Administrative value is the assessment of the importance of a business record to daily operations. Records deemed to have administrative value are kept on file or used regularly in conducting business. This categorization of business records drives a company’s document retention policy and can have legal implications in a variety of circumstances, such as in response to a discovery request during litigation or pursuant to a tax audit.
Business records are the lifeblood of operations. The paper trail of transactions is the way a company meets its government obligations to prove compliance with the law. Businesses are required to document sales to substantiate payment of income taxes as well as records of the status of employees to prove work eligibility and to substantiate hours worked. Policies and procedures are typically committed to paper, which create a historical record of the change in policies over time.
These requirements, along with internal needs and industry standards, mean that every record a company produces must be assessed for its administrative value. A company determines if the record is something that must or should be kept for a certain length of time, or if it can be destroyed without consequences. Larger businesses will typically establish a document retention policy that helps employees determine the value of documents so that the kinds of business records that are retained are uniform throughout the company.
Smaller companies rarely design a formal document retention policy, but the determination of administrative value is no less important in a small firm environment. Inadequate record-keeping can put any company out of business. For example, a company that enters into contracts for services typically provides the client with the right to audit its records of account activity. If proper administrative records are not kept, the client can sue for a return of payments made. In a retail sales environment, the successful defense of a slip and fall lawsuit could depend on the written policies and procedures that employees received as part of their initial job training.
Administrative value also plays a role in a public context for oversight and historical purposes. The public typically has an interest in the daily operations of government officials and offices, and some countries have laws that entitle the public to access government records, such as the Freedom of Information Act in the US. An assessment of administrative value often determines what records must be kept and what can be shredded while complying with the law. Without this emphasis on the value of certain business documents, much of the transactional history of businesses, agencies, and organizations would be lost.