[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR260.5]

[Page 593-594]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 260--USE OF SOUND RECORDINGS IN A DIGITAL PERFORMANCE--Table of Contents
 
Sec. 260.5  Verification of statements of account.

    (a) General. This section prescribes general rules pertaining to the 
verification of the statements of account by interested parties 
according to terms promulgated by a duly appointed copyright arbitration 
royalty panel, under its authority to set reasonable terms and rates 
pursuant to 17 U.S.C. 114 and 801(b)(1), and the Librarian of Congress 
under his authority pursuant to 17 U.S.C. 802(f).
    (b) Frequency of verification. Interested parties may conduct a 
single audit of a nonexempt subscription digital transmission service 
during any given calendar year.
    (c) Notice of intent to audit. Interested parties must submit a 
notice of intent to audit a particular service with the Copyright 
Office, which shall publish in the Federal Register a notice announcing 
the receipt of the notice of intent to audit within 30 days of the 
filing of the interested parties' notice. Such notification of intent to 
audit shall also be served at the same time on the party to be audited.
    (d) Retention of records. The party requesting the verification 
procedure shall retain the report of the verification for a period of 
three years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent auditor, shall serve as an acceptable verification procedure 
for all parties.
    (f) Costs of the verification procedure. The interested parties 
requesting the verification procedure shall pay for the cost of the 
verification procedure, unless an independent auditor concludes that 
there was an underpayment of five (5) percent or more; in which case, 
the service which made the underpayment shall bear the costs of the 
verification procedure.
    (g) Interested parties. For purposes of this section, interested 
parties are those copyright owners who are entitled to receive royalty 
fees pursuant to

[[Page 594]]

17 U.S.C. 114(g), their designated agents, or the entity designated by 
the copyright arbitration royalty panel in 37 CFR 260.3 to receive and 
to distribute the royalty fees.