Overview
FAR 4.705 establishes mandatory minimum timeframes for the retention of specific contractor records related to financial accounting, payroll administration, and acquisition/supply management. These regulations prioritize the functional purpose of a record over its specific name or form number to ensure consistent availability for government audits.
Key Rules
- Standard Retention Periods: The section generally mandates two primary retention periods: 4 years for most substantive financial and procurement documents, and 2 years for more routine or supporting documentation.
- Financial & Cost Accounting (4.705-1):
- 4 Years: Accounts receivable/payable, invoices, purchase orders, non-salary checks, and freight bills.
- 2 Years: Labor cost distribution cards and petty cash records.
- Pay Administration (4.705-2):
- 4 Years: Payroll sheets, registers, and tax withholding statements.
- 2 Years: Clock cards (timecards) and evidence of payment (e.g., receipts for wages).
- Acquisition & Supply (4.705-3):
- 4 Years: Purchase order files (including negotiation memos), equipment usage reports, receiving/inspection reports, and quality control records.
- 2 Years: Store requisitions for materials and supplies.
- Functional Identification: Retention requirements apply based on what the record describes or its purpose, regardless of the contractor's internal naming conventions or filing systems.
Practical Implications
- Audit Compliance: Contractors must ensure their records management systems are configured to meet these minimums to remain compliant with DCAA (Defense Contract Audit Agency) audits and contract closeout procedures.
- Internal Policy Alignment: Companies should map their internal document titles to the FAR functional descriptions to prevent the premature destruction of records that may have unique internal names but fall under the 4-year retention mandate.