Guide for Initial Audits

Preparing for Your Initial Audit: Documentation

Bylaw 2.8 Publisher Duty to Install and Maintain Records states that it is the responsibility of the publisher (ABC applicant or member) to maintain all records necessary for audit, ensure the records are accurate, and to provide those records to the ABC auditors in a timely manner. This bylaw also states:

“Publisher members may sell copies in quantities through agents, distributors and wholesalers, independent contractors or other third parties, however, the publisher shall remain responsible for the accuracy, completeness and accessibility of the records maintained by such organizations…”

Most third-party fulfillment operations, agents and distributors are familiar with ABC and its audit requirements. However, it is your responsibility to notify these organizations that ABC will be conducting an audit for your title and ensure that the organizations will maintain, and make available to ABC staff, the various reports and documents necessary for the audit. You should also instruct them to fulfill all auditors’ requests for documentation or information in a timely manner, so the audit may continue efficiently.

Regardless of who maintains the records, an ABC audit focuses on the following: 1) order 2) delivery 3) classification and 4) payment (if circulation is claimed as paid.) Below is a summary of the types of documentation that may be necessary to complete the audit. This is not intended to be all-inclusive, rather only intended to provide general guidance on the documentation typically necessary for an ABC audit.

General Documentation

• Rate card/media kit for the period covered by the initial audit.
• A hard copy of each issue served during the initial audit period.
  • If your publication is fulfilled by a third party, the auditor may ask to be placed on your complimentary mailing list, so they will already have hard copies available for future audits.
• Printer’s invoices
  • Copies of the invoices from the printer for all issues served in the initial audit period.
• Distribution records
  • Third-party verification of delivery including U.S.P.S. 3541 postal statements, UPS or Federal Express forms, and documentation for any additional method of delivery.
• Label reports
  • System reports that should indicate the total number of copies served, by issue, for each type of distribution (individual, sponsored, partnership, verified, analyzed non-paid, etc.).
• Summary of circulation for the initial audit period
  • Spreadsheet or system report summarizing the label reports for the period covered by the initial audit, by issue. It should state the total number of copies served for each type of distribution and in total for the issue.
  • If complete, you should be able to calculate all the figures necessary for Paragraphs 3 and 6 of the Publisher’s Statement (Paragraph 2 for Analyzed Non-Paid only Publisher’s Statements).
• Promotion File
  • Per Rule B 1.1 File Copies, Subscription Promotion Offers, a publisher is required to maintain a file for each audit period that contains at least one copy of all promotional materials used during the audit period. This includes, but is not limited to:
    • Print offers (blow-in cards, letter, postcards, other direct mail pieces)
    • Telemarketing scripts (in-bound and out-bound)
    • Internet offers (copies of Web site pages)
    • Point of purchase materials (signs, cards, posters, etc.)
    • Radio scripts (or recording of advertisement)
    • Television scripts and storyboards (or recording of advertisement)
    • Advertising campaigns printed in the magazine or other publications
    • All solicitation pieces used by third-party subscription selling agents

For the Analyzed Issue
An analyzed issue is a single issue in the initial audit period, chosen by the publication, to be analyzed and disclosed in detail. See also the definition of an analyzed issue. The following documents should be maintained for the analyzed issue selected:

• Geographic summary of label reports
  • System report of copies served for the analyzed issue, detailed by the quantity of distribution in each U.S. state, each Canadian province, international delivery and distribution to military/civilian personnel overseas.
  • For your single-copy circulation, each distributor will need to complete an Interstate/Inter-provincial survey to provide you with geographic information. (See also the section on paid single copy.) This is a document the distributor prepares to inform you of the geographical breakdown of their net sales, by U.S. state and Canadian province for the analyzed issue.
  • Once you have the system report and distributor information, you should be able to calculate all the figures necessary for Paragraph 7 of the Publisher’s Statement (Paragraph 5 for the Analyzed Non-Paid only Publisher’s Statement.)
• Complete mail galley
  • This galley should include all active paid, verified, and analyzed non-paid recipients as well as any single-copy retailers that received the analyzed issue via USPS, UPS, Federal Express, or other alternative delivery method. A magazine may maintain separate galleys for various types of circulation, such as sponsored sales, verified circulation, analyzed non-paid, etc., but all of them should be ready and available for the audit.
• Supplemental mail galleys
  • Galley for post-expires served for the analyzed issue.
  • Galley for cancels served for the analyzed issue.
  • Galley for adds and removes for analyzed issue (also known as on/off galley.)
• Subscription file
  • This is a list of all active paid, verified, and analyzed non-paid individuals who received the analyzed issue. A separate subscription file may be obtained for paid, verified, and analyzed non-paid accounts, but all of them should be ready and available for the audit.
  • This list(s) should run in ZIP code order and contain the following information for each individual subscriber account:
    • Name and address
    • Subscription term ordered
    • Source code/key code/agent I.D.
    • Expiration date
    • Any demographic information (and date acquired)
    • For paid orders: offer price, amount paid (or payment status) and batch date for payment
    • For verified individually requested: date request was received
    • For verified individual use or list source: date of list source
• Subscriber account sample (also referred to as an “Nth factor”)
  • This is a selection of a sample of subscribers, from your subscriber file, for the auditor to analyze in more detail during an audit.
  • If subscriptions for your title are processed through a third-party fulfillment operation, they may arrange for this selection to be made automatically (once you notify them the title will be audited by ABC).
  • If subscriptions for your title are processed in-house, then the ABC auditor assigned to your publication will contact you in advance to provide the parameters and instructions for this selection.
  • For each paid subscriber account selected, you will need to provide documentation to support the order and payment.
  • For each verified subscriber account selected, you will need to provide documentation to support that the subscriber opted-in (individually requested) or was sent an opt-out notice (individual use).
  • For individual use verified circulation and analyzed non-paid list source, you will need to provide the list or directory from which the name was obtained, as well as any demographic data to support the recipient qualification (has affinity for publication).

Paid Subscriptions

• Proof of order for all subscription copies claimed as paid circulation.
  • This may include individual orders or requests, contracts or agreements with organizations for sponsored or verified public place copies, etc.
• Proof of payment for all subscription copies claimed as paid circulation.
  • A screen shot is not sufficient. The auditor needs to review actual payment documentation such as credit card clearing reports, payment batches, and deposits. This is required for all paid circulation including individual subscriptions, partnership sales, sponsored sales, etc.
• Summary of copies served on credit then cancelled for non-payment, by issue.
• Summary of copies served in expire status (a.k.a. post-expire copies)—by issue, by expire date.
• Proof that circulation complies with all additional ABC rules and guidelines governing the classification in which it was claimed. This includes, but is not limited to:
  • Individual - copies of the premiums, risk-free or trial offer, reduced price offers, etc.
  • Combination Sales – copy of the combo offer and how purchase price was allocated to each publication in the sale.
  • Association – copies of the membership/application materials and any renewal statements reflecting notice to the member that $x of their annual membership dues is allocated to a subscription of the magazine.
  • Loyalty Point Programs – copies of all the program materials such as enrollment, benefits, purchase options, point value, etc.
  • Partnerships – copies of all materials seen by the consumer notifying them a subscription was included with the purchase and a refund was available. This includes direct mail pieces, Internet screens for Web site purchases, point-of-purchase materials, etc.
  • Sponsored Sales – copies of the contracts/agreements with the sponsor detailing the elements of the transaction. Attestations confirming the details of the transaction are also required from the publication and from the sponsor.
• Average price (optional for initial audits)
  • All information necessary to calculate average price, if you choose to include this analysis in your initial audit. See the average price instructions and the average price worksheet on ABC’s Web site.
  • IMPORTANT NOTE: Reporting and analysis of average price is not required for the initial audit; it is optional only. Average price reporting becomes mandatory no later than the third Publisher’s Statement issued following release of an initial audit.
• New and Renewal production
  • Information on all subscriptions sold or renewed during the initial audit period—duration of subscription, whether a premium was offered, and how the sale was obtained.
  • Samples of all premiums and documentation used to determine value of each premium (i.e. invoices to purchase item, manufacturing costs, retail value).
  • If complete, you should be able to calculate all the figures necessary for Paragraph 8 of the Publisher’s Statement (not applicable for analyzed non-paid).

Verified Circulation

• Contracts or agreements with hotels and airlines for public place copies
• List sources for individual use copies
• Order documents for individually requested copies
• Documentation to support the mailing of opt-out notices for waiting rooms and individual use copies (for all others an opt-in or written agreement is required)
• Documentation to confirm at least two consecutive issues were served to the recipient or public place location
• Documentation to support the type of locations or individuals to whom the copies were distributed (i.e. doctor’s waiting rooms, personal care salons, show attendees, season ticket holders, charitable donors, educational facilities, etc.
• This information is needed to construct Paragraphs 6A and 6B of the audit. A complete list of possible categories for Paragraphs 6A and 6B can be found on ABC’s Web site.

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