When someone grants you permission to use their idea or creation, they have the authority to review your records to ensure compliance with the rules. This is known as audit privilege or audit rights.
Audit privilege is the right of the intellectual property owner to examine the financial records of the licencee. It is commonly included in licence agreements to ensure compliance with the terms of the agreement. For instance, if a company licences a software program, the licence agreement may contain an audit privilege clause. This clause allows the software owner to audit the licencee’s financial records to ensure proper payment of royalties and adherence to the agreement’s terms. Similarly, a music artist licensing their music to a movie studio may include an audit privilege clause in the agreement. This clause enables the artist to audit the studio’s financial records to ensure the agreed-upon royalties for the use of the music in the movie are being paid. These examples demonstrate how audit privilege safeguards intellectual property owners and ensures they receive the compensation entitled to them under the licence agreement.
Audit privilege refers to the legal protection that allows individuals or businesses to keep certain documents or communications confidential during an audit or investigation by a government agency or regulatory body.
Audit privilege is typically available to taxpayers or entities that are subject to audits or investigations by government agencies, such as the Internal Revenue Service (IRS) or the Securities and Exchange Commission (SEC).
Audit privilege generally covers documents or communications that are created or obtained for the purpose of seeking or providing legal advice or representation in connection with an audit or investigation. This may include attorney-client communications, work product, and certain tax-related documents.
Yes, audit privilege can be waived voluntarily by the taxpayer or entity. However, it is important to consult with legal counsel before waiving this privilege, as it may have significant implications for the audit or investigation.
While audit privilege provides broad protection, there are certain exceptions. For example, if a document or communication is not created or obtained for the purpose of seeking or providing legal advice, it may not be covered by audit privilege.
Audit privilege generally does not apply to criminal investigations. However, certain communications with legal counsel may still be protected by attorney-client privilege, which is a separate legal doctrine.
Audit privilege typically lasts for the duration of the audit or investigation. Once the audit or investigation is concluded, the privilege may no longer apply to the documents or communications.
Audit privilege generally only applies to the taxpayer or entity being audited. However, in certain circumstances, the privilege may extend to third parties who are assisting in the audit or investigation, such as accountants or consultants.
Violating audit privilege can have serious consequences, including the potential loss of confidentiality protections and the use of the disclosed information against the taxpayer or entity in the audit or investigation.
To assert audit privilege, it is advisable to consult with legal counsel who can guide you through the process and ensure that the necessary steps are taken to protect your confidential documents and communications.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/audit-privilege/
- Modern Language Association (MLA):Audit Privilege. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/audit-privilege/.
- Chicago Manual of Style (CMS):Audit Privilege. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/audit-privilege/ (accessed: May 09 2024).
- American Psychological Association (APA):Audit Privilege. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/audit-privilege/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts