Document Management Compliance: What You Need to Know

April 23, 2020

No matter what your business does, it is likely that you are affected in some way by regulation. For some industries, proving compliance may be as simple as a health inspection from time to time.

For others, compliance is an ongoing process that demands significant resources and planning. One thing is for sure, whatever your industry, proving compliance will involve some level of documentation.

Despite its ubiquity, regulatory compliance continues to be a point of confusion and frustration for many organizations. This is partly due to the constantly evolving nature of regulation for many industries, but it is also to do with confusion over what exactly constitutes compliance documentation, and how that documentation should be managed. So, what is documentation management and how can it help your business achieve compliance?

What is Document Management?

Document management is any system or set of processes that are put in place to manage documentation. At one end of the spectrum, this could simply be a series of unlabeled filing cabinets or loose hard drives. However, as anyone who has experienced a “document management” system like this could attest (and they do exist), that is a quick way to cause yourself a lot of headaches.

Most businesses will have some organized form of document management in place, as it is very difficult to run an effective business without one. This will involve the storage, labeling, and indexing of all documents that are pertinent to the operation of the business, both physical and digital/electronic. Essentially, anything that may need to be referred back to or referenced at a later date. For most enterprise-level businesses, or any operating in a heavily-regulated industry, this will be an electronic Document Management System (DMS).

Documents vs. Records

Just as not all rectangles are squares, not all documents are records. Every email on that chain that you really didn’t need to be on is a document. Every word document and every slide deck. Naturally, not all of those are stored and managed actively, nor should they be. So, at what point does a document cross the line and become a record?

What is a Document?

Documents are pieces of recorded information (both digital and physical) that are produced and utilized by the day to day operations of your business or organization. They are active, often still in the process of being created. Some of them may become records, but not necessarily. 

Document Management

As it deals with living documents that are in active use, document management is primarily concerned with improving the day-to-day efficiency of an organization by streamlining how documents are created and moved around.

Document management aims to:

  • Optimize document retrieval speed
  • Improve organizational efficiency
  • Reduce document loss
  • Use storage space for effectively

What is a Record?

Records always begin their life as documents of some type or another. The key difference is that records are generally fixed, or are at least not revised regularly. This is because records serve as evidence of the activity of a business or organization, rather than being part of day-to-day operations.

Records Management

Records are documents that provide a record of the activity of a business, whether they be evidence of training or the academic records of students. When it comes to compliance or legal challenges, it is primarily the records of a business that will be looked at. For this reason, records management involves many of the same aims as document management, with a greater focus on controls and disposition schedules.

Records management aims to:

  • Determine a clear chain of custody and audit trail
  • Maintain a consistent record lifecycle
  • Clearly identify the owner of records
  • Implement a consistent retention and disposition schedule
  • Bring an organization in line with regulatory requirements

 

Document Management and the Importance of Compliance

Generally speaking, document management is not a requirement, per se, of compliance with most regulatory frameworks. As noted above, compliance generally requires a consistent system of record for audits. Some, like the FDA’s CFR Part 11 actually include very specific terminology about the level of records management that is in place. Others, like the CCPA, do not require that a specific system be put in place, but the requirements of access and disposition for records mean that it would be impossible to be in compliance without a proper records management system in place.

However, a proper system of document management can be hugely beneficial for meeting regulatory compliance requirements. This is because every record begins its life as a document. So, putting an integrated system of document and records management means that you will have a seamless record lifecycle from creation to disposition. This will improve operational efficiency generally, but it will also ensure that as documents transition into becoming records, there is no risk of them being misfiled or lost. And that’s not the only benefit of good document management. 

Common Regulatory Frameworks

While most regulatory frameworks do not have specific document management requirements, some do. Or, if they don’t, they have particularly stringent and complex records management requirements. Either way, compliance with these frameworks is made much easier with a robust document management platform or system. Below are some examples of these types of frameworks.

FDA 21 CFR Part 11

Governing all food and drug manufacturers, the FDA’s regulation is one of the best examples of complex compliance requirements. With a specific focus on pharmaceutical and medical instrumentation manufacturers, 21 CFR Part 11 has incredibly strict requirements regarding document access and electronic signatures, both of which can and do fall under document management.

Dodd-Frank

Created as a response to the 2008-9 financial crisis, Dodd-Frank was one of the most sweeping overhauls of regulation in recent history. While the law touches almost every aspect of the US financial system, the document and records management aspect essentially stipulates that all information related to trades must be held for up to 30 years and be readily accessible to the SEC and CFTC. This makes for incredibly complex document and records management that makes both active and inactive documents/records constantly available for audit.

FATCA

One of the few regulations that has specific recommendations regarding document management, the Foreign Accounting Tax Compliance Act (FATCA) requires that foreign banks report all assets of US nationals or companies in excess of $50k. The goal was to limit the use of offshore assets as a means for hiding income from the IRS. For companies with offshore assets, this means that all documentation regarding offshore assets must be tracked accurately and reported to the IRS.

HIPAA

In 1996, the Health Insurance Portability and Accountability Act (HIPAA) brought huge changes to how patient information was handled by insurance and healthcare providers. With the much more active and frequently accessed records of the healthcare industry, HIPAA compliance absolutely requires a highly-effective and streamlined document management system to avoid hefty fines.

 

Document Management Solutions for Compliance

Thankfully, good document management doesn’t mean having a whole separate platform from your records management. It also doesn’t mean dealing with a digital document management system that won’t integrate with your physical documents and records. A modern document and records management software system will allow you to effectively manage your active documents and seamlessly transition them into your records retention and disposition lifecycle.

It will also allow for the digitization of your physical documents and records, bringing both digital and physical information management under one roof. With built-in compliance tools for specific frameworks that you need to meet, integrated document management solutions should turn compliance from a complicated headache into a regular part of your daily operations.

 

Summary

Whatever level of compliance requirements you need to meet, if you are an enterprise organization then good document management should be a priority either way. It allows for a streamlined flow of information through your organization and protects against the unnecessary loss and misfiling of documents, improving operational efficiency across the board. 

However, if you are governed by one of the more complex or stringent regulations, then your system needs to go beyond managing active documents. By integrating your document management and records management into one coherent ecosystem, you can make compliance into an inherent part of your day-to-day operations, rather than some additional level of work to do. The right document and records management solution will do all that for you and more.

 

Subscribe