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April 1991

Paper shredders: eliminating the risks. (Management of an Accounting Practice)

by Kahles, Marie

    Abstract- Accounting firms can increase their security by installing paper shredders. Paper shredders will render sensitive documents unintelligible, thus preventing the leaking of the secrets of the firm and its clients. There are three types of shredders: strip-cut shredders, which cut the paper into strips, typically one-fourth of an inch wide; cross-cut shredders, which cut the paper into particles of one-fourth inch by one-and-one-half inches and provide more security than strip-cut shredders; and top-security-cut shredders, which meet the standards of the Department of Defense and provide the highest level of security. An accounting firm should purchase the type of shredder that meets its security needs.

By Marie Kahles, Product Manager, Cummins-Allison Corp.

Are you throwing away important papers, not realizing that what is no longer important to you could be useful, even crucial, to someone else?

Maybe you think it's safe to toss rough drafts of financial statements, internal memos, business plans, proposals, correspondence, marketing plans, sales reports, budgeting worksheets, loan applications, bank drafts, and deposit slips into the trash can next to your desk. But do you know that once something is thrown into the garbage, that garbage becomes public domain and is available to anyone to go through and take?

How can you protect your company's or your clients' information from getting into the wrong hands? Surely, you do not want drafts and worksheets of future plans and forecasts to be accessible to your competitors. Surely, your clients would not be happy if they knew their financial data was available in last night's trash. Shredding your company's documents can save considerable loss and embarrassment.

Even delicate documents within your office must be protected. Confidential information such as personnel records, salary reviews, and insurance data should be shredded when they are no longer needed. Just placing a paper shredder in the personnel department, or even next to the photocopy machine, provides added security and protects your employees' privacy.

Preparing to Purchase

Before you purchase a paper shredder, there are a few questions you must ask yourself. What materials do you plan to shred? Who will do the shredding? How much material will be shredded and how often?

The shredder you select depends on whether you'll be shredding correspondence, printouts, ribbons, photos, art boards, or corrugated material. Choosing a shredder that accepts paper clips, staples, or fasteners eliminates the need for removing them before shredding and saves you time.

Which departments are most concerned with document security? Can individuals or departments share a shredder? The answers to these two questions will determine whether your company works well with a centralized or a decentralized system, or even a combination of the two systems.

With a centralized system, usually one large shredder is conveniently located for use by multiple people or departments. For example, the shredder might be placed next to the copier, in a mailroom, or a similar common area. Some companies have large industrial type shredders where specific employees operate the unit and destroy materials collected from various departments.

With a decentralized system, shredders are located in the immediate area where documents are generated and used. Multiple shredders are placed throughout the office next to desks, computers/printers, fax machines, blueprint machines, and filing areas for prompt shredding. Unnecessary documents and data are disposed of immediately and not left waiting to be collected or taken to the shredder.

Types of Shredders

Shredders are available in strip cut, crosscut, and top security cut versions. Strip cut machines destroy materials in strips usually 1/4" wide. The length of the strips vary. Strip cut machines are most popular because they cost less, are most durable, and shred faster than crosscut and security cut models.

Crosscut shredders reduce paper to particles approximately 1/4" x 1- 1/2" and provide a higher degree of security than a strip cut unit. Because crosscut shreds are small, the shredded material takes up less space.

Top security meets DOD (Department of Defense) standards and offers the highest level of security. Like crosscut shredders, these units reduce bulk, allowing maximum material to be shredded without frequent bag changes.

Remember, when choosing between strip cut, crosscut, or top security cut, you need to determine the level of security required for destruction of your documents and the volume of material you will be shredding regularly.

Match the Shredder to Your Needs

No matter what your shredding needs may be, there are many models and sizes available. If you are short on office space, there are various small office and compact units that will fit into an individual office or next to a desk. Models with disposal containers housed in a front door cabinet can be placed against a wall to maximize your office floor space. Table top units are also available. Models ranging from medium to heavy volume to industrial shredders can be purchased. Most industrial models feature a conveyor belt that accepts all types of paper from flat to crumpled. Some large plant models include a compactor to dramatically reduce the volume of shreds for disposal.

The shredder you select should last for a five-year growth span. A smaller unit may have a low purchase price, but if you use it regularly for all types of documents, the cost could end up being very high. If a lot of material requires shredding, a low volume shredder will quickly wear and become expensive with service and repair costs.

Bells and Whistles

Once you've determined your basic shredder needs, you can look at other features. Automatic stop, an important feature, shuts the shredder off should paper jam in the feeder. In some cases the motor will reverse itself pushing the papers back from the cutting heads so that they can be easily re-fed. Another feature is an alarm or indicator light that shows when the bag is full or the container needs to be emptied.

The size of throat you need is determined by the type of documents you will most often shred. If most of your documents are computer printouts, then you'll require at least a 16" throat. Conveyors on industrial units handle all types of paper--flat or crumpled. Even binders are easily destroyed in an industrial type shredder. Remember to check if the shredder you are buying accepts paper clips, staples, and fasteners so that you do not have to remove them before shredding.

Printout racks or shredder stands, with three or four shelves, allow you to stream feed continuous form printouts without constant operator attention. Insert the first sheet and the shredder automatically advances to the following sheets until the entire report is destroyed.

Also consider capacity; how many sheets can be fed into the shredder at one time without a paper jam. Ask about the blades--hardened steel blades provide long cutting life.

Any brand new shredder will work well in the beginning. The true test comes when heavy loads and stacks of printouts are shredded regularly. If your shredder is not built to withstand this stress, you'll end up with costly repairs and service fees.

Shredder Due Diligence

Talk to your salesperson to find out what materials were used to make the various components used in the shredder. Open the hood and view the inside. Is it made of mostly plastic or steel? Do the electronics include solid-state circuitry and what type of bearings were used? Asking questions like these will help you find out how much your supplier knows about shredders.

Ask your dealer to bring a shredder to your premises on a trial basis. Definitely ask to see a demo or a machine in operation at another company. Check references. Ask your salesperson for a list of current customers. Call the customers and ask about dependability, performance, service, and any problems.

Check the shredder's warranty. Shredder warranties differ, so don't assume all are alike. Some cover the machine for 90 days and some are longer. Other warranties cover certain parts and labor from one to three years. Warranties on cutters may differ substantially from warranties on motors. The length and type of warranty on a shredder may provide a clue as to how confident a manufacturer is in the quality of his or her shredder. Determine how warranty service is handled--at your location, or must you return the shredder to your supplier or the manufacturer?

Choosing a Vendor

Choose a vendor who's an expert in document security. He or she should be able to make a recommendation, keeping in mind your needs and future demands. Many suppliers have added shredders to an existing product line and may have limited experience with shredders. Be sure to check out your vendor. When contacting customers, find out how knowledgeable the vendor is and if they are willing to listen and educate. Investigate the availability of support and assistance after the sale.

One of the most important features of a shredder is service. Where and how is service handled? Are nationwide sales and service offices available should your company purchase multiple shredders for various locations? Check the manufacturer's or dealer's references on how quickly the vendor responds and how fast repairs are made. Must the machine be packed and shipped back or are a service technician and parts available locally?

With proper usage and preventive maintenance, your shredder will last for several years.

Other Benefits

In addition to document security, effective use of a shredder will reduce the amount of files and record keeping. Records management studies indicate that less than 30% of information in a company's files should be stored: 70% are either duplicates or obsolete.

Shredding drafts and worksheets helps eliminate confusion and possible mistakes. You can't erroneously refer to an earlier draft if it no longer exists. Shredding can save money by reducing the bulk of paper products to be disposed of and carted from the premises.

Recycling, an important issue, is another reason for shredding. Companies sell used, shredded paper to recycling houses or reuse the shreds themselves as packing material for shipping and mailing.

A Rather Simple Device With Significant Impact

In order for a document security program to be successful, people in your organization, top management on down, need to be aware of all the benefits of shredding: security and protection, cost savings, space savings, and more efficient record keeping.

PHOTO : Strip Cut Shredded Document

PHOTO : Crosscut Shredded Document

PHOTO : Top Security Cut Shredded Document

Editor: David W. McThomas The International Group of Accounting Firms

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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