Intellectual Property Audits: Accounting Procedures for IP Protection

The information age has transformed the idea of intellectual property (IP) and its perceived value. For many businesses — such as Disney or Netflix — IP can be their single most crucial asset. Additionally, artificial intelligence (AI) is rapidly presenting a bigger threat to IP due to its ability to replicate protected content.

The online Master of Business Administration (MBA) and Master of Professional Accounting (MPAcc) Dual Degree program from Eastern Washington University (EWU) teaches students about fundamental business and legal concepts. This program helps those seeking accounting and business expertise to understand the finer points of topics like IP and elevate their careers to new heights.

What is Intellectual Property?

According to the World Intellectual Property Organization (WIPO), IP is any creation of the mind, including inventions, artistic works, symbols, designs, names or any similar property used in commerce. These creations are commonly protected by law using patents, copyrights and trademarks. These regulations allow the creators to earn recognition and financial benefits from what they invent.

For companies, assessing the value of their IP — along with protecting these assets — is a critical task. However, the value of IPs can be difficult to measure. For example, Mickey Mouse is one of the most recognizable characters in the world and is invaluable to Disney. So, how much money is Mickey Mouse worth to Disney? How much should Disney charge in damages if another company attempts to use Mickey’s likeness? This is where accountants and IP audits come into play.

Technology and Tools: Streamlining IP Audits

An IP audit is a thorough review of a company’s patents, trademarks and copyrights. By conducting periodic reviews, companies can ensure all IP assets are accounted for and adequately protected. There are three main goals of IP audits:

  1. Review all the intellectual assets that a business owns.
  2. Assess the current protection for these assets.
  3. Put systems in place to protect current and future assets.

The IIPRD, a leading IP consulting and licensing firm, states that there are three types of IP audits:

  1. General-purpose audit: a regular audit conducted periodically as a general review practice
  2. Event-driven audit: when the client or company enters a particular financial transaction or event
  3. Limited-purpose audit: an audit limited to a particular purpose and only for selected IPs

Thorough audits help companies keep an accurate record of their IP assets. For accounting professionals, IP audits are a prime opportunity to add value to companies — whether their employer or a client. During these audits, accountants can help companies unlock value they didn’t know existed.

Intellectual Property Valuation

IP audits can help companies protect some of the most essential aspects of their business while also assigning values to elements like patents, copyrights and trademarks. WIPO cites three benefits of conducting IP audits:

  1. Creating competitive advantages: delivering competitive advantages for a company by adequately protecting its IP from other companies
  2. Creating revenue streams: receiving compensation from illegal IP use or creating consistent revenue streams from licensing or merchandising
  3. Avoiding unnecessary expenses: avoiding the misuse of IP and paying damages to other companies

These benefits typically require the help of talented accountants who thoroughly understand IP laws and regulations. Skilled professionals who can help companies protect their assets are in high demand.

Additionally, the need for qualified IP professionals will likely only increase over the coming years, mainly thanks to the introduction of generative artificial intelligence. As AI algorithms become increasingly advanced, the need to protect digital IP will only grow more nuanced and important.

A Career in Intellectual Property

Those interested in IP should consider an advanced degree in accounting. For example, through courses like Essentials of Auditing, EWU’s online MBA and MPAcc Dual Degree program provides students with the knowledge to ask the right questions in audits, including those related to IP. Graduates can pursue roles like economists, business management consultants, law firm administrators, financial planners or policy planners.

While program graduates will not be experts in IP audits, they will gain foundational knowledge to pursue roles and specializations in IP auditing in as few as 14 months. The program teaches students about contemporary accounting topics and research and evaluation methods for accounting, auditing and taxation issues.

Learn more about EWU’s online Master of Business Administration and Master of Professional Accounting Dual Degree program.

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