The importance for those companies of managing their records efficiently and effectively has never been more critical. This importance has increased globally following scandals such as Enron and Andersen in 2001. As record retention regulations are becoming stricter throughout the globe, legislators in Pakistan are also contemplating stricter regulatory provisions to ensure compliance. Paperwork is the largest overhead expense in any organisation, with active files typically growing at a rate of about 25% annually.
The corporate sector in Pakistan must be ready and prepared for these changes. From 2007, records management has been of increased interest among corporations in Pakistan as a result of compliance regulations and statutes. Up until recently, record keeping in the corporate sector has been poorly standardised and implemented. But financial scandals - at home as well as abroad - have renewed interest in corporate records compliance, retention period requirements, litigation preparedness, and related issues in Pakistan.
For example, section 230(6) of the Companies Ordinance 1984 says that 'the books of accounts of every company relating to a period of not less than ten years immediately preceding the current year shall be preserved in good order'. Furthermore, in the case of default, section 230(7) says that listed companies are 'punishable for a term of which may extend to one year and fines...Other companies...six months and fines.'
The Securities Act 2015 passed by the National Assembly of Pakistan introduces a stricter record retention regime, with penalties of up to 300m rupees (US $4.7m) and even imprisonment. This follows the changes seen in the West after the Enron/Andersen scandals. Since then, stricter laws governing record management in the US have led, for example, to the US Commodity Futures Trading Commission fining Morgan Stanley Smith Barney US $280,000 in 2014 for records violations and other failures.
According to research, managers spend an average of four weeks a year searching for or waiting on misfiled, mislabelled, untracked or 'lost' information; 67% of the data lost is directly related to user blunders, making them 30 times more menacing than viruses and the leading cause of data loss.
Paperwork is the largest overhead expense in any organisation, with active files typically growing at a rate of about 25% annually. At any given time, between 3% and 5% of an organisation's files are lost or misplaced. Whether records are managed internally or the task is outsourced to a third party, a good record management system leads to efficient and systematic control of the creation, receipt, maintenance, use, and disposition of records, including the processes for capturing and maintaining evidence of, and information about, business activities and transactions in the form of records.
Overall, the goals of good records management are to: comply with laws, rules and regulations; to develop and implement sound record keeping practices; to identify, appraise, locate and manage information resources during a record's lifecycle; maintain consistent record-keeping practices; and generate fewer but better records overall.
Those records must then be stored in such a way that they are accessible and safeguarded against environmental damage and hazards.
In my own company's case, in addition to being able to store records, we have also established capabilities for the retrieval of records through a live web portal, so that any document is a click away in the event the item is needed for audit or litigation purposes.
(The writer is Chairman ACCA Pakistan's member Network Panel)
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