It’s time to celebrate the end of the financial year!  On a less exciting but equally important note, the end of financial year is a good time to consider what records you need to keep and how you might go about destroying any records if the circumstances and time are right.

Why keep your documents and what might they include?

A good record management system will help protect you if or when things go wrong.  If a professional indemnity claim is made against you, your insurer will need to access your records pertaining to a particular project or file, the subject of the claim.    If your documents are well organised this will greatly assist your insurer in providing timely advice and / or defending a claim.  Failing to retain your documents in the event a claim is made against you will make it extremely  difficult to prove you were not at fault and you will likely be held liable.

Some examples of the types of records you should retain include, but are not limited to:

• originals and copies of drawings, schedules and specifications;
• documents submitted and stamped for building approval, or other statutory approval;
• construction contract documents;
• ‘as built’ drawings;
• general correspondence including, but not limited to, letters, emails; and
• records of telephone calls, file notes and minutes of meetings.

Keeping ordered documents will also assist you in court if a claim proceeds to hearing.  Witnesses giving evidence in court are likely to be found more credible if they kept and recorded details of events pertaining to the matter in dispute.

How long should you keep your documents for?

The length of time you are legally required to retain your records for can vary depending on the type of document.  For example, company law requirements stipulate that you are to retain your financial records and non-project business records for at least seven years.  There are two main considerations influencing the rules of retention namely, the applicable state and federal statutory requirements as well as the statutory limitation period within which a claim may be brought against a designer, an owner / client or the builder.  From an insurance perspective, it is recommended that you should retain your records for insurance purposes for at least 10 years.

You should also be aware of any professional obligations which may apply to you with regards to retaining documents.  For example, in NSW, under the NSW Code of Professional Conduct, architects need to keep their records for 6 years.  We suggest you check the requirements of your particular  profession and State in which you are practising.

When and how to destroy your records?

When sufficient time has lapsed and you are ready to destroy your records, we recommend that you implement a clear and sound policy for doing so.  It is also important to consider the following when embarking on this task:

• is there any risk of claims and if so, ensure these files are retained;
• record what was destroyed and why; and
• some documents may be the property of the client and these should not be destroyed without the client’s consent (preferably in writing).

Our informed subscriber documents include a Document Destruction Checklist which can assist you further in checking off some of the key risks.

See our list of current example documents:

More information about subscriptions:

Discounted prices on subscriptions are available for professional indemnity insurance clients of our sister business, Planned Cover.  Please contact us at info@informedprofessionals.com.au with any questions about our subscriptions.

 

Kathryn Budd

NSW Risk Manager