What is a Royalty Audit?

A royalty audit verifies if a Licensee is complying with the license/contract, including payments, research milestones, advertising or any other clause that allows itself to be tested by an independent party

Provides quantified supported findings for negotiation and collection

Identifies areas of ambiguity for improved future license agreements
MAGNITUDE OF MISREPORTING
86% of Licensees Audited Underreported Royalties
AUDIT OUTCOMES
- Recover cash due
- Modify templates to clarify future agreements
- Amend license language in light of audit findings
- Educate internal staff about license language for future licenses
- Better internal analysis of royalty reports
- Expand upon and create a more robust compliance program
- The audit process brings to light possible differences in interpretations and allows for prompt discussion and feedback on those issues
- Audits are the perfect platform to rekindle communications between Licensor and Licensee while also highlighting and strengthening the mutual benefits of the business relationship