[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR262.6]

[Page 670-671]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 262_RATES AND TERMS FOR CERTAIN ELIGIBLE NONSUBSCRIPTION TRANSMISSIONS, NEW SUBSCRIPTION SERVICES AND THE MAKING OF EPHEMERAL REPRODUCTIONS--Table of Contents
 
Sec. 262.6  Verification of statements of account.

    (a) General. This section prescribes procedures by which the 
Designated Agent may verify the royalty payments made by a Licensee.
    (b) Frequency of verification. The Designated Agent may conduct a 
single audit of a Licensee, upon reasonable notice and during reasonable 
business hours, during any given calendar year, for any or all of the 
prior 3 calendar years, but no calendar year shall be subject to audit 
more than once.
    (c) Notice of intent to audit. The Designated Agent must file with 
the Copyright Office a notice of intent to audit a particular Licensee, 
which shall, within 30 days of the filing of the notice, publish in the 
Federal Register a notice announcing such filing. The notification of 
intent to audit shall be served at the same time on the Licensee to be 
audited. Any such audit shall be conducted by an independent and 
qualified auditor identified in the notice, and shall be binding on all 
parties.
    (d) Acquisition and retention of records. The Licensee shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit and retain such records for a period of not less than 3 
years. The Designated Agent shall retain the report of the verification 
for a period of not less than 3 years.
    (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 parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to the 
Designated Agent, except where the auditor has a reasonable basis to 
suspect fraud and disclosure would, in the reasonable opinion of the 
auditor, prejudice the investigation of such suspected fraud, the 
auditor shall review the tentative written findings of the audit with 
the appropriate agent or employee of the Licensee being audited in order 
to remedy any factual errors and clarify any issues relating to the 
audit; Provided that the appropriate agent or employee of the Licensee 
reasonably cooperates with the auditor to remedy promptly any factual 
errors or clarify any issues raised by the audit.

[[Page 671]]

    (g) Costs of the verification procedure. The Designated Agent shall 
pay the cost of the verification procedure, unless it is finally 
determined that there was an underpayment of 10% or more, in which case 
the Licensee shall, in addition to paying the amount of any 
underpayment, bear the reasonable costs of the verification procedure.