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Government Resources
FAR Record Retention Regulations
The Federal Acquisition Regulations (FAR) stipulate specific time periods for retaining records. Government Contractor audits involve research into past records, making it crucial to closely follow the rules on Record Retention. Here are the abbreviated regulations from FAR 4.703.
- Contractors need to maintain books, documents, accounting procedures and practices, and other supporting evidence to satisfy contract negotiation, administration, and audit requirements of the contracting agencies for 3 years after the final payment or according to the table below.
- Contractors shall keep these records for a longer period of time if a longer period is in the contract clause or the contractor retains records for a longer period for its own purposes. Also, if the contractor does not meet the original due date for submission of final indirect cost rate proposals, the retention periods shall be automatically extended one day for each day the proposal is not submitted after the original due date.
- Original records need not be maintained or produced in an audit if the contractor or subcontractor provides photographic or electronic images of the original records and meets the following requirements:
- A reliable imaging process that captures all the information;
- An efficient indexing system for these images; and
- Maintainance of the original documents for one year after creating images of them.
- Maintaining any of these records on a computer is acceptable as long as it can be restored.
Some notes on how to calculate retention times:
- The retention periods below are calculated from the end of the contractor's fiscal year in which an entry is made charging or allocating a cost to a Government contract or subcontract. If a specific record contains a series of entries, the retention period is calculated from the end of the contractor's fiscal year in which the final entry is made.
- When records generated during a prior contract are relied upon by a contractor for cost or pricing data in negotiating a succeeding contract, the prescribed periods shall run from the date of the succeeding contract.
- If two or more of the record categories described below are interfiled and separating them is impractical, the contractor shall retain the entire record series for the longest period prescribed for any category in that group.
The following table lists the records and retention times:
I. Financial and Cost Accounting Records ( FAR 4.705-1 ) |
A) A/R Invoices, Adjustments to Accounts,
Invoice Registers, Freight Bills, Shipping Orders |
4 years |
B) Material, Work, and Service Order Files |
4 years |
C) Cash Advance Recapitulations |
4 years |
D) Paid, canceled and voided checks for other than
payment of salary and wages |
4 years |
E) A/P Records |
4 years |
F) Labor Cost Distribution Cards |
2 years |
G) Detailed Petty Cash Records |
2 years |
II. Construction Contracts Pay Administration Records ( FAR 4.705-2 ) |
A) Payroll sheets for each employee for each period
of contract |
4 years |
B) Time and Attendance Cards |
2 years |
C) Employee Checks |
2 years |
III. Acquisition and Supply Records ( FAR 4.705-3 ) |
A) Requisitions for materials, supplies, equipment,
and services |
2 years |
B) Maintenance Work Orders |
4 years |
C) Equipment Records |
4 years |
D) Expendable Property Records |
4 years |
E) Receiving and Inspection Reports |
4 years |
F) Purchase Order Files for equipment, material, or
services used in a contract |
4 years |
G) Records of Quality Control, Reliability and Inspection |
4 years |
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