Jen: This is The PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski, and I’m back again with Carlos Gomez, an audit manager and one of the faces of the PKF Texas Contract Compliance Services team. Carlos, welcome back to The Playbook.
Carlos: Hey Jen. Thank you.
Jen: In a previous episode, we talked about operational management audits, and you mentioned about findings and how we could find up to 10%. That sounds like a lot to me. What do we do in that process and what do findings look like?
Carlos: When we say 10% like that, that’s an industry standard throughout most contract compliance engagements. It’s 10% upon the amount of what we’re auditing or what our coverage is; whether it be gross sales or royalties, 10% is what we typically see. But we’ve had cases where certain clients I’ve seen have recovered 45% up to 100%, and that includes interest and audit fees on top of that, once those are recovered, because they meet a certain threshold within the agreement that now that third party is responsible for the fees. And then another great thing to keep in mind, too, is that the return on investment, like, our fees are never going to encompass the total amount that we find for you.
Jen: So, when we say recovered fees, what does that exactly mean? Is it something that was missing in the contract? Was it something that one of the parties didn’t do? Explain what that looks like.