Our unified team of experienced professionals provides royalty and licensing audits to licensors around the world.
A royalty audit (a.k.a., licensing audit) is an inspection of books and records that determines whether a licensee (user of a patent/license/franchise) is paying the licensor (owner of the patent/license/franchise) the correct amount of royalty or licensing fees. The licensor and licensee have each entered into an agreement regarding use of the patent/license/franchise. The agreement may have either an explicit or implied audit right to check that licensing royalties are being paid correctly.
Royalty agreements span across many industries, including the technology industry.
Companies that are engaged in a licensing agreement may want to engage in royalty auditing services for the following reasons:
- To obtain all royalties for which they are entitled.
- To induce further compliance by the licensee (a licensee is less likely to underreport if they know the licensor is going to check periodically).
- To determine if there is material noncompliance with an existing licensing agreement.
The product of our years of experience performing highly specialized royalty and licensing audits is a consistent approach for conducting effective and efficient audits and delivering concise and relevant findings.
- PlanningWe work closely with the licensor and licensee to thoroughly plan each inspection prior to engagement.
- CoordinationWe open channels of communication to ensure smooth coordination between the client (licensor), the licensee, and the Linford & Company team.
- FieldworkWe execute customized work plan using our proprietary data analysis technologies and audit software in order to test for thoroughness and accuracy of the licensee reporting and payments.
- ReportingDetailed findings are confirmed and agreed to by the licensee. We then consolidate the finding in a clear and concise report, along with our recommendations, and present it to the licensor.
- Wrap-upWe conduct a closing meeting with the licensee to discuss findings and debrief the client to ensure all participants have a clear understanding of the engagement results.
At Linford & Company, our specialized, third-party expertise provides effective results in identifying royalty underreporting and maintaining licensor/licensee relationships.