Case Study: Uncovering a Systematic Reporting Error
Client: Global Software Vendor with OEM Distribution Partner
Challenge: Anomalies in royalty reporting, lack of transparency, suspected underreporting
Situation
For years, an OEM partner had provided timely royalty reports—always accurate on the surface but without any calculation detail, only bottom-line numbers. A vendor manager noticed discrepancies in historical trends and suspected underreporting. When asked for supporting details, the OEM insisted their reports were correct and refused to provide further backup, citing contractual terms that did not require detailed disclosure.
Our Approach
Analyzed Historical Reports
Compiled several years of quarterly submissions.
Built trendlines and compared them to the OEM’s public financial disclosures.
Identified a strong likelihood of underreported royalties.
Persistent Escalation
Engaged in multiple rounds of discussion with the OEM customer.
Negotiated for greater transparency—eventually securing a copy of their master royalty spreadsheet, but with all data stripped out.
Reverse Engineering the Model
Rebuilt the dataset by combining:
the empty spreadsheet structure (formulas, macros)
royalty formulas
fragments of prior reporting data
Traced calculations cell by cell to validate outputs against submitted reports.
Results
Discovered a faulty formula in a calculation cell that systematically undercounted distributions.
Presented findings to the OEM, who validated the error.
OEM corrected the spreadsheet, reconciled past underreporting, and issued a $600K catch-up payment.
Relationship strengthened: no dispute, no litigation—only restored trust and accuracy.
Key Takeaway
Systematic errors can persist undetected for years, even with well-intentioned partners. By combining trend analysis, contract expertise, and forensic modeling, we resolved the issue collaboratively, securing a major financial recovery while protecting the vendor–partner relationship.