What is a royalty audit? - Licensing Executives Society USA and ...

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Historical Statistics Underreported Royalties as a Percent of Reported Royalties 81% Underreported – 19% Reported Accurately 19% Properly Correctly Properly Reported Reported Reported Over 100% Over 100% 27% underreported royalties owed by more than 100% of the total amount rep orted. 19% underreported ro yalties owed b y 1-5% of the total am ount repo rted. 81% Incorrectly Reported 25-49% 50-99% 50-99% 10% underreported ro yalties owed by 25-49% of the total amount reported. 3% underreported royalties owed by 50-99% of the total amount reported. 8% underreported royalties owed by 6-10% of the total amount repo rted. 18 14% underreported royalties owed by 11-24% of the total amount reported.
Most Common Errors Discovered ▼ Bizarre interpretations of your license agreement that had not occurred to you ▼Combination products that aren’t or percent not based on economic value ▼Price averaging ▼Foreign sales that aren’t ▼Purchaser (OEM) says they don’t have to pay ▼Cash v. Accrual ▼Didn’t “sell” just received “service” revenue ▼Distributors 19
Page 1 and 2: When Does a Royalty Audit Make Sens
Page 3 and 4: Why license? ▼ Nonprofit institut
Page 5 and 6: Audit Deficiencies / Percent Misrep
Page 7 and 8: Audit Compliance Program for all Li
Page 9 and 10: Decide who you want to audit ▼ Re
Page 11 and 12: Choose an auditor…. ▼ Who will
Page 13 and 14: Transfer knowledge to auditor ▼ S
Page 15 and 16: Let auditors do their thing They wi
Page 17: Outcomes 17
Page 21 and 22: Audit Deficiencies / Frequency Freq
Page 23 and 24: Advice - Continued Communication wi
Page 25 and 26: It’s about the money 25

What is a royalty audit? - Licensing Executives Society USA and ...

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