When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part Two of Three)

Lawyers, accountants, customs brokers, sales agents and distributors are just a few of many third parties an organization typically retains that can cause serious FCPA problems.  Regularly auditing appropriate third parties is a key tool for decreasing third-party corruption risk.  To assist companies in drafting and using audit rights clauses in third-party contracts, the Anti-Corruption Report is publishing a three-part series. This, the second article in the series, provides strategies for securing audit rights during negotiations; discusses situations where companies should or should not proceed without audit rights; and provides advice regarding drafting audit rights provisions.  The first article discussed how companies should determine which third-party relationships require audit rights and outlined the benefits and drawbacks of including audit rights provisions in contracts.  The final article will explore when a company should conduct a third-party audit; provide advice on performing a third-party audit; and discuss what a company should do about issues raised during an audit.

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