Technology licensing revenues have increased dramatically over the past twenty years. Patent licensing fees, estimated at $15 billion in 1990, have the potential to reach $500 billion by 2015. As licensing revenues have increased, so has the need for accuracy in license agreement compliance.
Misinterpretation of agreement terms, inaccurate exchange rates, poor accounting systems, and poor communication between engineering and accounting departments are just a few of the causes of royalty underpayment. Traditional auditing procedures, designed to determine whether financial statements are materially misstated, are not adequate to determine whether royalties have been accurately paid.
IPFC employs professionals with the required combination of skills necessary to identify underpayments and to assist in negotiation between licensors and licensees. CPAs and other financial professionals with years of experience in auditing, negotiating royalty settlements, and working with counsel are uniquely qualified to perform such engagements.
IPFC incorporates a three stage approach to royalty audit engagements:
Map Licensee's Business and Accounting System
Independently Calculate Royalty Based on License Agreement Terms
Reconcile Independent Calculation of Royalty to Actual Amounts Paid