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What does a royalty audit engagement entail?
License agreements provide licensors with the right to conduct an on-site audit of the licensee’s books and records. Once a licensor has identified the licensee(s) that needs to be audited, we will ask that the licensor provide copies of the contracts, statements and other information relevant to the relationship. After conducting pre-audit research, a staff member from CRC will typically spend up to five days at the licensee’s office performing the field work for the royalty audit. Following conclusion of the field work, an audit report is submitted to the licensor. If desired, CRC provides follow-up services that assist the licensor in collecting any amounts due as a result of the royalty audit.
What does an audit report include?
Comprehensive Royalty Compliance believes in providing the client with precisely the type of audit report that they are comfortable with. Our standard report is very detailed, organized and informative. We explain in detail the errors, omissions, etc. that have resulted in a miscalculation of royalties. The report also provides observations related to the license agreement that may not be quantified as an audit finding, but that involve situations that need to be brought to the licensor’s attention. These situations can include weak contract language, important sales and marketing data and other issues that could ultimately result in lost revenue for the licensor.
What will it cost?
Comprehensive Royalty Compliance offers flexible options for billing. Call CRC and you may discuss the situation that best suits the needs for your organization.
Why consider royalty auditing?
Some licensees are new to royalty accounting, while others are overwhelmed with the number of royalty statements that they have to prepare. Employee turnover and employees with multiple responsibilities are also a fact of life in today’s business environment. Your licensees may or may not be exposed to these situations. However, mistakes can and will be made which can potentially reduce your royalty revenue. The potential also exists for licensees to apply estimates when calculating your royalties. Their interpretation of the license agreement may be completely different from the intent of the contract. Licensing compliance audits encourage licensees to implement more effective internal controls and can result in more timely royalty payments from licensees and agents.
The royalty statement that you receive typically provides very little information. It is impossible to know the true performance of your property without the benefit of regular royalty audits of your licensees.
Why should I choose Comprehensive Royalty Compliance?
- Experience. The success that CRC has enjoyed in the licensing business is no accident. Our staff has a combined 75 years of experience in this industry. We have expertise in industries such as accessories, apparel, automotive, collectibles, electronics, food & beverage, gifts & novelties, footwear, health & beauty, promotions, publishing, software and gaming, theme parks, toys and games, and many others Considering the number of engagements that the CRC staff has conducted, there is a high probability that we have previously audited your licensees. A list of the agents and licensees that CRC has audited can be provided upon request.
- Service. At CRC, we pride ourselves on providing a high level of customer service. We are small enough to provide individualized attention to each client, yet large enough to respond quickly to your needs. We stay in contact with the licensor throughout the audit engagement process. Once the licensor has selected candidates for audit, CRC can manage each aspect of the process. CRC will schedule the audit, conduct the audit, issue the audit report and even follow-up with the licensee regarding audit findings, if desired by the client.
- Reputation. Our clients know that they can depend on CRC for a consistent and professional approach to each and every engagement. Each audit will involve a thorough examination of the licensee or agent in question, with the results communicated in a clear and detailed manner. CRC has established a reputation of ethical business practices among both licensees and licensors. Reference information for our current clients can be provided upon request.
Call CRC to discuss your audit and/or consulting needs and take a major step toward protecting your valuable licensed property.