DEBORA R. STEWART, CPA
JUDY A. BYRD, CPA
This chapter provides results of a study by Debora Stewart and Judy Byrd. They examine both the magnitude of royalty misreporting and its underlying causes.
Licensors who do not know if they are reaping the full benefits of their license agreements should be concerned. Enormous resources are expended in drafting and negotiating license agreements, not to mention the time, effort, and money spent generating or acquiring the intellectual property. Few organizations are altruistic, interested only in promoting society's common good. Most are interested in recouping investments through royalty payments to the organization. As such, management is tasked with the responsibility of ensuring that assets are protected and used to their fullest earning potential.
Many fiscal problems arise when no one takes responsibility for protecting assets. We read about it in the papers and hear about it in the news. Cash is embezzled. Fraud is ...