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Royalty Audit Procedures

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Royalty Audit Procedures

This playbook outlines the steps necessary for conducting royalty audits on intellectual property agreements. It aims to ensure compliance and recover any unpaid royalties.

Step 1: Preparation

Review the intellectual property agreement to understand the royalty terms, calculation methods, and payment schedules. Gather all related financial documents and prior audit reports.

Step 2: Notification

Provide formal written notice to the licensee about the intent to audit. Ensure the notice is within the timeframe allowed by the agreement and specify the scope and timing of the audit.

Step 3: Planning

Develop an audit plan outlining the objectives, scope, and methodology of the audit. Determine the resources and personnel required.

Step 4: Data Collection

Collect financial records, sales reports, and other relevant documents from the licensee that pertain to royalty calculations. Ensure all necessary data for the audit period is obtained.

Step 5: Analysis

Examine the collected data to verify the accuracy of royalty calculations and payments. Identify discrepancies and areas where unpaid royalties may exist.

Step 6: Reporting

Prepare a detailed audit report summarizing findings, calculations, and any discrepancies. Include recommendations for compliance improvements and recovering unpaid royalties.

Step 7: Resolution

Discuss the audit findings with the licensee and negotiate the recovery of any unpaid royalties. Agree on corrective actions and future compliance measures.

Step 8: Finalization

Formalize any agreements made with the licensee regarding the payment of unpaid royalties and future compliance. Ensure that all understandings are documented.

Step 9: Follow-Up

Monitor the licensee&#x27;s compliance with the revised terms and conditions following the audit. Schedule subsequent audits as per the agreement or as needed.


General Notes

Confidentiality

Maintain confidentiality of all proprietary information and financial records obtained during the course of the audit.

Legal Compliance

Ensure that all audit processes comply with applicable laws, regulations, and industry standards.