Practice software audit for accountants: How to do one in 2024

A software audit for accountants is an important, but often overlooked task for determining whether your firm’s technology stack is up-to-date, secure and compliant with licensing agreements.

A software audit is a comprehensive evaluation of an organisation’s software assets to make sure they align with licensing agreements, security protocols and industry regulations. The audit involves taking inventory of all installed software, verifying compliance with licensing requirements, identifying unused or outdated programs and assessing any security vulnerabilities.

They’re not just about avoiding penalties for non-compliance, they’re also about optimising the performance and cost-effectiveness of your software investments. An audit can identify unnecessary expenditures on unused or underutilised tools, improve cybersecurity by patching vulnerabilities and ensure that software solutions continue to meet businesses’ evolving needs.

Why is a software audit important for businesses?

As cyber threats become more sophisticated, outdated software with unpatched vulnerabilities can serve as an entry point for hackers. Regular software audits allow businesses to identify such risks and take corrective action.

The rise of cloud-based applications, remote work tools and specialised software solutions has increased the complexity of managing a company’s tech stack.

As more tools are introduced, it’s easy for businesses to lose track of licensing and usage. A software audit for accountants helps create a clear understanding of the tools in use, reducing unnecessary costs and ensuring compliance with licensing agreements.

Non-compliance with software licences can result in fines and damage to a company’s reputation. In some cases, businesses may face audits from software vendors or third parties, and being unprepared could lead to costly outcomes.

A software audit can help businesses identify redundant or unused software. Eliminating these tools can reduce unnecessary expenses and free up resources that could be better invested elsewhere. Understanding the full range of software licences and their usage patterns allows companies to optimise their software spending.

A guide to performing an effective software audit for accountants

Step 1: Create a complete inventory of all software used within the business. This includes both on-premise and cloud-based solutions. To make the process easier, consider using automated tools designed for software asset management (SAM). These tools can track installations, versions and usage patterns so no software is overlooked.

Be sure to include all devices where software is installed, such as employee laptops, desktops, servers and mobile devices. With the rise of hybrid work environments, keeping track of software used across different locations is important.

Step 2: Review each software’s licence agreement. This involves verifying the number of licences your company holds and comparing it to the actual usage. Make sure that you are not under-licensed (using more software than allowed) or over-licensed (paying for more licences than needed).

Pay close attention to any expiration dates for licences and maintenance agreements. Renew or negotiate contracts as needed to avoid any interruptions in service or compliance issues.

Step 3: Use the audit to identify programs that are no longer in use or that have duplicated functionality. Removing unused software helps reduce costs and improves system performance.

For cloud-based services, review any auto-renewing subscriptions that may no longer be necessary. The audit may reveal tools that were adopted during rapid transitions (like the move to remote work) but are no longer needed.

Step 4: Assess security and vulnerabilities as outdated software can expose your business to cybersecurity threats. All software needs to be up to date with all the latest security patches and updates.

Assess the permissions and access controls associated with each application. Ensure that employees only have access to the software and data they need to perform their job functions. This minimises the risk of unauthorised access or accidental data breaches.

Step 5: Document your findings. Generate reports that outline the current state of your software assets, including any compliance gaps, cost-saving opportunities or security risks. Use these reports to inform strategic decisions regarding future software purchases, renewals and upgrades.

Set up a regular audit schedule – annual or semi-annual reviews can help guarantee your software stack remains secure, compliant and cost-effective.

Bright offers cloud software for accountants that can help simplify your software audits as there are no risks of outdated software being installed on your firm’s machines.

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.