What is an Audit Right?

An audit right is a provision in a contract that allows one party to review and verify the financial records of another party related to payments, royalties, or revenue reporting. It is commonly included in music industry agreements to ensure that royalty payments are calculated correctly.

For example, an artist, songwriter, or producer may have the right to audit the accounting records of a record label, publisher, or distributor. This allows them—or a hired accountant—to examine the company’s financial statements and royalty reports to confirm that the correct amounts have been paid.

Audit rights typically include conditions such as how often an audit can occur, how far back records can be reviewed, and who pays for the audit. These clauses help protect creators by providing a way to verify financial transparency in contractual relationships.