Why do royalty audits so often lead to disputes, and how does mediation help?

Recording and publishing agreements typically give the artist or writer the right to audit the company’s books, and audits routinely surface discrepancies — unreported income, recoupment status, disputed deductions, currency conversions, or misallocated streaming revenue. The audit clause itself is often the first fight, before anyone even gets to the numbers. Contracts typically limit how far back an audit can reach, who can conduct it, how much notice is required, and how often audits can happen. The company and the auditor frequently disagree on both the methodology and the resulting number. A mediator handling this is often reconciling two different kinds of disagreement, not one: whether the numbers themselves are right, and whether the audit that produced them was properly conducted under the contract, timely, within the permitted lookback period, with costs allocated correctly. The two get tangled in practice, since a company arguing the audit reached back too far can take an artist's strongest findings off the table regardless of whether they're arithmetically correct. . Mediation is particularly effective for audit disputes because the exercise is fundamentally about reconciling figures, not assigning fault. A neutral, experienced in music accounting can help the parties narrow the gap between the audit claim and the company’s position and reach a negotiated settlement figure far more efficiently than litigation would allow.