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Key Considerations in Implementing an Electronic Recordkeeping System

Key Considerations in Implementing an Electronic Recordkeeping System

When was the last time your auditor asked you for a copy of a policy or other document that was approved years ago?  You know the policy exists; it is just a matter of getting your hands on it.  You have searched through your storage and still no luck.  Recordkeeping is often a challenge for small and large organizations alike.  One way to manage records is to store documents electronically.  If properly indexed, an electronic recordkeeping system can help your organization maintain and easily access its records.

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If your organization is considering an electronic recordkeeping system, there are certain key elements to take into account when changing from a paper (hard copy) system to an electronic recordkeeping system, one of which is to designate a responsible person(s) to oversee the electronic recordkeeping transition and system.  This person should be involved in creating your organization’s overall electronic recordkeeping policy. 

Key questions to address before implementing an electronic recordkeeping system include the following, which also should be summarized in the electronic recordkeeping policy:

How will the documents be organized?

  • Determine which documents your organization wants to maintain electronically.
  • Create a good filing system; it is essential to have a proper structure to the system.  Documents should be filed in a logical order and properly indexed.

Who will have rights to view, change or modify the electronic documents?

  • Determine who will have access to which records.  Some records are confidential and/or may contain sensitive information. 
  • Incorporate these determinations when setting up your electronic filing system.  Take care to grant access to certain folders and documents only to those who need it.

How long are electronic records kept?

  • Determine how long your organization maintains not only its hard copy documents, but also its electronic documents.
  • Consider your organization’s industry, applicable regulations and nuances between regulatory authorities when developing your records retention policy.  For example, the Internal Revenue Service and the Department of Labor may have different required retention periods for the same document.

What are the back-up procedures? 

  • Back-up the documents locally and off-site.
  • Implement a disaster recovery policy.
  • Test your organization's back-ups to ensure that the organization's records are retrievable.

By planning ahead and developing your electronic recordkeeping policy, your organization will be on the right path to creating a successful electronic recordkeeping system.

Organizations will also want to identify the best equipment and resources for the job:

  • It is important to research the equipment your organization plans to use to scan the hard copy documents into Portable Document Format (PDF) documents.  Although many photocopiers have the ability to scan documents into PDFs, the file size can oftentimes be large, taking up valuable server space.  There are scanners available that reduce the file size of large documents to a manageable size.
  • Today’s scanners also have optical character recognition (OCR) capabilities, which allow you to, among other things, search for keywords in a PDF document.
  • Care must also be taken to ensure that the scanned document is legible. 
  • Some organizations will hire or designate certain individuals to be responsible for scanning and proofing the documents to ensure each document is properly scanned and is legible.  Other organizations will hire an outside company to scan all of the organization’s records.
  • Determine whether scanned documents will be stored locally or in the cloud. 

Helpful links

From the Department of Health and Human Services (includes resources for standards for safeguarding electronic protected health information):

HIPAA information for covered entities 

Security Rule Guidance Material 

Recently updated compliance tips for labor  organizations from the Department of Labor’s Office of Labor-Management Standards.

Jessica R. Roster, CPA, Partner – Based in Lindquist LLP’s San Ramon office, Jessica has more than 12 years of audit and accounting experience with employee benefit plans, not-for-profits and labor organizations.  She played a key role in the firm’s transition to a paperless system, which required the creation of numerous processes and procedures.  Jessica now leads Lindquist LLP’s Audit Technology Group.  Contact her at (925) 277-9100 or jroster@lindquistcpa.com

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