The US is ahead of SA when it comes to legislated corporate governance, no doubt spurred by the exposure of fraudulent activities in many top US companies over the past few years. Acting decisively to restore faith in its businesses, US legislators passed the Sarbanes-Oxley Act.
Audit yourself before someone does it for you - fixing any problems you find will be easier and cheaper than fixing what the government finds.
Paul Mullon, Marketing Director, Metrofile.
The Act affects corporate governance, financial disclosure and the practice of public accounting. It stipulates the integration of corporate governance and reporting functions in corporations, and non-compliance is a serious offence that can see corporate leaders fined or serving jail time.
There should be no doubt that a similar law will be enacted in SA within the foreseeable future, which will see business leaders held responsible and accountable for what happens in their companies, how they report results and how they record day-to-day business. It is therefore now a certainty that keeping records of all business transactions and correspondence, whether on paper, e-mail and perhaps even verbal, will be a critical and integral part of the new South African corporate landscape.
In the US, penalties for poor record-keeping are stiff, as was demonstrated in December 2002 when five large financial-services firms - Deutsche Bank Securities, Goldman Sachs, Morgan Stanley, Salomon Smith Barney and US Bancorp Piper Jaffray - were fined $8.25 million for violating various regulations governing the archiving of e-mail.
More recently, Caldera and the renowned Texas Rangers also brought attention to themselves by destroying documents that could have had a bearing on future legal cases. It`s no longer the middle manager who will pay the price for shredding documents or the technical support person for deleting e-mails, but the CEO for giving the order in the first place.
Appropriate steps
The importance of proper record-keeping - and that includes keeping documents for as long as the law requires and destroying them when required - can not be overstated. Even if a well-meaning clerk deletes an e-mail archive, the CEO of the company could still be liable because he/she did not put the appropriate steps in place to ensure it couldn`t happen.
Although many companies have not started their trek to implementing a formal content management strategy, they are not new to reporting on a regular basis - either as a listed or a tax-paying entity. The changes the new laws will bring about will force leaders to certify that their systems are compliant and that documents and records are automatically and reliably stored, regardless of the actions of staff. This will facilitate easy inspection of financial results, for example, to avoid any Enron- or WorldCom-like swindles.
Some companies may look at the new laws and decide it`s more cost-effective to pay a fine each year than to go through the process of implementing an efficient content and records management system. At first glance this may seem like an attractive option, as preparing for such a system consists of:
* First finding what you have and where it is;
* Identifying and categorising it;
* Creating the processes and internal rules of handling;
* Figuring out what you need to make that happen;
* Deciding on a product or set of products; and
* Then starting the implementation.
Just as the US lawmakers nipped that thought in the bud by adding jail as an incentive to executive boards which may have opted for a fine, we can expect local regulators to consider such steps.
Worse news is, for those companies happy that they already have a content and records management system in place, think carefully. How well do your systems measure up against the yet-to-be-legislated standards? Many US companies have already found their internal processes need an overhaul if they are to meet regulations.
Not technology, but policy
The key is not technology, but a formal record and content management policy. This is the first step and the only way to develop a working, legal document to oversee the handling of corporate records. Without a formalised policy, the company will be in no state to identify records and determine which must be saved or destroyed, or even to prove they have the appropriate systems in place.
Should those polite ladies and gentlemen ever come knocking on your door with a court order, the best way to send them away is to have an auditable and structured process in place. Naturally, having the finest policies and procedures is pointless unless the entire organisation follows them consistently. And the only way to ensure this happens is via audits. Audit yourself before someone does it for you - fixing any problems you find will be easier and cheaper than fixing what the government finds.
The window for debate is almost closed. Manage your content in a way that benefits your business and the law, or the law will make you manage it in a way that suits it - and that is not necessarily the best way for your business.
Five pointers
The following are basic pointers to consider when setting up a formal content management policy:
1. Capture all corporate correspondence. Some companies have a policy of allowing staff to determine what needs to be captured - why take the chance? Rather save everything: e-mail, memos, letters, message boards, Web interactions... everything.
2. Make sure your records management policies are formalised and each employee is provided with a copy, as well as appropriate training.
3. When storing records, ensure the process of saving is auditable to ensure nobody can tamper with the original. If the business needs to use a copy (electronic or otherwise), make sure all additions or deletions can be tracked - and keep an original somewhere safe.
4. If you store data, make sure you have a simple, quick way of retrieving it. This is not an "in case" for when a court order demands it, but a way to stop people wasting time searching for documents. The ultimate goal of content management is not staying within the law, but creating a more productive environment.
5. Spend the money: Have someone monitor the process, if not as a full-time job, at least at regular intervals.
This may seem like creating an additional overhead, but in reality it is merely enforcing good business practice. Implementing sound policies and systems to manage all corporate information is becoming a prerequisite to business longevity.
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