No. 19Financial Terms
Audit Rights
Also called right to audit, royalty audit, inspection rights, accounting examination
Your right to inspect the label's financial records to verify royalty calculations are correct.
Artist-friendly
Audit rights protect the artist; their absence is a red flag.
- Appears in
- Recording Agreement, Publishing Deal, Distribution Agreement, 360 Deal
- Topic
- Transparency & Accountability
- Jurisdiction
- United States
- Reviewed
- July 2026
In plain English
Audit rights give the artist (or their accountant) the ability to examine the label's books and records relating to the recordings, to verify that royalty statements are accurate. Without this right, you are entirely dependent on the label's own calculations. Industry studies consistently find that audits recover significant underpayments.
Why it matters
Royalty accounting errors, intentional or not, are extremely common. A right to audit is the only mechanism to catch and recover underpayments. Many artists only discover discrepancies years after the fact when cumulative errors are substantial.
Where it can land
The same clause is drafted three ways. These are the positions we see, worst first, so you can tell at a glance which one is in front of you.
- No audit rights at all
- Audit can only be triggered once every 5 years
- Audit findings cannot be used in legal proceedings
- Artist must pay all audit costs regardless of findings
- Audit window limited to records from the past 2 years only
- Label has 120+ days to respond to audit findings
- Audit rights exercisable once per year with 30 days' notice
- Label pays audit costs if underpayment exceeds 5–10% of the audited amount
- Audit findings form the basis of a binding reconciliation within 60 days
The language
The drafting language and the negotiation moves for this clause are part of the workspace.
You have read what the clause means and where the risk sits. The rest is the side-by-side of how it reads when it is against you and when it is not, plus the specific moves that get it there.