9 Tips To Avoid Audit Failure & Ensure Software License Compliance


To ensure you have your software licensed, have clear contract terms, check the user’s license, and maintain software usage policies.

When your organization has many computers that use particular software, the owner of that particular software holds a software audit. In this audit, the IT organization compares the total number of software the company bought and the number of software currently installed in the organization’s computers.

These audits are held because, in their absence, there is a possibility that the software will be duplicated, and the software owner will face great financial loss. Not only that, the duplicated software will not have any license and can tarnish the company’s reputation.

With that said, let us look at how you can avoid a failure in these audits and ensure software license compliance.

1. Understand The Contract Terms Properly

When things of high value are exchanged between parties, a contract is made to ensure that both parties are satisfied with the exchange and actions that can be taken if one deceives the other.

The contract is documented proof that a deal was made between two parties, and all the relevant and key details are present in that contract. This is why it is essential to go through and understand the terms presented in the contract.

Otherwise, it is likely that you might get cheated or misinterpret something. Either way, you might face a huge loss. So, understand the contract terms properly.

2. Draft A Thorough Software Usage Policy

Contracts are not the only document, although they are the most critical ones. Another document that records how you can use the product and what will be consequences of misusing that product is the software usage policy.

The opposing party expects that you follow the terms in this agreement if you want to use their product. And so, they come up with the usage policy.

But it is not uncommon that many people ignore such agreement, thinking they are not that important. It might be true sometimes, but not in the software and IT world.

A simple misuse of software can cause you immense trouble. So carefully read the software usage policy, but to provide better in-app protection and white-box cryptography, you can use pace anti-piracy systems.

3. Have A Clear Understanding Of User License Agreement

User license agreement means how many users will use the software for a given time. There are four agreements:

1. Proprietary Licenses

When a single copy of the software is bought for the entire company.

2. Workstation Licenses

When separate software is bought for various workstations.

3. Single User Licenses

When each individual of the company will use a single software.

4. Concurrent Use License

When the number of users is limited to one copy of the software

4. Seek The Help Of Professionals When Required

Even if you check all the agreements and policies, it is likely that you will forget about some of them and get yourself in trouble.

When such problems occur, do not try to solve them yourself, as it will only make things worse. Seek the aid of a professional. Even before documenting the policy, professionals can help you better determine and improve the contracts so that everyone can gain more.

With the help of a well-experienced professional, you can get the license in your favor.

5. Record The License Agreement For Future Use

There are dishonest businessmen around, and there is no denying that. There will be multiple incidents where the software owner tries to trick you by tinkering with the software license agreement. They might even threaten to sue you and ask for money or something valuable.

To prevent this from happening, you must keep a detailed and accurate record of the agreement, the policy, and even the contract. This way, when someone falsely accuses you, you can show the original documents and stay clear of any trouble.

6. Create A Source of Truth For Your Software Compliance

When you buy the software at the very beginning of your company, it is very easy to track the record of software compliance. That is because the company is small and not too many people use the software.

As the company grows, more and more people will use the software. With the increased use, it will be tough for the company to keep a record of the software compliance. This is why most large companies hire another company to keep records of software compliance. That company provides proof of your software compliance, if and when required.

7. Have Proper Understanding Of External Software Audits

In the IT sector, there are no compromises. If your software development company or organization somehow gets wind that you are violating the user agreement, they will immediately call for an audit. They will do so even if they do not have any proof that you are actually misusing the software in any way.

You must clearly know what triggers these audits and all the external factors that make software providers think you are violating the regulations.

8. Occasionally Conduct Internal Audits

Internal audit means when the buying company itself conducts an audit to see if the software they bought is not being maintained properly. They regularly check for any software noncompliance and report it to the authority.

By doing so, they ensure that they can reduce the frequency of external audits and avoid audit failures completely.

9. Understand The Audit Failure Penalties

In the agreement, there will also be rules regarding what will happen if one company cannot keep its end of the bargain. If the company fails the audit, they need to pay the penalties as agreed in the contract between the software provider and the buyer.

There might be certain cases where you might not come out unscathed from an audit. Understanding the penalties will let you know the consequences you will face.

Final Thoughts

Software is crucial in any business’s success, and when it is traded between companies, they must strictly follow the agreements to ensure software license compliance. Otherwise, they will risk failing the audit when the software owner challenges them. Always make appropriate arrangements and records to avoid any type of audit failures and resulting penalties.