sound like tough questions but in reality, they may not be too difficult to handle.
My suggestion is to get the input from three professionals: your attorney, your accountant, and your management company. You will certainly get three separate answers. If you create a sample list of association files, here is a possible consensus you may receive:
| |
Length of Time Recommended by: |
Item Description |
Attorney |
Accountant |
Management |
| Accounting Reports, Financial Records, Tax Returns |
3 years from Fiscal Year End (FYE) |
3 years. However, indefinite for Audits and Tax Returns |
Financials - 3 years from FYE; Audits and Tax Returns - indefinite |
| Association Attorney File |
Indefinite |
Indefinite |
Indefinite |
| Contracts and Insurance Policies |
5 year after termination or policy expiration |
5 year after termination or policy expiration |
Insurance Policies - indefinite; contracts & bids - 5 years |
| General Association Correspondence to Members (issued and received) |
3 years |
3 years |
3 years or as long they are a current member of the association, whichever is greater |
| General Association Correspondence to Non-members (issued and received) |
1 year |
1 year |
2 years |
| Insurance or Liability Claims involving Personal Injury |
2 years from date of injury |
2 years from date of injury or date of closure |
Indefinite |
| Insurance Policies |
Indefinite |
Indefinite |
Indefinite |
| Legal Documents |
Indefinite |
Indefinite |
Indefinite |
| Minutes of Board and Membership |
3 years minimum, suggest keeping longer |
Indefinite |
Indefinite |
| Property Damage Claims |
5 years |
5 years |
Indefinite |
| Resolutions |
Indefinite |
Indefinite |
Indefinite |
The Board would review this list and would keep the type of file that corresponds to the longest period. The items that take up the most storage space (sometimes between 50% and 90% of the total) are the Association's financials. If you agree to jettison all the financial records older than 3 years (yet still keep all the audits and tax returns), you will probably free more space than all the other categories totaled together.
Once the Board agrees to the length of time for the records, it is time to place the decision in a board resolution entitled “Retention of Records”. A sample resolution is shown below:
| Name of Your Association, Inc. Resolution
Retention of Records
March 1, 2007
Whereas, it is the desire of the Board of Directors to clarify the period of time to retain Association records; and
Whereas, the Board of Directors has received and reviewed the general guidelines for records retention from [your attorney] in their opinion letter dated January 5, 2007; and Whereas, the Board of Directors has also received written guidelines from [your auditor], as outlined in [your management company] “ Retention of Records ” memorandum dated December 4, 2006; and
Whereas, Article [x], Section [x], of the Bylaws of the [your association name], states that it is the duty of the Secretary of the Board of Directors to “…keep appropriate current records … as required by the Board.”
Now therefore be it RESOLVED that the time periods listed in the [your management company] column of the “ Retention of Records ” memorandum dated December 4, 2006, a copy of which is attached, shall be adopted immediately upon execution for all Association books and records:
| Signature:_______________ |
_______________ |
President |
Secretary |
| Date: ___________________ |
_______________ |
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Now that you have passed the resolution, the management company should be able to devise a system to cull through the files and eliminate a large volume of the association records which may decrease your storage costs.
So, would you have kept the newsletter from October, 1988? Probably not. The grounds contract from 1991? No. How about that insurance policy from 1985? Yes, you would have definitely kept it.
Scott Meardon, CMCA®, PCAM®
Chief Executive Officer
Community Group
Glen Allen, VA
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