BRIEFS

Records Retention Schedule: (item....retention period)

Accident reports/claims (settled cases)....7 years Accounts payable ledgers/schedules....7 years Accounts receivable ledgers and schedules....7 years Audit reports permanently Bank reconciliations....2 years Bank statements....3 years Capital stock and bond records registers, stubs showing issues, record of interest coupons, options, etc.....permanently Cash books....permanently Charts of accounts....permanently Checks (canceled - see exception below)....7 years Checks (canceled for important payments i.e., taxes, purchases of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction).... permanently Contracts, mortgages, notes and leases (expired)....7 years (still in effect)....permanently Correspondence (general)....2 years Correspondence (legal and important matters only).... permanently Deeds, mortgages and bills of sale.... permanently Depreciation schedules....permanently Duplicate deposit slips....2 years Employment applications....3 years Expense analyses/expense distribution schedules....7 years Financial statements (year-end, other).... permanently Garnishments.... 7 years General/Private ledgers, year-end trial balance.... permanently Insurance policies (expired)....3 years Insurance records, current accident reports claims, policies, etc.....permanently Internal reports (miscellaneous)....3 years Inventories of products, materials and supplies, etc.....7 years Invoices (to customers, from vendors)....7 years Journals.... permanently Magnetic tape and tab cards....1 year Minute books of directors, bylaws and charter.... permanently Notes receivable ledger and schedules....7 years Option records (expired)....7 years Patents and related papers....permanently Payroll records and summaries....7 years Personnel files (terminated)....7 years Petty cash vouchers....3 years Physical inventory tags....3 years Plant cost ledgers....7 years Property appraisals by outside appraisers....permanently Property records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints, and plans....permanently Purchase orders (except purchasing department copy)....1 year Purchase orders (purchasing department copy)....7 years Receiving sheets....1 year Retirement and pension records....permanently Requisitions.... 1 year Sales commission reports....3 years Sales records....7 years Scrap and salvage records (inventories, sales, etc.).... 7 years Stenographers' notebooks....1 years Stock and bond certificates (canceled)....7 years Stockroom withdrawal forms....1 year Subsidiary ledgers....7 years Tax returns, worksheets, revenue agents' reports, and other documents relating to determination of income tax liability....permanently Time books/cards....7 years Trademark registrations and copyrights....permanently Training manuals....permanently Union agreements....permanently Voucher register and schedules....7 years Vouchers for payments to vendors, employees, (includes allowances and reimbursement of employees, officers, etc. for travel and entertainment expense)....7 years Withholding tax statements....7 years

The Surety Association of America recently published a series of financial parameters to evaluate the financial health of a construction company. Escalating loss within the industry during recent years will continue to result in further restriction of the bonding capacities of contractors in a marginal financial position. The following ifnancial ratios and operating statistics detail "Safety Zone".

Ratio	Safety Zone
Total Debt/Net Worth	Less than 3 times
Annual Revenue (determined on percent of completion basis)/Net Worth	Less than 12.5 times
Current Assets (excluding prepaid expenses and related party receivables) Current Liabilities	Greater than 1.3 times
Annual Revenue/Working Capital	Less than 30 times
Net Worth/General & Administrative	Greater than 1 to 1
Costs and Estimated Earnings on uncompleted contracts in excess of billing (underbilling)/Net Worth	Less than 30% net income in last two years.

If we can help your organization with this or any other problems, call us anytime.

Sincerely,

Edward Jacks & Company
Certified Public Accountants