When an auditor or regulator asks how a control works, they are rarely asking for the contract PDF. They are asking whether your systems can produce a reliable record of what happened, who approved it, and whether the process you described is the process you actually ran.

That shift is subtle until you live through it. I have sat in audits where the document language was fine and we still had a problem because we could not prove execution with system evidence. In regulated environments, “we have it in the contract” is table stakes. The defensible answer is the system trail.

Contract lifecycle management platforms sit right in the middle of that. Not because CLM is a compliance tool, but because CLM increasingly feeds evidence into compliance conversations.

Regulators are telegraphing a systems-first posture

The cleanest example is recordkeeping enforcement. In the SEC’s January 2025 recordkeeping case, the story is not “you misplaced documents.” The story is that firms failed to maintain and preserve required electronic communications, including off-channel communications, and those failures extended into supervision and governance.

FINRA’s exam teams make the same point in plainer language. The 2026 FINRA Books and Records section calls out inadequate controls to retain and review electronic communications and inadequate due diligence on third-party vendors, including whether service contracts align with recordkeeping requirements.

That is the posture contract ops teams should internalize. Regulators are not impressed by “we told people to do X.” They want proof the system captured X, retained it, and can produce it quickly.

In regulated industries, audit trail requirements are explicit

Financial services is not the only example. New York’s cybersecurity regulation has a direct audit trail requirement in 23 NYCRR 500.6, with language about maintaining systems designed to reconstruct material financial transactions and detect and respond to cybersecurity events.

Life sciences has its own version of the same idea. The FDA guidance on computerized systems used in clinical trials defines an audit trail as a secure, computer-generated, time-stamped record that can reconstruct the course of events, and it ties that concept to 21 CFR Part 11 expectations.

You do not have to be a broker-dealer or a clinical sponsor to feel the downstream effect. Once a regulator normalizes “systems must reconstruct events,” auditors adopt that posture across the board.

Auditors treat your reports as evidence and then test the system behind them

This is where CLM configuration stops being “admin work” and starts being audit posture.

Under the PCAOB’s updated AS 1105 Audit Evidence standard, when auditors rely on “information produced by the company,” they test the accuracy and completeness of the information, or they test the controls over accuracy and completeness, including IT general controls where applicable.

In practice, that means if you hand an auditor a CLM export that says “all contracts over $250K had CFO approval,” the next question is not “can I see the contracts.” The next question is “how does your system determine the $250K population and what prevents someone from changing the approval rule.”

That is configuration. That is metadata. That is workflow logic. That is permissioning. That is your audit trail now.

What counts as CLM configuration in an audit conversation

When auditors say “system,” they usually mean a few specific things:

Metadata standards

If your contract type field is free text, reporting is brittle. If your counterparty naming is inconsistent, duplicate entities contaminate populations. If “effective date” is optional, you cannot produce a reliable aging report.

These are not cosmetic issues. They determine whether a report is complete and precise enough to be used as evidence, which is the problem AS 1105 is trying to address in the PCAOB standard language.

Workflow rules

Approval routing is often the control. If your policy says “Security must approve DPAs,” the real control is the CLM rule that routes the right set of contracts to Security, and the record that Security approved.

That is why auditors increasingly ask for the workflow configuration itself, not just the final approval stamp.

Roles and permissions

If a business user can change a risk tier field after approval, your approval evidence is weak. If an admin can retroactively adjust a workflow with no governance, the control becomes hard to defend.

NIST treats this as a standard control problem in CM-3 configuration change control, and it ties directly to restricting who can implement changes in CM-5 access restrictions for change.

Reporting logic

Saved reports, filters, and export definitions become “the evidence.” If you cannot explain how a report was generated and whether its underlying fields are governed, the report becomes a story instead of evidence.

This is the same reason FINRA cares about controls that capture and retain communications in its Books and Records guidance, even when the communications exist somewhere.

The common failure mode is configuration drift

Most control failures I see in contract ops are not because the contract language was wrong. They are because configuration drift made the process different from the policy.

The policy says “Finance approves above $100K.” Someone changes the threshold to $250K during a busy quarter. It never gets changed back. Nobody documents the change. The approval evidence is still “correct” in the tool, but the control no longer matches the policy.

Configuration drift is why governance teams want change control. NIST’s configuration change control model is not academic. It exists because unauthorized or undocumented changes are exactly how control environments quietly rot.

How I handle my daily audit work

I am careful about product claims because auditors will test them, and because tool truth matters.

Two Concord specifics have been reliably useful in my day-to-day work:

• Concord’s Audit Trail feature logs a record of key document activity, including drafts and redlines, signatures, lifecycle updates, and the creation of approval workflows, which lets me reconstruct what happened without chasing emails.
• Concord’s approval workflows support conditional steps based on smart fields, which lets me operationalize “if X then Y approval” controls in the workflow instead of relying on manual routing.

One note: clauses added to the summary sheet are tracked, but standard and custom fields are not tracked in the audit trail, so I treat metadata integrity as a governance problem, not as something the audit log alone solves.

That is also the broader point of this post. Configuration and evidence are intertwined, and you have to know where the system draws the line.

How contract ops teams make CLM configuration audit-defensible

Here is the operating model that has held up best for me under scrutiny.

Maintain a contract data dictionary like it is finance master data

Define what each key field means, who owns it, and what values are permitted. Treat changes to definitions as controlled events, not casual edits.

That aligns with the audit-evidence logic in the PCAOB standard because your reports are only as reliable as the underlying definitions.

Put configuration under change control

Have a lightweight change process for workflows, roles, and critical metadata standards, with a record of what changed and why. NIST’s framing in CM-3 is the right mental model, even for teams that are not formal security shops.

Separate “evidence reporting” from “operational reporting”

Operational dashboards can tolerate noise. Evidence reports cannot.

For evidence reports, lock down field definitions, document the filter logic, and define who can run the report and who can change the underlying configuration.

Test your audit narrative against an actual reconstruction exercise

Pick one policy control, like “CFO approves contracts over X,” and run a timed exercise. Produce the population, the workflow used, and the approval evidence for a sample set. Then ask what would happen if the amount field was wrong or edited late.

That exercise reveals where your CLM configuration is part of your audit trail, because it shows exactly what you can and cannot prove.

The bottom line

Audits used to be document-centric. They are now system-centric.

Regulators and auditors have been explicit that recordkeeping and control narratives need operational proof, as you can see in the SEC recordkeeping posture and FINRA’s exam priorities in Books and Records. In regulated industries, the expectation for systems that reconstruct events is built into requirements like 23 NYCRR 500.6 and the FDA’s audit-trail concept in its computerized systems guidance.

Once you accept that, CLM configuration is not administrative overhead. It is part of your evidence chain. It is part of your audit trail.