Kessler International Shows Most Celebrities and Entertainers Cheated of Their Fair Share

NEW YORK, Aug. 6, 2012 /PRNewswire/ -- A study of the royalty audits conducted by Kessler International over the past three years has disclosed that celebrities, entertainers and their estates are habitually underpaid. Kessler also found a significant upsurge in the amount of recoveries identified as a result of intentional miscalculations. Cheating one of their fair share is significant but increasingly more important for those who are no longer working and actively look to this revenue as a crucial source of income.

During the period of 2009 through 2011, Kessler determined that in 84% of all royalty audits it conducted, a sizable underreporting of revenue was identified. In fact, it is surprising that more audits are not regularly conducted as Kessler found that for the majority of clients where errors were identified, the payback was significantly more than sufficient to compensate for the cost of the audit if the client was obligated to pay the fee. Most times audit fees are addressed as a clause in the agreement as to who pays and when. Additionally, the benefit of increasingly accurate revenue reporting was realized after the audit as licensors became more cautious in their reporting practices.

By industry, Kessler saw that entertainment and celebrity clients saw underreporting more frequently than in any other industry. Kessler found that 92% of the celebrity's properties audited disclosed a substantial underreporting of fees as a result of the audits, whereas in the software and gaming sector 78% disclosed underreporting, in trademarks 81% and in the franchise and other industries category only 41% showed an underreported fees.

During the last three years as the economy became tighter, Kessler also saw a substantial increase in the amount of clients conducting royalty audits, with an increasingly larger portion of those coming from the entertainment/celebrity field. 

Michael G. Kessler, President and CEO of Kessler International and "Forensic Accounting Expert to the Stars," stated that, "Royalty miscalculations can occur for any number of reasons. There may have been inadvertent mathematical errors made by the licensees. An audit will reveal these and they can usually be easily rectified." Kessler also indicated that, "It is very often the case that a licensee will intentionally misrepresent royalties owed."

Kessler routinely observes falsely reported sales figures used as the starting basis of calculations and the use of incorrect royalty percentages to calculate royalties. Also noted were instances where sublicense and affiliate sales were not reported and instances where the licensee takes inappropriate deductions.

Established in 1988, Kessler International provides discreet investigative, business intelligence, forensic accounting and royalty auditing services to celebrities and entertainers, corporations, law firms and individuals worldwide and is the place "Where lies go to die."

For more information on this research or other matters relating to forensic accounting issues, contact Michael G. Kessler at 212-286-9100 or visit Kessler International's website at http://www.investigation.com/.

Kessler International
45 Rockefeller Plaza - 20th Floor
New York, NY 10111-2000
Phone: 212-286-9100
www.investigation.com

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SOURCE Kessler International