Royalty audits

Companies with registered patents and other rights have begun to understand the importance of obtaining the maximum value from their IP in terms of managing licensing and other contractual arrangements. As part of our vast range of services, Mazars royalty audit services provide assurance that royalties have been correctly reported.

Under-valuations of sales, both deliberate and unintentional, by subordinate patent holders and licenses and misinterpretations of license agreements, can result in the loss of large royalty revenues for the patent holder. Using tailored tests and procedures, our team identifies royalties that have been underreported and verifies critical factors such as net sales, royalty rates, foreign affiliate/licensee accounting, advertising funds and free items.

After an agreement is reached on the most prudent course of action, we can help organisations determine if their licensees are reporting sales in compliance with the terms and conditions of their license agreements.

Our reports will provide information about the following issues:

We can also support businesses to evaluate their reporting and follow-up systems to monitor royalty revenues.

Accordingly, a royalty audit results in a report that includes our conclusions from the audit. It may also include recommended changes and our opinions of the license agreement, payment procedures, reporting templates, etc. Where necessary, we work with the Mazars’ Forensic and Investigation services team to investigate breaches of royalty and licensing agreements. We assist our clients to identify licensees considered suitable for forensic review, including those where we suspect errors, breaches of contract or underreporting.