Services Offered

Profit Participation & Residual Compliance Auditing

For clients in creative industries, profit participations can provide considerable back-end income. The complexity of the underlying transactions and computations can lead to substantial underpayments. Gingold & Company specializes in protecting those payments for our clients by conducting comprehensive examinations of major film and television studios, and independent production and distribution companies.

The following are examples of findings identified during profit participation and residual compliance engagements:

  • Unreported revenue
  • Incorrect allocation of receipts by market
  • Disallowed deductions
  • Advances received but not reported
  • Deduction of fees exceeding pre-determined caps
  • Failure to recapture revenue from the sale of assets purchased for production
  • Unaccounted for markets of distribution by third party entities
  • Incorrect residual rate calculations
  • Undervalued license fees between affiliated companies
  • Incorrect reporting based on net receipts instead of gross receipts
  • Failure to report vendor rebates
  • Incorrect computation of breakeven points
  • Disallowed overhead charges
  • Mathematical errors

Examples of Potential Findings During a Royalty Compliance Engagement

  • Unreported sales of licensed products
  • Royalties paid at incorrect rates
  • Unpaid advances, royalties and other fees
  • Sales of unlicensed products
  • Sales in unauthorized channels of distribution
  • Failure to comply with advertising requirements
  • Sales in unlicensed territories
  • Disallowed deductions
  • Continued sales after the expiration of the term
  • Product pricing issues
  • Unauthorized use of intellectual property

Once Gingold & Company identifies contractual issues and calculates the related findings, we present them to the client for review before sharing them with the company under audit. After the final report is issued, we remain available to assist the client throughout the settlement process with well documented support which facilitates the outcome and preserves the relationship between both parties.

In addition, the firm offers contract analysis, litigation support, collections support and general business consulting to our clients.