Software Audits

Tax season, at least for me, brings feelings of dread and jubilation. As we grow older, our taxes tend to become more complex and time consuming. Whether handling our taxes alone or leaving the process in the hands of professionals the risk of an audit always looms in the background. Personally, I take measures to ensure the data is accurate because the last thing I want to deal with is the IRS. This uneasy feeling prompted me to consider the similarities between CPAs and Information Technology professionals, in that both regularly deal with the process of reporting and remediating audits.

Software giants, such as Microsoft, regularly review and subsequently audit customers using their licensing. In most cases, this would be the operating system running on your server and computers. Each individual installation of Windows requires a license key, which is used to validate that specific software instance. As companies grow and add computers to their environment, they must purchase additional license keys to remain compliant with the vendor. When onboarding a new client it is not uncommon to find their licensing has been woefully unmanaged and license keys have been reused on multiple computers, which puts the client at risk of being audited. In the event we identify gaps in licensing, wherein there are more computers using the software than the customer is licensed for, we can simply purchase the licenses needed to regain compliance with the vendor. In the event a company is already being audited, the process to become compliant can be more difficult.

Software licensing, depending on the vendor and reseller you purchased from, can be a frustrating model to comprehend. As an example, Microsoft offers both standalone and subscription based methods for licensing your servers, computers and email. Often, a company will have a mixture of both given the purchases were spread out over time. Depending on where you purchased the licenses and who actually installed the software it is common to find reused licenses spread across several computers as a way to avoid purchasing more software. While this might save you money on the frontend an eventual audit will result in having to purchase all the licenses you skimped on, as well as a potentially hefty fee for deviating from the licensing terms of the vendor.

To avoid a potential audit scenario with a vendor it is pivotal to regularly audit your own hardware and software to ensure your compliance. Typically, all software purchases made through a specific vendor can be managed via an online portal, which can then be compared to the hardware you own to verify compliance. The process for doing so can be arduous when multiple types of software from a myriad of vendors with differing licensing models are involved. Proactively consulting with an IT professional could save you from fighting an audit alone or potentially avoiding one altogether.