Record retention and audit in outsourcing

The following TMT practice note provides comprehensive and up to date legal information covering:

  • Record retention and audit in outsourcing
  • Initial considerations
  • How long should records be kept?
  • Corporate records
  • Specific categories of records
  • Personal data
  • Relationship with customer's record retention policy
  • Deletion or return
  • Audit rights
  • Regulated institutions
  • More...

Record retention and audit in outsourcing

The expression of audit rights in a contract, and the requirement to maintain records relating to that contract in a particular manner, are an essential component of any outsourcing. Effective oversight allows a customer to ensure that services are being performed as expected and provides an opportunity for the supplier to demonstrate compliance with the contract.

This Practice Note considers the following key issues in relation to record retention and audit rights in outsourcing transactions:

  1. Initial considerations

  2. How long records should be kept

  3. Audit rights

  4. Consistency with other terms of the contract

  5. Supplier's perspective

For examples of drafting that can be used in record retention or audit provisions of an agreement, see clauses 22 (Records) and 23 (Audit) of Precedent: Outsourcing agreement—long form.

Initial considerations

There are several key questions that the parties will need to answer in order to determine what is appropriate in any given situation:

  1. What are the record retention requirements for each of the customer and the supplier both at law and in relation to internal policies?

  2. What audit rights (if any) does the customer require in order to satisfy any regulatory obligations or to allow the customer to satisfy its regulators that it has appropriate oversight of the services?

  3. What audit rights (if any) does the customer require in order to prudently manage the supplier in this particular

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