Page 202 - Accounting Best Practices

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10–6 Extend Time Period before Computer Records Are Purged
elimination of paper documents does not interfere with the daily conduct of com-
pany business, which can fail or be severely impacted if the conversion to digital
documents does not go as planned.
Cost: Installation time:

10–6 EXTEND TIME PERIOD BEFORE COMPUTER RECORDS
ARE PURGED
An accounting department that relies on the data stored in its computer system to
handle day-to-day transactions has a problem when those records are purged. The
purging process usually occurs during the month-end or year-end closing
process, typically destroying all transaction records that are more than one year
old. When this happens, the accounting staff goes from having immediate access
to all records via their computer terminals to having to retrieve paper documents,
frequently from an off-site storage location. Clearly, this is a major reduction in
the speed and efficiency of the department as it relates to the retrieval of data.
The reason why records are purged is that they take up a considerable
amount of space in the hard drive storage of the computer system. By purging old
records from time to time, it is possible to reduce storage requirements, which
makes it unnecessary to purchase additional storage devices. The best practice
advocated here is actually a set of variations on retaining some or all storage
space, as noted:

• Delay purging old records. The most comprehensive way to avoid additional
filing work is to extend the period before which records will be deleted. For
example, an automatic purge after one year can be shifted to a purge after
two years. However, this policy will greatly expand a computer system’s
storage requirements, a serious consideration, especially when the purge
period extends so far back in time that there is a diminishing return on the
usefulness of the data in comparison to the cost of the extra computer stor-
age. Though this is the most common version of the best practice currently in
use, it should not extend storage too far back in time, given the high cost of
doing so.
• Only purge selected files. Rather than purge all records, it may be possible to
only purge those files containing specific types of records. For example,
management may not feel that it is necessary to retain accounts payable
records for more than one year, whereas it may want to retain sales records
for a considerably longer period. Accordingly, the best approach in this case
is to delete specific files regularly, while retaining others for longer periods.
This is an effective way to retain data in the system while spending less
money on computer storage. It is most effective when those files containing