SSE-KMS (Server-side encryption with AWS Key Management Service) not only encrypts data at rest but also integrates with AWS CloudTrail to provide detailed logs of key usage — meeting the audit requirement.

“SSE-KMS provides the ability to audit key usage to see who used the key and when, via AWS CloudTrail.”

— Amazon S3 Encryption Documentation

Benefits:

Encryption with customer-managed or AWS-managed KMS keys

Audit trails of key usage events

Fine-grained access control

Incorrect Options:

A: SSE-S3 does not support auditing of key usage.

C: SSE-C does not integrate with CloudTrail or KMS.

D: Self-managed keys require external key infrastructure and custom audit logging.