When engaged in a license or royalty agreement, whether you’re the licensor or licensee, it isimportant that your revenue calculations are regularly examined for completeness and accuracy. A license and royalty audit is intended to ensure royalty calculations are consistent with your agreements.
The use of an independent third-party royalty audit firm can be very beneficial to an organization. Oftentimes the licensee may be reluctant to share proprietary information with the licensor; therefore, utilizing an independent third-party such as Eide Bailly to perform the audit may elicit more timely and cooperative assistance from the auditee.
In addition, 75-85% of licensees have errors in their royalty reporting, and 89% of license agreements are underpaid. By establishing a compliance program, licensees are more likely to maintain compliance and less likely to evade the system.
How Eide Bailly Can Help with Your Royalty Audits
Eide Bailly has curated a team of specialists to assist you with your licensing and royalty audits. As a trusted royalty audit firm, our team is comprised of our risk, forensic and technology specialists.
Our professionals will work to develop a thorough knowledge of your royalty audit agreement, history of the licensing relationship and licensor’s interpretations. We will gain an understanding of licensee’s positions, disagreements and historic performance under the license. We’ll also become familiar with licensee’s accounting methods, processes, systems and documentation.
Specific ways Eide Bailly can help with your licensing compliance program include:
- Auditing the license agreement
- Assisting in set-up and operation of compliance program
- Reviewing contracts with licensees for compliance
- Comparing the contracts to the licensee accounting process
- Supporting licensors (i.e. licensee not paying)
- Reviewing contracts in place, last schedule, last payment and managing portfolio
- Litigation Support
- Franchise Support
As part of the compliance program, we provide a data and reporting solution that gives insight and visibility into both royalty performance and risk areas. Data is captured from relevant systems and joined to form a global view of the relevant data points.
Dashboards and reports bring this data to the surface and make it very actionable for both the licensor and the licensee. Increased visibility increases accountability and provides licensees with greater visibility into the economic benefit of the relationship. This will be a catalyst for better communication and overall satisfaction of both parties during the duration of the agreement.