An audit rights clause gives a customer, regulator or contracting party the ability to inspect evidence that the other party is meeting contractual obligations. It may apply to fees, service performance, security controls, data protection, regulatory compliance or supply-chain commitments.
Good audit clauses balance transparency with operational burden. They should define notice, frequency, scope, confidentiality, who pays the costs, whether third-party auditors are allowed, and how findings are remediated. In data-heavy contracts, audit rights often sit beside a data processing agreement and sub-processor controls.
Related reading: What should a data processing agreement include?