Our client noticed that royalties over the previous year and a half were trending downward while their licensee’s revenues were growing significantly. They asked Protiviti to verify if the licensee was accurately capturing and reporting its royalty obligations.

Protiviti’s Licensing and Contract Risk Services professionals took the following steps to provide our client with deep insights about their royalty program:

1. Reviewed the licensing agreement, performed analytical procedures on the royalties reported and compared them against contractual obligations.
2. Analyzed the current state royalty-capturing process, identified areas of risk and control weakness, and recommended process improvements.
3. Verified all licensee products that contained the client’s intellectual property (IP) and determined the percent of sales containing royalty-bearing IP.
4. Recalculated royalties per the contractual agreements and interest owed due to late payments.

The analysis uncovered an undisputed, under-reported royalty amount of $6.7 million. Within weeks of the audit’s conclusion, our client received a settlement for the full amount.

Protiviti’s professionals identified that the underpayment was the result of vendors:

1. Failing to report all quantities of IP embedded within finished goods
2. Failing to accurately capture and report manufactured goods produced under third-party contract

 
How We Help Companies Succeed

Effective revenue risk management requires a methodology and thought process focusing on those customer- and product-centered activities that have a significant impact on revenue, as well as the cost-drivers required to generate that revenue. Protiviti’s revenue risk management methodology helps clients reduce costs while increasing revenues, and strengthen partnering relationships.

Protiviti helps provide a product strategy around profitability – increasing profits by as much as 3 percent to 5 percent of total sales, providing a focus on customer risk management and reducing fraud

​contactus@protiviti.com

Protiviti (www.protiviti.com) is a global business consulting and internal audit firm composed of experts specializing in risk, advisory and transaction services. The firm helps solve problems in finance and transactions, operations, technology, litigation, governance, risk, and compliance. Protiviti’s highly trained, results-oriented professionals provide a unique perspective on a wide range of critical business issues for clients in the Americas, Asia-Pacific, Europe and the Middle East.

Protiviti has more than 60 locations worldwide and is a wholly owned subsidiary of Robert Half International Inc.
(NYSE symbol: RHI). Founded in 1948, Robert Half International is a member of the S&P 500 index.