HighDrive NetworkHighDrive NetworkHighDrive NetworkHighDrive Network
  • Programs
    • The BusinessMakers
    • The EnergyMakers
    • HXTV
    • HealthMakers
    • BusinessMakers USA
    • Entrepreneur’s Playbook
    • Business Builders
    • Brandonomics
    • Women Mean Business
    • Biz Moments
  • About HighDrive
  • Contact

Recovering Fees in Operational Management Audits

Entrepreneur's Playbook | Episode: 774 | Guests: Carlos Gomez | 0
Operational Management Audits can net results of 10% or more in recovered fees. Find out how in this episode of PKF Texas – The Entrepreneurs Playbook® with Jen Lemanski and Carlos Gomez, an Audit Manager and one of the faces of the PKF Texas Contract Compliance Services team.

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. Tt’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.

Carlos: Yeah, so typically with these third party agreements there’s some revenue share, some expense share, and that third party has to report that back to our clients. And now, whether that missed reporting is based on accident, intent, you know just not understanding the contract, those types of things, they don’t pay our client the full amount of revenue that they should be, or their share of revenue, or their royalties or whatever the case. And so, a lot of times in like the property management thing, what happens is they’ll share expenses, and some of the expenses aren’t allowed for the agreement. Or, like we’ve seen in other cases where the third party actually had ownership in an affiliate company that did the work, and because that company appeared to be an independent third party, they pass—those expenses became pass through instead of revenue share. And so, it got really tricky. There is a couple extra million dollars that we found that were ended up billed to our client.

Jen: Wow, well that definitely seems like something. They need to get us in to take a look at everything.

Carlos: Yes ma’am, yeah. We got a client right now where actually the ROI on all the audits that we’ve done so far, their return on investment is about 260%.

Jen: That’s awesome, that’s great for the client. That’s really great for the client.

Carlos: Yes, you are not going to get that with any bank right now.

Jen: No, not at all. Well, we’ll get you back to talk a little bit more about this because it seems like there’s a bunch of stories that you could tell.

Carlos: Yes ma’am. Thank you.

Jen: Perfect. For more information about this topic visit pkftexas.com/contractcompliance. This has been another thought leadership production brought to you by PKF Texas – The Entrepreneurs Playbook. Tune in next week for another chapter.

brought to you by

Recent Entrepreneur's Playbook Episodes

Entering a Licensing Agreement - What to Know

Entering a Licensing Agreement – What t...

There are various nuances when you’re navigating a licensing agreement – the best terms, ...
Entrepreneur's Playbook
The Importance of GAAP Financial Statements

The Importance of GAAP Financial Statements

GAAP financial statements can help streamline the due diligence process for buyers and sellers ...
Entrepreneur's Playbook
Documentation for Your Donors' Charitable Contribution

Documentation for Your Donors’ Charitab...

Does your not-for-profit organization have generous donors? Make sure you’re providing the correct documentation ...
Entrepreneur's Playbook
Why Sell-Side Due Diligence Helps Sellers

Why Sell-Side Due Diligence Helps Sellers

Think of sell-side due diligence like car maintenance. We’re the mechanics taking a look ...
Entrepreneur's Playbook
Why Companies Should Have a Licensing Agreement

Why Companies Should Have a Licensing Agreeme...

Do you know the benefits of purchasing a licensing agreement for your company? How ...
Entrepreneur's Playbook
Why Business Owners Should Invest in an Audit

Why Business Owners Should Invest in an Audit

There is more to an audit than simply going through one. Other valuable things ...
Entrepreneur's Playbook
Load More Episodes Loading...
© HighDrive 2018-2019 | All Rights Reserved
  • About HighDrive
  • Charlotte, NC
  • Columbus Ohio
  • Contact HighDrive
  • Fort Lauderdale
  • HighDrive Network
  • HighDrive Programs
    • Biz Moments
    • Brandonomics
    • Business Builders
    • BusinessMakers USA
    • Entrepreneur’s Playbook
    • HealthMakers
    • HXTV
    • The BusinessMakers
    • The EnergyMakers
    • Women Mean Business
  • HighDrive Weekly
  • Indianapolis Indiana
  • Kansas City
  • Milwaukee
  • Nashville
  • Oklahoma City
  • Raleigh NC
  • San Antonio
  • Seattle
HighDrive Network