Royalty audit
A royalty audit is an examination of a licensee's books and records to check that royalties owed under a licence or royalty agreement have been calculated and paid correctly. In private licensing, the right to audit is a contractual right, not a legal process.
How BC law treats it
There is no general statutory right to audit a licensee; the licensor's audit rights depend on the agreement. Crown resource royalties are a separate matter, audited by government under resource statutes.
What it means for your business
Licensors should include audit rights, record keeping duties and cost shifting for underpayments in their licence agreements.
Risks and common mistakes
Without an audit clause, a licensor may have no practical way to verify royalty reports short of litigation.
For the full explanation, see our entry on Royalty agreement.
General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.
