IP assets can be licensed to a third party licensee, in exchange for payments based in usage, which are known as royalties. A royalty audit ensures that the licensee is paying the correct royalties. Audits manage the risk of underpayment and provide recommendations for a licensee on how to improve their compliance with a licensing agreement for their benefit, as well as that of the licensor. 

If companies are licensing out IP assets, these audits should be a regular feature of their licensing strategy and should be incorporated into every licensing agreement.