construction audit

Construction Audit Rights: When the Owner Can Examine Your Books and What They're Looking For

Audit rights — contract provisions allowing owner examination of contractor cost records — are common in cost-plus, GMP, and construction management contracts. What auditors review, what findings lead to disallowances, and how contractors should prepare for audit differ substantially from typical corporate audit. Contractors working under contracts with audit rights need specific record-keeping discipline. The audit isn't about whether contractor is honest — it's about whether costs are supported per contract terms.