KPMG Contract Compliance Services (Contract Advisory) professionals help determine compliance of your third-party contractual relationships to help protect your bottom line.
If your organization licenses its intellectual property, royalty revenue likely is a key contributor to your bottom line. It’s important to consider how well you are monitoring compliance of your third-party contractual relationships, identifying errors, and ultimately helping to recover lost revenue or overcharges. While most licensees do not purposely underreport the amount of money they owe, KPMG estimates that as much as 70 percent of self-reporting by business partners or customers is inaccurate.
Benefits of reviewing your licensees
ROI & Cost Recovery
Mitigate Risk
Drive Better Behavior
Improve Profits
Protect Your Intellectual Property
Improve Transparency
Common errors
KPMG‘s Contract Advisory professionals have identified issues of contractual noncompliance or misreporting more than 90 percent of the time while conducting contract compliance reviews. Several factors contribute to this prevalence, including:
- Deductions from gross revenue that are not allowable per the agreement
- Royalty calculations for bundled products that are not clearly defined in the agreement
- Missed products due to the introduction of additional products and/or manufacturing facilities
- Intercompany sales not being captured in the data gathering process for royalty calculations
- Licensee applying incorrect royalty rates per the contract due to tiered or changing rates
- Rate changes not being captured when pegged to indices such as the Consumer Price Index
- Differences in contract interpretation
