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Crash Course Part IV: The Gold Standard of Royalty Audits—Ongoing Income Recovery

So far, this crash course has identified the different types of underpayments; tips and common mistakes to avoid; and the differences between a “desk-forensic audit” and a normal full audit. This section will introduce the gold standard of compliance audits—ongoing income recovery services.

The ongoing income recovery process is more effective than simply a regular audit because it enables the auditors to look at the client’s entire picture and analyze holistically. This process consists of 5 steps:

  1. Reviewing the Client’s agreements

  2. Reviewing general ledger details kept by the business manager

  3. Identifying unpaid advances, installments, deferments, royalty or participation payments

  4. Liaising with 3rd parties and facilitating resolution

  5. Performing “desk-forensic audits” and normal audits when appropriate

During ongoing income recovery services, the auditors review the Client’s agreements with 3rd parties and the general ledger details, kept by the business manager, to identify missing and/or underpaid royalties and profit participations.

An audit firm like Hurewitz And Company determines which deals are good candidates for a “desk-forensic audit,” and upon authorization, analyzes amounts reported on the face of the royalty statements and/or profit participation statements to identify errors and additional amounts that are owed.

After identifying monies and/or statements owed, either by a general ledger review, “desk-forensic audit” or normal full audit, Hurewitz And Company provides a draft of a letter and relevant documentation to go to the third party. If authorized, the firm then contacts the 3rd party directly to resolve the issue, so the client can be paid the missing or underpaid amounts.

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