37 CFR 382.7 - Verification of royalty payments.
(a)General. This section prescribes general rules pertaining to the verification of the payment of royalty fees to those parties entitled to receive such fees, according to terms promulgated by the Copyright Royalty Board.
(b)Frequency of verification. Interested parties may conduct a single audit of the Collective during any given calendar year.
(c)Notice of intent to audit. Interested parties must submit a notice of intent to audit the entity making the royalty payment to the Copyright Royalty Board, which shall publish in the Federal Register a notice announcing the receipt of the notice of intent to audit within 30 days of the filing of the interested party's notice. Such notification of intent shall also be delivered at the same time to the party to be audited.
(d)Retention of records. The interested party requesting the verification procedure shall retain the report of the verification for a period of three years after completion of the verification process.
(e)Acceptable verification procedure. An audit, including underlying paperwork, which was performed in the ordinary course of business according to generally accepted auditing standards by an independent and Qualified Auditor, shall serve as an acceptable verification procedure for all interested parties.
(f)Costs of the verification procedure. The interested party or parties requesting the verification procedure shall pay for all costs associated with the verification procedure, unless an independent and Qualified Auditor concludes that, during the period audited, the Licensee underpaid royalties in the amount of five (5) percent or more, in which case, the entity that made the underpayment shall bear the costs of the verification procedure.
(g)Interested parties. For purposes of this section, interested parties are those who are entitled to receive royalty payments pursuant to 17 U.S.C. 114(g)(2), or their designated agents.