Financial Records Retention
|POLICY TITLE:||Carnegie Mellon University Policy for Financial Records Retention|
|DATE OF ISSUANCE:||This policy was approved by the President's Council on January 14, 1997.|
|ACCOUNTABLE DEPARTMENT/UNIT:||Office of the Vice President for Finance and the Chief Financial Officer. Questions about policy content should be directed to the Office of the Controller at ext. 8-5904.|
|Describes Carnegie Mellon's policy for the collection, preservation and maintenance of records concerning the university's financial operations.|
|RELATED POLICIES:||University Historic Records
Compliance with Finance Conflict of Interest Requirements in Research
Cost Transfer Policy for Sponsored Programs
Business and Travel Expense
Auxiliary and Recharge Service Centers
Note: Due to recent changes within the Defense Contract Audit Agency, all incurred cost audits (F&A rates) have been placed on hold. Carnegie Mellon's audits are only complete through fiscal year 2006, therefore 2006 should be the year used where references are made to the "final sign off."
Carnegie Mellon University, recognizing its responsibility to its donors, sponsors, regulatory bodies, the academic community and the public to ensure the preservation of records documenting the activities of the university, adheres to the following policy for the collection, preservation and maintenance of records concerning the financial operation of the university.
Financial records retention policies and practices have been established to provide consistent operational practices among the various units and to ensure compliance with government regulations. Carnegie Mellon University conducts business under the rules and regulations of federal, state and local municipalities. Policies and practices must adhere to government regulatory costing principles, such as those contained in the Office of Management and Budget (OMB) Circular No. A-21, "Cost Principles for Educational Institutions," as well as internal university accounting policies and practices. As of September 1995, Carnegie Mellon has incorporated federal Cost Accounting Standards (CAS). Consequently all records and documentation of the university's compliance with CAS are required to be maintained in the same manner as other financial records described. Federal Acquisition Regulations (FAR) 4.7 and 52.2-5 and OMB Circular No. A-133 specifically require documented policies and procedures regarding the retention of records.
In addition, anyone generating records while working in an official university capacity should contact the university archivist, ext. 8-7268, regarding their preservation (see the Policy on Historic Records).
Retaining records serves two purposes. In the short term, it provides those responsible for management with the means to monitor transactions and resolve problems. In the long term, it enables the university to comply with Federal Acquisition Regulations, the Internal Revenue Service regulations and other federal, state and local regulations governing auditability.
University financial records are university property and include: annual reports, budget and financial statements, government contracts produced or received, gifts and donor agreements, spreadsheets or other software programs that document calculations, memoranda, correspondence, planning documents and receipts, e-mail messages to the extent they authorize or provide substantiating information, or other documentation of individual entries made in the transaction of its business. This policy applies to all original documentation supporting the accuracy, applicability and method of calculation for all financial entries.
This policy applies to all original or archival forms of storage media, including: paper, microfilm, microfiche and/or jackets, aperture cards, optical disks, CD ROM, 8mm or other magnetic tape, computer drive, any size diskette or other magnetic, film or optical media.
This policy applies to all units at Carnegie Mellon University.
It is the responsibility of departments to designate a person to be responsible for records retention. Many departments designate the business manager. The designated person should have appropriate knowledge of and access to departmental financial data.
Designated personnel and all university staff and faculty are required to comply with the following:
The required retention period for various documents associated with an activity is dependent upon the source of funds used to support that activity. At the end of the required retention period, documents should be destroyed in an acceptable manner (see Methods of Disposal, below). Documents of permanent historic significance should be sent to the University Archives for preservation (see the Policy on Historic Records). For the required retention periods of various documents, refer to Appendix A - Financial Records Retention Schedule at the end of this document.
Legal and Audit Requirements
When requirements for long-term retention of records overlap, the responsible office should retain records for the maximum period needed to meet both legal and audit requirements. General rules are:
- Direct Charges to Contracts and Grants: Financial records, supporting documents, statistical records and all records pertinent to a contract or grant's activity must be retained for at least seven years, unless a litigation claim or audit is started before the expiration of this period. In these cases, records need to be retained until seven years after all litigation, claims or audit findings are resolved.
- Business Transaction Records for Centers Included in the Indirect Cost Rate: Records must be retained for six years following the final sign-off for that year by the federal government. Contact the Cost Analysis Office for information on included centers and accounts.
- All Other Business Transaction Records for Centers Not Included in Contracts, Grants or the Indirect Cost Rate: Records must be retained for six years following the end of the fiscal year.
- Individual Employee Payroll Information: Records must be retained for seven years from retirement or termination.
- Taxable Income (cash receipt information and billings, and all documents for activities deemed unrelated business income): Records must be retained for six years following the end of the fiscal year.
Longer retention times apply to certain documents. See Appendix A - Financial Records Retention Schedule for a listing of documents, their retention periods and responsible department.
When a central office has retention responsibility, the department initiating a transaction may discard copies of documentation supporting the transaction when it is no longer needed for management purposes. For example, after the transaction is complete and the expenditure statement containing the transaction has been reviewed, departments may either dispose of or keep copies of documents at their discretion.
Documents may be stored on the most efficient and effective media available as long as the long-term archivability and usefulness of the records are maintained, and the viability and accuracy of the transfer to the archival media are ensured. This may entail, for example, ensuring that the software and hardware necessary to read any magnetic media are available in working order for the duration of the required retention period. Responsible departments should work in partnership with their computing systems provider to ensure usability of archived data.
All forms of media must conform to the established standards for use and storage related to that medium. Consult the university archivist, ext. 8-7268, for information on the various standards and storage requirements.
When the source documentation for a transaction is electronic, the department responsible for maintaining the application is responsible for retaining the transaction record. This retention may employ the most efficient and effective media available, as discussed above. (See Appendix B for a list of current responsible departments.)
Departments that create and transmit journal entries electronically must retain all source and supporting documentation for the entries as cited in the Retention Period section. If this is impractical, the source documentation may be given to the Office of the Controller for retention on a pre-approved schedule. In the latter case, Office of the Controller will assume the responsibility for proper retention and disposal of the records. Contact the Office of the Controller to discuss arrangements for this service.
When the source documentation for a transaction is paper, the office that receives the original document is responsible for retaining it. In some cases, a central administrative office (such as Payroll or Accounts Payable) is responsible for retention.
Documents Retained Centrally by the University
Certain documents, either original or archival media, are maintained by the central administrative offices of the university. These records do not need to be duplicated in other offices. If you are unsure whether a particular document is retained centrally, contact the Office of the Controller before disposal.
See Appendix A - Financial Records Retention Schedule for a listing of documents, their retention periods and responsible department.
Retention of Supporting Documentation by Service Centers
Service center charges are subject to audit as long as the grants or contracts they charge (either directly or indirectly) remain subject to audit requirements. Service centers are also subject to periodic review by the university's Internal Audit Department and by external auditors, to evaluate compliance with established university policies and accounting practices. Therefore, service center activities must be adequately documented and records must be maintained to support expenditures, billings and cost transfers. (For a definition of what constitutes a service center, see the Policy for Auxiliary and Recharge Service Centers.)
Each service center must, at a minimum, retain the following:
- Documentation on how the chargeout rate(s) were calculated, including the algorithms and components of the rate structures used.
- The Rate Approval Letters from the Cost Analysis Office.
- Supporting documents related to expenses incurred, including transaction forms and salary data for all current employees.
- Records supporting utilization (level of activity).
- Records supporting the amount and basis of user billings (revenues).
Service centers under long-term agreements must retain their records until either their annual report is audited or that year is "closed" by Carnegie Mellon's cognizant government agency, the Office of Naval Research (ONR), whichever is later. Service centers should contact the Cost Analysis Office before disposing of any records.
Retaining Records at an Off-site Location
In order to safeguard the assets of the university in the case of extreme physical disaster, records of permanent or long-term value should be stored in secure off-site locations. The university has negotiated agreements with a number of preferred vendors for off-site storage. The responsible department should arrange for the appropriate off-site storage of their financial records. For more information on off-site storage vendors contact Procurement Services.
All records, regardless of media, should be stored in containers capable of surviving the storage period while maintaining the physical integrity of the records. Records should be clearly labeled with a description of the contents, the responsible department, the origination date and the disposal date. For advice on the proper storage of records, contact the university archivist.
Methods of Disposal
At the end of the required retention period, financial records may be disposed of unless they support current audit or litigation. Records may be disposed of via recycling in accordance with the university's recycling policy. The only exception to this is documents containing information, such as name or social security number, that could identify any individual member of the campus community. Documents containing this type of information must be disposed of via incineration or pulverization. Please contact the university archivist, ext. 8-7268, regarding secure disposal methods.
In order to safeguard the privacy of individuals, documents that contain salary information are treated in a highly confidential manner. Access to these documents is only allowed on a need-to-know basis with the written approval of the assistant vice president, Payroll and Benefits Accounting. Once their retention period has expired (if applicable), the documents will be disposed of in a secure manner.