Guide - Recordkeeping for business activities carried out by contractors

Natalie DewsonSenior AdvisorGovernment Recordkeeping ProgrammeArchives New Zealand

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Overview

• Purpose of the guide• What does the PRA say?• Which contracted out relationships are covered?• Underlying expectations• Legal agreements• What records should be created?• Recordkeeping considerations

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Purpose of the guide

To improve recordkeeping by:

• Raising awareness among local authorities and public offices of the requirement to create and maintain records of contracted-out business activities under the PRA

• Clarifying recordkeeping requirements

• To support the Create and Maintain Recordkeeping Standard

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Target audience

• People with responsibility for drafting contracts with independent contractors

• Independent contractors wanting clarification on their recordkeeping obligations

• People with recordkeeping responsibilities

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Contractual relationships

• These relationships may cover the performing of local and central government business activities by - independent contractors under contract or by

another agreement; or - functions performed by a non-government organisation where a public office or local authority retains some input

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Coverage

• Internal• External• ‘Embedded’• Large projects• Small projects• Short-term, Long-term or ongoing relationships• Outsource of entire functions

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Contractors records includes e-records

• Email• SMS• Instant Messaging• Websites• Blogs and Wiki’s • Databases, etc.

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What does the PRA say?

s.17(1)Public offices and local authorities must create and maintain full

and accurate records in accordance with normal, prudent business practice, including records of matters contracted out

s.17(2) & s.17(3)Public offices and local authorities must continue to maintain

records in an accessible form for reference until their disposal is authorised

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Who is responsible for the records?

It is the responsibility of the public office or local authority to ensure that records of outsourced activities are created and maintained, not the contractor, so stipulating your legislative or other recordkeeping requirements protects and enables your business

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Create and Maintain Standard

Depending on the nature of the work being carried out, recordkeeping will involve either:

• The contractor creating and temporarily maintaining the records of the business activity on behalf of the public office or local authority or

• The contractor regularly providing the public office or local authority with enough information about the function to enable the creation and maintenance of full & accurate records, or

• A combination of the two

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What level of recordkeeping is required?

Public Offices

• Recordkeeping activity should be informed by the level of risk associated with the outsourced activity

• Where the accountability level is high, the public office should require the contractor to create records which will provide them with detailed evidence of the work undertaken.

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What level of recordkeeping is required?

- Local Authorities

• Section 17(1) requires local authorities to maintain good records of contracted business activities

• S17(1) does not apply to records generated by private contractors in the conduct of their usual business (e.g. timesheets)

• The requirement is that the local authority maintains the records of the relationship with the contractor and the activity the contractor has undertaken on their behalf

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The underlying recordkeeping expectations

The underlying expectation for outsourced or contracted out recordkeeping are:

• Recordkeeping requirements are clearly understood by all parties involved in the process

• Recordkeeping requirements must be consistent with any current legislation, and with any applicable industry standards

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6 – Put recordkeeping requirements into your contract

Address Recordkeeping and archiving requirements at the time of completion of contracts or agreements.

• It is unlikely that the contractors will want to devote time and effort to records of a business activity that it is no longer performing, unless there is a contractual requirement to do so

• Contracts/agreements should contain provisions to ensure that records of outsourced business activities can be created and maintained

• The Contracting & outsourcing guide will contain basic generic recordkeeping contract clauses, and provide links to others.

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Recordkeeping principles

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1 – ensure recordkeeping requirements are understood by all parties

Agree with the contractor the records you expect to be created, captured and maintained

Specify the policies & guidelines the contractor must use when carrying out a business activity on your behalf

Agree on a process to share & handover records

Provide the contractor with training

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2 – Prevent unauthorised disposal of records

• Although the contractor may have physical custody of the records, the legislative disposal requirements and control remains with the public office or local authority unless otherwise agreed

• Disposal of records should be defined in accordance with the public office’s authorised R&D schedule, one-off appraisal or the Local Government Schedule

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3 - Maintain oversight and control of records

Check the contractor is meeting your organisation’s recordkeeping requirements, e.g. through a reporting or audit process

Define and document the ownership of records and the information they contain

If you give a contractor custody or access to your organisations records, set guidelines

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4 – Ensure accessibility

• Ensure records remain accessible to your business and the public, e.g. through an Official Information Act 1982 or Local Government Information and Meetings Act 1987 request

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5 – StorageAppropriate records storage requirements are addressed in contractual arrangements.

• Arrange appropriate storage of all records involved in the outsourced activity in line with Archives New Zealand’s mandatory storage standard

• NB. It is prudent to come to an agreement over the format, management and storage of electronic records as they are very vulnerable to accidental or inappropriate disposal

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6 -Training & enablement

• Give contractors the tools to do it!• Provide guidelines and procedures for external

contractors this may include:– using specific BCS structures or electronic formats– periodic transfer or reporting– sharing your policies, procedures, etc.

• Train internal or ‘embedded’ contractors as you would other new employees

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Benefits of formalising RK requirements

• Protect your assets• Document your business• Cover yourself (legal & compliance obligations)• Mitigate against disputes over service delivery• Protect your intellectual property• Retain corporate knowledge

Having well articulated contractual agreements is just good business practice and prudent risk management, ask your legal people!

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Further resources

• Recordkeeping Issues associated with Outsourcing and Privatisation of Government Functions  http://www.caara.org.au/Policy/policy13.htm

• New South Wales Government. Guideline 16: Accountable Outsourcing

http://www.records.nsw.gov.au/recordkeeping/government-recordkeeping-manual

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Timeframes for the guide

• The draft is currently being developed• It will be available on the Continuum website in June

2009

Questions?

Email: rkadvice@archives.govt.nz

Phone: 04 495 6210