A royalty audit is an analysis or financial investigation of a licensee’s compliance with the various obligations laid out in the license agreement, financial or otherwise.  It generally focuses on whether the licensee is paying the correct amount of fees as per the agreement for the use of the licensor’s patent, license or franchise.  The licensor may trigger the audit clause in the license agreement if there are concerns regarding whether the licensee is reporting and paying correctly, to encourage more timely and accurate reporting and payment and address concerns of potential underreporting or to clear up unintentional mistakes.

CHS assists licensors with an objective and independent team of forensic professionals experienced in the assessment and quantification of royalties due as compared to what was paid.  Consideration is given to the relevant products contemplated by the agreement, including consideration of new versions or products and product numbers/SKUs being changed.  We review the quality and timeliness of licensee reporting as well as conduct independent investigation or consideration of factors and information outside of the licenses reporting.  Our work product typically results in an expert report assessing the accuracy of the reporting and identifying any differences.