What's an "audit clause"?

I haven't been directly asked "what's an audit clause?" so I'll beat everyone to the punch:

"Auditing: The Author retains the right to provide an independent auditor to verify the Publisher's sales figures and royalty payments to the Author. This audit shall encompass the sales and royalties of only the auditing Author, and shall not include any information related to other authors or titles written by other authors.

The Author shall be responsible for the expense of an independent audit, except in the case than an underpayment of royalties has occurred in excess of five (5) percent. In the case of overpayment of royalties in excess of ten (10) percent, the Publisher shall withhold an amount from future royalty payments necessary to decrease the overpayment to less than ten (10) percent."

A wise author would look for these words or similar in a contract, should they have a novel accepted and a contract sent to them. To put in the simple terms described to me, it allows an author to play IRS if they think the publisher's holding back on royalties and wants to check the books. It's hard to get to the publishing contract level and discover this type of clause isn't included. Without it, the author risks the publisher cheating them on royalties and not being able to check the books. True, getting an audit is expensive I've been told, but from what was described to me (don't necessarily take my word for it, I'm no lawyer!) a good publisher has it just to prove they've got nothing to hide.

You can of course, seek your own legal counsel. I was lucky enough to get a free consultation from a very nice lawyer, who was patient enough to explain things to me in clear terms. I'm simply passing along the wise counsel I was given. So far, it's proven quite true as the publishers I've found to have it are usually very nice and don't mind questions regarding a clause like this. Unfortunately, it's not a very common clause and a lot of the time, it's not in the contract.

The other thing is this clause might be a key to proving the publisher's not afraid of sharing their books, but you'll still want to check the BBB and complaint boards for any other problems that might exist. Frequently, the publisher's happy enough to send you a sample contract before you even submit the book - that's a good time to look for the clause and if you find it, investigate further. It's a rare publisher (in my experience anyway) that has the clause and no complaints or bad reports.

My other problem is having stories that have been declared "experimental fiction." That's scared more of them than anything else. My Dream Angel Novel is the one I've submitted the most and more often than not, the publisher never responds. The publisher that liked the novel as a short last year decided this year it's "anime in novel format" and I haven't heard much of anything since. I warned the more recent publisher I submitted it to of what they said and he still sounded interested.

Wish me luck and hope that it's published! If I can get a ground breaker published, then some of this advice I've been posting is bound to be fruitful for others!