Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Audit definition

What does Audit mean? In asset-based lending, an audit is the lender’s on-site or desktop review of the borrower’s collateral, records and controls to verify the quality and value of funded assets and the accuracy of borrowing-base reporting. It is distinct from a statutory audit of financial statements under the Companies Acts. “Audit” in this context is a descriptive term used in facility documents (also called a collateral audit, field examination or survey), not one defined by legislation or case law. Audits typically occur pre‑lend and periodically during the facility, or on triggers (e.g. covenant breach, rapid growth or acquisition). Scope usually covers receivables...

Software Licence Audits: Preparing, Managing and Challenging Under-licensing Allegations, Negotiating Outcomes and Handling Litigation

Published by a LexisNexis TMT expert

Practice notes

A software Audit arises when a software supplier seeks confirmation that a customer’s use of licensed software complies with the terms of the granted licence, and requests Verification of that compliance. Such reviews confirm adherence to permissions granted.

This Practice Note offers guidance on:

the purpose of a software audit and the exposure for customers
circumstances that might prompt an audit
preparing for the prospect of an audit
the manner in which the audited organisation should run the audit
how the audited organisation should address the final report, including dealing with adverse findings and negotiations

It also addresses litigation connected to software audits. This Practice Note is based on the audit practices of leading international software suppliers. The guidance in this Practice Note should be applied and adapted on a case-by-case basis, as appropriate in the circumstances.

The role of an audit and the risk for customers

The audit Notice

The process typically starts with the supplier sending the customer a letter (the audit notice). The notice commonly:

states that the supplier wishes to carry out an audit in line with the audit rights agreed between the parties in the software licence agreement...

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Web page updated on 21/05/2026

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