WHAT IS A
A royalty examination assesses compliance with the license agreement. Conducting an examination includes:
Gain an understanding of the industry and the cultural environment, to perform corroborative inquiry with Category Management, to review license agreements, to analyze royalty statements and to perform financial analysis in order to identify potential non-compliance issues,
The performance of tailored calculations to verify the accuracy of the royalty declarations at the licensee’s premises. This is not a definite and static approach but rather a customized forensic approach to determine whether royalties reported are complete and accurate,
Post Fieldwork & Settlement:
Findings raised during the audit are introduced and evidenced to the licensee’s executive Management. The purpose is to gain clarity and an understanding before issuing the final audit report disclosing all monetary and non-monetary findings.
Licensing companies may not be as familiar with proper implementation and monitoring of their Intellectual Property (“IP”) programs. Quite frequently, license compliance audits address monetary findings which turn into significant revenues streams for licensors and valuable points for improvement for licensees.