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Marketing Fund Audits
If an agreement directs one party to pay money to a marketing or other cooperative fund, the party must – within three months after the end of the last financial year – prepare an annual financial statement of the fund’s receipts and expenses for the last financial year. This must include amounts spent on production; advertising; administration; goods and services supplied by the franchisor or an associate of the franchisor; and other stated expenses.
Generally, the work performed by the auditor will include:
- A review of the internal control and record keeping procedures of the franchisor to ensure the data used to create the marketing fund statement is reliable.
- Testing of expenses to ensure they are expenses that can be validly incurred by the marketing fund and testing to ensure these are correctly recorded in the statement.
- Testing that royalties paid by franchisees are being correctly recorded in the marketing fund report, and ensuring that all royalties are being recorded.
- Ensuring the statement is reasonable by conducting an independent review.
The cost of an audit is usually borne by the marketing fund. Most franchise agreements provide the costs of preparing and auditing the marketing fund report which can be paid out of fees paid into the marketing fund. The better the franchisor’s record keeping and preparedness, the lower the cost of the audit. The lower the cost of the audit, the more money that can be spent on external marketing activities for the benefit of franchisees and the system as a whole.
Our dedicated team can assist you with all your auditing needs. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.
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The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.