Zeribe Law Offices
Maintaning Business Records
Managers should become familiar with the federal and state rules of civil and criminal procedure that apply to their particular business:
| • | the Uniform Business Records as Evidence Act, adopted in 16 states, allows a record of an act, condition, or event to be submitted as evidence if its custodian or another qualified witness testifies to its identity and mode of preparation, and if the record was made in the regular course of business at or near the time of the activity. |
| • | the Best Evidence Rule allows the submission of a duplicate record as evidence only if the absence of the original is satisfactorily explained. |
| • | expanding the Best Evidence Rule, the Uniform Rules of Evidence and the Uniform Photographic Copies of Business and Public Records as Evidence Act (UPA) give duplicate records and microforms the same legal status as an original record under certain conditions in federal proceedings and in those states adopting both laws. |
Your business should maintain its records carefully. Properly maintained business records can prove helpful in case of litigation. No matter how diligently a business tries to identify, understand, and comply with the law, it is inevitable that it will experience some type of government investigation or litigation during its lifetime. Unfortunately, accurate and complete record-keeping is no guarantee against charges of violations.
Record-keeping regarding financial transactions and asset management is a necessity for both internal and external purposes. Laws and regulations applicable to a number of industries and specific transactions also necessitate good record-keeping.
Businesses create and maintain records primarily to meet their internal needs, but laws and government regulations also compel creation of complete and accurate records. Laws and regulations have a greater impact on business today than they did 20 years ago, and they are in a constant state of change. Which of the thousands of federal, state, and local laws and regulations are relevant to a particular business will vary according to:
| • | the type of business or industry |
| • | how the business is organized |
| • | how and where the company conducts business |
The consequences of failure to comply with the law can be serious indeed. Most statutes and regulations stipulate or imply record-keeping requirements, which tend to grow fastest in newly regulated areas and in areas affecting the public welfare or individual rights. Certain records are created and maintained in order to comply with a law or regulation to do so. Other records are created to document a company’s compliance with a law or regulation. Record-keeping requirements may include:
| • | record creation |
| • | a specified form of a record |
| • | record maintenance or preservation |
| • | information reporting or disclosure |
| • | information protection |
Mandating good record-keeping are litigation, stricter enforcement of laws, and heavy fines, penalties, and prison sentences. An organization may need to make its records available for:
| • | congressional hearings on a product, service, or business practice |
| • | review, audit, or investigation by government agencies |
| • | civil or criminal proceedings |
A business has an obligation to its shareholders, employees, and other stakeholders to support and defend its claims in civil or criminal proceedings. Proper record-keeping may prevent or minimize the risk of losses in court proceedings or government investigation. When a business does not maintain and protect the right records, the result may be the loss of the right to a proper defense or the loss of the right to file a claim.