Putting client records under a legal hold
When a firm should put client records under a legal hold, what a hold stops in Achekam, and how it fits the three-person disposal rule.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Retention schedules are written for the ordinary case: keep the file for the required period, then dispose of it. The difficulty is the extraordinary case. A client sues, a regulator opens an investigation, a tax authority starts an audit of a year whose working papers are due for destruction next month. Destroying records then is not housekeeping. It can look like concealment, and it can leave the firm unable to defend its own work.
A legal hold is the instruction that suspends the ordinary schedule for specific records. This article covers when a firm should place one, what it stops in Achekam, and how it interacts with the rule that three different people must agree before anything is disposed of.
Events that call for a hold
Place a hold as soon as the firm reasonably expects a dispute or inquiry, not when the summons arrives. Typical triggers:
- a client complaint that mentions loss, negligence or a lawyer;
- a letter of demand or notice of a claim against the firm or a client;
- an investigation or inspection by a regulator that names an engagement;
- a tax audit, assessment or objection affecting a year the firm worked on;
- a fraud, theft or reportable irregularity discovered in a client's affairs;
- litigation between a client and a third party where the firm's work may be evidence.
The scope should be wide enough to catch everything relevant: the audit file, correspondence, the client's documents in the firm's vault, billing records and time records for the engagement.
What a hold stops
Achekam disposes of a governed record only after its retention period has ended and no legal hold applies. So a hold stops disposal outright, even when the retention period has run out.
That is the property that matters. Without a hold, a record that reaches the end of its retention period becomes eligible for disposal through the normal process. With one, it stays, however long the dispute lasts. Holds and retention are managed together under QUALITY & GOVERNANCE > Record Governance, in the Legal holds and Retention & disposal areas.
Holds and the three-person disposal rule
Disposal in Achekam is deliberately slow. It needs three different people: one to request, one to review and one to approve. When a record is disposed of, the disposal certificate keeps proof that it happened, but not the content.
The hold and the three-person rule protect against different failures. The three-person rule stops one person quietly destroying records. The hold stops even a properly approved disposal from going ahead while a dispute is live. Use both, and make "is anything under hold?" a standing question for whoever reviews a disposal request.
A simple routine for disposal reviewers:
- Confirm the retention period has ended for every record in the request.
- Check the list of active holds and the clients, engagements and years they cover.
- Ask the partners whether any dispute or inquiry is expected that is not yet under hold.
- Only then review the request, and record the check.
Holds over locked audit archives
Audit files already have strong protection. After the report is issued, the engagement partner assembles and locks the file, after which changes can only be added as addenda, and unlocking needs a second partner or the quality reviewer. Each locked file is built into an archive of its papers, workbooks, signed report and logs, with a hash manifest that can be re-verified, and only a partner, manager or the quality reviewer can download it. Assembling and archiving the audit file describes the archive.
In South Africa, IRBA Board Notice 512 of 2023, Rule 4, requires the final engagement file to be assembled within 60 days of the report date and kept for at least five years, for audits of periods beginning on or after 15 December 2024. Achekam's rule book holds this rule as approved and uses it for the retention date, and a file cannot be completed without a retention rule. Audit file assembly and IRBA retention covers the South African rule.
The lock prevents change; the hold prevents disposal. When a locked file becomes relevant to a dispute, place a hold on it too, so that it outlives the end of its retention period if the matter drags on. For the international position, ISA 230 deals with assembling the final file and retaining audit documentation, and the IAASB's 2026 Handbook contains its full text alongside the ISQMs.
Recording why the hold exists
A hold with no recorded reason is hard to lift. Years later nobody remembers whether the matter was settled, so the records stay forever and the retention schedule loses its meaning.
Keep a short hold memo for each one:
| Item | Example of what to record |
|---|---|
| The matter | Claim by a client concerning a set of statements |
| Who asked for the hold | The partner responsible for quality |
| What it covers | Named clients, engagements and years |
| Date placed | The day the firm became aware |
| Review date | When the matter's status will next be checked |
| Release condition | Final settlement, withdrawal or end of appeal rights |
Changes to governed records are logged in Record Governance, showing who did what, when and with what result, and the log can be checked for an unbroken chain. It covers records under record governance, not every screen, and viewing it needs the AUDIT_LOG_VIEW permission.
Review every hold at least twice a year and lift it when its release condition is met, so that normal retention resumes.
Today
Ask each partner one question this week: is there any client matter where a dispute, claim or inquiry is reasonably likely? For each yes, place a hold over the related records and write the memo.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
