5.0 Accountings

5.1 Method

The producer will usually accept that he will be accounted to in the same manner and upon the same dates as the company accounts to the artist.

5.2 Audit Rights

The producer should ensure that he has a suitable direct right of audit against the record company. Ideally, the record company should be obliged to reimburse the audit costs in the event of a discrepancy of some kind (perhaps where there is an underpayment of say 5% or 10% of the total amount properly payable in relation to the accounting periods under review). As we have seen (Chapter II Part III paragraph 5.4 ) more and more recording artists undertake regular audits. However, the producer usually has a lesser financial interest than the artist. Given the considerable costs involved in undertaking a proper audit producers tend to be reluctant to incur those costs (even if the contract provides that those costs are to be reimbursed in the event of a discrepancy). In practice, the most sensible course is for the producer to maintain contact with the artist and to review from time to time with the artist whether they should jointly carry out an audit with the artist and the producer contributing on a pro rata basis to the costs involved (to the extent that those costs cannot be recovered from the record company). In any event, it is worth trying for a provision to the effect that if the artist carries out an audit as a result of which a settlement of some kind is made then the producer’s royalty account should automatically be adjusted on the same basis.