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Royalty Audit Services

SRR helps organizations realize the full value of their IP by ensuring compliance with existing license agreements.  As many as 90% of licensees fail to accurately report royalties and many of these inaccuracies take the form of under payments which range, on average, from 10% to 25%.  Given the significant impact licensing revenue can have on a company’s bottom line, it is not surprising to see companies pay more attention to the full realization of this existing stream of revenue.  A company that chooses to perform a royalty audit over its licensed IP assets by utilizing an independent, third-party can realize significant increases to its profitability.

SRR’s professionals offer unique capabilities to assist and counsel clients in attaining the full realization of their licensed IP assets.  A non-exhaustive list of our services includes:

  • Desk audits
  • Field audits
  • Forensic accounting and investigative audits
  • Royalty reporting/system audits
  • Evaluation of license agreements
  • Development of a royalty compliance and monitoring program
  • Review of an existing royalty compliance and monitoring program

Our experts bring to bear a level of expertise unparalleled by other firms by consistently identifying the misreporting of royalties.  A non-exhaustive list of some of the most common findings follows:

  • Misinterpretation of the agreement
  • Clerical errors
  • Incorrect foreign exchange conversion rates
  • Improper deductions from gross sales
  • Unaccounted for returns
  • Unapproved discounts
  • Incorrect royalty rates
  • Misallocation of sales price among bundled products
  • Missing inventory
  • Untimely royalty reports

In addition, there are benefits beyond recovering underpaid royalties.  For example, a proactive royalty audit can enhance the business relationship between licensor and licensee by: 1) putting the licensee on notice that the terms of the license agreement will be enforced and monitored; 2) providing increased transparency between the parties that can be used as a tool for identifying weaknesses in the license agreement prior to any significant disagreements; 3) demonstrating to external auditors compliance with Sarbanes Oxley and other regulations; and 4) providing increased knowledge and information flow to both parties which can only help to enhance the ongoing business relationship and working environment. 

Our IP team has served across a wide range of industries and technologies, view the comprehensive list.