Audit Compliance In a Time of Change
ABC and BPA rules change every few months (or so it seems), so it’s easy for circulators and publishers to fall behind. ABC’s most recent and most pressing rule is the new verified circulation rule which passed last November and took effect for the first time in the June statements.
The new rule from ABC most relevant to paid-circulation magazines establishes verified circulation as subscription copies designated by publishers for readership in public places or intended for individual use by recipients who are likely to have a strong affinity for the content.
“People should get new programs reviewed and pre-approved before they are put into place” says Joe Kaley, audit manager at ABC. “What we’re seeing is that there may be some confusion as to what verified is.”
Kaley stresses the fact that verified circ is not just a default category for disqualified paid circulation, and that people or places that receive the free subscription have got to be given the option to opt out of it, which needs to be verified in writing.
“When auditing, we are looking to confirm that the list is valid and that people have an affinity to the magazine and were given the option to opt out,” says Kaley.
For b-to-b circulators, the most significant new BPA rule regards sponsorships. The new rule states that sponsorship sales need to be a no-recourse transaction and an agent cannot be a sponsor.
Rich Murphy, senior vice president of auditing for BPA, also suggests that a simple pre-review of any new sponsorships with your auditor can help avoid any complications. And, when your audit comes around the auditor will need to have access to all of the financial statements involved in the sponsorship transaction, so be organized and be prepared.
Audit Advice from the Experts
ABC’s Joe Kaley, BPA’s Rich Murphy and auditing specialist Bridget Wells
weigh in on the most common mistakes and how to avoid them:
• Don’t procrastinate. Perpetually prepare for your audit and create individual binders for each magazine you are responsible for.
• Review the prior year’s opinion letter right away and implement the changes immediately. Some members only pull out that letter once they get the new letter. If you wait too long to implement suggested changes, you will run into problems.
• Proof your statement carefully and ask someone in your office to have a look at it as well.
• Manage your vendors, including printers, fulfillment companies, telemarketing and consultants. If anything goes wrong with the audit it will fall on the publisher’s shoulders.
• Keep in contact with your audit manager throughout the year and be up to speed on new rules. Log on to the ABC and BPA Web sites or attend training sessions that are held periodically after new rules are put in place.
• Collect materials throughout the year—ie: promotions, printer bills, mailing info, etc.
• Know what the auditors NEED, and make sure you have that information. Don’t give more than needed.
• If you are not on continuous audit, get on it. This is invaluable when offers pop up that might cause problems down the road.
• Know what agent programs you are authorized for and how they will be audited.
• Ask for info from agents to ensure your comfort level with their practices regarding offer, order, and payment.