“Audit” is an inspection conducted by an independent auditor to ensure the accuracy of your company’s financial records. For example, an Audit conducted by an independent auditor can provide investors with an objective evaluation of your company’s Financial Statements, in order to ensure that they provide a fair and accurate representation of your company’s financial health. Many Venture Capitalists require annual Audits for their portfolio companies in order to track their financial performance more accurately and reliably.

An Audit right is a contractual provision that allows one party to an agreement to inspect the Books and Records of the other party, in order to confirm, for example, that certain sales results have been achieved to calculate a related sales commission or royalty payment.