Guidelines on FMS Hard Copy Document Retention

Background

The University’s Financial Management System (FMS) provides the facility to store digitised images of hard copy documentation relating to the financial transactions undertaken using FMS.  In the majority of FMS processes, users are expected to digitise any relevant hard copy documentation associated with a transaction, and to upload these images to the transaction record.  This then provides a complete electronic record supporting that transaction, in a form that is more secure, searchable and cost-effective than hard copy records.

The accuracy, completeness and integrity of record-keeping is key to substantiating our financial position for internal and external purposes in the event of routine review or periodic query.  In particular, we have obligations to be able to evidence financial transactions for statutory financial reporting purposes, for tax purposes and to support funder audit.
The UK’s tax authorities, HMRC, have confirmed that fully electronic records are acceptable for UK tax purposes, and that hard copy documentation does not need to be retained, as long as electronic records are a complete and accurate representation of any hard copy documentation.

Historically, key University funders and auditors have requested that hard copy documentation be retained for audit purposes – in particular, in relation to EU funding arrangements.  The University, in conjunction with nine other Scottish HEIs, sought and received confirmation from the EU in April 2016 confirming that ‘electronic copies or digitalised documents are considered by the Commission as originals if the practice is authorised by the national laws or the national authorities’.  The confirmation from HMRC that electronic record-keeping is acceptable therefore supports the acceptability of electronic records for the purposes also of evidencing funding claims.

HMRC and funder requirements in relation to the time period for retaining records are fully supported by FMS.  HMRC require, in general, that records be kept for a minimum of six years.  Funder contracts may specify different specific retention periods.  For example, the EU FP7 Model Grant Agreement requires that originals be kept for 5 years from the end of the project, and for EU H2020 awards, 3 or 5 years after the payment of the balance, depending on the amount of grant.  Finance Directorate archiving policies explicitly reflect retention requirements.

Document retention within Departments

Where users upload a digitised version of hard copy documents to FMS, and that documentation is to be used to evidence future funding claims, or as part of our financial or tax records, users should retain that hard copy documentation locally for a sufficient period to ensure that it has been scanned completely, accurately and legibly.  Local arrangements can be made either for the short term retention of those documents by individuals, or centrally within a Department.

Such documentation would include (but is not limited to):

  • receipts and other documentation substantiating expense claims
  • receipts and other documentation substantiating purchase card expenditure

It is recommended that an appropriate minimum period for retaining such original hard copy documentation is three full calendar months.

This time period is expected to be sufficient to ensure that the transaction has been fully processed and therefore subject to a number of checks and reviews, including:

  • confirmation by the initiator that the transaction is complete and accurate before submission
  • confirmation by one or more approvers that the transaction is complete, accurate and represents legitimate University expenditure
  • settlement and reconciliation of the transaction through FMS and our banking systems

Documents that do NOT need or be retained in hard copy once digitised and uploaded to FMS

Where hard copy documentation has no potential tax or funding claim implications, the hard copy may not need to be retained for an extended period after digitisation and successful upload to FMS.  Such documents might include:

  • goods delivery notes (no funder / claim / tax implications)
  • procurement documentation (no funder / claim / tax implications)

Even where hard copy documentation does not need to be retained for an extended period, it is recommended that it be retained for a sufficient period after digitisation to ensure that the digitised records have been properly uploaded in FMS – that is, they are a complete and legible copy of the original.  Generally, retention would be expected until at least the point at which a transaction is approved or otherwise concluded, giving sufficient time for the approver and any others included in the transaction workflow to review the transaction and supporting documentation and confirm its completeness, accuracy and legibility.

It is recommended that this period be no less than one calendar month.

Document retention within the Finance Directorate

Certain documents relating to FMS transactions will be received in the Finance Directorate in original hard copy form, to be digitised and uploaded to FMS by Finance staff.

Such documents may include (but will not be limited to):

  • supplier invoices
  • requests for payment
  • expense claims for non-staff, and undergraduate students outside HaSS

These hard copy documents will be retained centrally by Finance, for no less than three months, but may thereafter be securely disposed of or destroyed.