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Enron case sparks call for clearer document management

Antony Savvas

Firms should establish clear document management policies in light of the US Supreme Court overturning the conviction of accounting firm Arthur Andersen for the destruction of Enron-related documents, said analyst Gartner.

On 31 May the Supreme Court overturned the conviction of Arthur Andersen for destroying documents prior to energy company Enron collapsing in 2001.

At issue was Andersen's practice of destroying unneeded documentation. The unanimous court ruling faulted "flawed" jury instructions that instructed jurors to convict Andersen if the firm's document destruction policy had an "improper purpose," such as impeding an official proceeding.

Andersen argued that its employees were following company document retention policies in shredding tons of unwanted documents, and that there was no intent to thwart a US Securities and Exchange Commission probe into Andersen client Enron.

Gartner said the principles of good records management haven't changed in years, although that technology has transformed the media in which records are kept.

Gartner said IT departments should be asked to install a records management application, back it up, keep it running and delete documents according to the required business schedule.

The analyst said the court's ruling re-enforces four critical tasks that every business should undertake when it comes to document management:

  • Companies should establish a document retention schedule that includes document life cycle management and legal destruction
  • Train employees and key third parties (such as business partners, vendors or contractors) on the policy
  • Follow the policy and implement any technology necessary to make it as easy as possible for employees to comply with the policy
  • Implement compliance review and audit policies to ensure compliance

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