Software Audit: How to Prepare and Why

Karmak, Inc. | 10/14/2017

When we hear the word “audit,” it can shivers up your spine. After all, an IRS tax audit is something no one ever wants to have to suffer through, even if they have nothing to hide. For companies that are handling a significant number of software licenses, an audit by a software company can be just as scary.

If things are on the up and up and you are properly prepared, however, there is really nothing to be afraid of.

To get you prepared for a software audit, start with the following tips.

1. Keep Everything

So maybe keeping everything is a bit of a reach, but it’s important that you keep track of certain things. For starters, hang on to all licensed material as long as you intend to use it. Keep any and all contracts that outline terms of use and your rights to ownership. And file away invoices that explicitly mention quantities that you should have on hand.

In short, it’s a good idea to keep anything that could be used to help prove that you own all of the software that your company is currently using. It’s no fun to have to hang on to extra paperwork, but coming out of a software audit successfully will make the “pain” of keeping up with this stuff well worth it.

2. Be Your Own Auditor

Nothing makes a software audit easier to survive than knowing that your company is fully compliant and knowing that you can prove that with ease. And there is no better way to give yourself that peace of mind than by running your own audit. I would suggest doing one on your own every quarter.

This way, if you find any discrepancies on your own, you can work to find out where it is coming from and take care of it. That’s much easier than having an auditor find it and then scrambling to figure it out while the auditor is on-site.

Plus, if you and your staff are familiar with the number of licenses you should have and there is some familiarity with how an audit is going to work, the actual auditing process should be relatively quick and painless.

3. Be Open and Forthright

If you do find yourself the subject of a software audit, keep your cool and work with the auditor to help him or her find what they need. Being combative isn’t going to help anything and if the auditor does find something missing, it’s not likely they are going to have a sense of humor about it if you have made their job difficult.

And ultimately, it’s your responsibility to prove that you own all of the software that you are using, not the auditor’s. Help them prove that you are 100% compliant, don’t hinder them.

What Happens if They Find a Violation?

At the very least, you will be liable for the cost of the software that you are using that you do not own. On top of that, your company could be subject to fines. These may not be “slap on the wrist” fines, either. We could be talking thousands of dollars per title infringement.

Clearly, this is not something you want to have to deal with. No matter how much profit you are making, you can’t afford it.


The importance of staying on top of licensing cannot be overstated. This has to be something that is part of the culture of your organization and part of your routine. Don’t wait for a notice that you are being audited. By then, you may not have time to get everything together, opening your company up for, at best, a long, drawnout auditing process and at worst, a violation.

About Karmak

Karmak, Inc. is a leading provider of business management solutions for the commercial  transportation industry. With more than 30 years of heavy-duty experience, we offer a unique  approach combining innovative technology, strategic advice, and best practices. Our success programs produce measurable results by improving ROI, mitigating risks, and achieving operational excellence.

Serving more than 1,800 locations across North America, Karmak is an employee-owned company with headquarters in Carlinville, Illinois.