Question

Write a Business Memo:

J&J from BoD members 'We were concerned about the company's risk from loss of trade secrets and patents. Could you please explain why the company is concerned about this'. (take your response from the financial statement note discussing this).

Answer 1

An audit is the examination of a specific aspect of an organization, ideally by someone independent of that organization.

“An audit is an independent examination of financial information of any entity, whether profits oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to express an opinion thereon.

The purpose of an audit is to provide independent assurance that an organization’s management, governance, and processes are operating effectively and that any associated assets are being properly and professionally managed

Although trade secrets have been the neglected step-child of IP, this is slowly but surely changing for a variety of reasons:

1)Law changes

2)Increased trade secret litigation particularly involving US companies but not exclusively so.

3)Cyber criminals trying to steal trade secrets.

4)Pending trade wars which some link to trade secret theft

A trade secret audit should ideally be divided into the following phases

Planning phase

Communication phase

Interviews of key individuals phase

Data gathering phase

Data analysis phase

Reporting phase

Wrap-up phase

Conclusion

Companies generally gain tremendous value by taking a proactive, systematic approach to assessing their trade secrets in a comprehensive manner as described above.

The findings of any trade secret IP audit should be reported to and discussed with senior management in the organization, given that trade secrets may be the most valuable assets the organization possesses.