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Dependent Territories Face Complex Retention Requirements

A recent study by ARMA International has shed light on the complex retention requirements faced by organizations operating in dependent territories around the world. The research highlights the importance of accounting laws and tax laws, which often specify minimum retention periods that exceed the statute of limitations for contract-related litigation.

Study Findings

According to the study, a staggering 177 out of 200 countries and dependent territories have minimum retention periods specified in accounting laws and tax laws that exceed the statute of limitation for contract-related litigation. This means that organizations operating in these jurisdictions must retain accounting records for longer than they would need to if only considering contract laws.

Location and Format Requirements

In addition to retention periods, recordkeeping requirements also specify location and format requirements for organizations operating in different jurisdictions. The study found that more than 100 countries have laws and regulations that mandate the retention of accounting records at an organization’s principal business location or another location within the country.

  • Even where in-country retention is not mandated, various laws and regulations require sufficient accounting records to be retained in-country to accurately indicate an organization’s financial position for a specified period.
  • In some cases, tax officials must approve out-of-country retention or in-country storage locations apart from an organization’s registered office.

Electronic Records

The study also examined the impact of electronic recordkeeping on retention requirements. Most countries permit the retention of accounting records in electronic form provided they are accessible throughout their retention periods. This means that organizations can retain electronic records, but they must be readable and usable during the specified retention period.

Developing Global Guidance

For multi-national organizations operating in multiple jurisdictions, compliance with national requirements for retention of accounting records is a significant concern. The study suggests that providing uniform, enterprise-wide retention guidance for accounting records across all countries and dependent territories where an organization operates can help establish a baseline retention period that complies with minimum legal and regulatory requirements.

Operational Considerations

Finally, the study highlights the importance of considering operational needs when determining retention periods. Accounting ledgers and journals are critical to financial reporting and auditing, and organizations may need to retain records for longer than legally required to ensure accurate financial reporting and auditability.

Conclusion

Overall, the study emphasizes the complexity of retention requirements faced by organizations operating in dependent territories around the world. By understanding these requirements, organizations can ensure compliance with relevant laws and regulations while also meeting operational needs.

The full report is available at http://armaedfoundation.org/research-program_menu/research-reports/.