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Software Piracy:   Is Your Firm Exposed?
by Roman H. Kepczyk (Originally Written for AAA Report)

Software piracy is the act of using or distributing copies of software, which you or your firm, do not legally own.  It is a serious issue within CPA firms because of the large number of applications that the average CPA firm uses (typically 40-60 programs).  The penalties are severe, so it is imperative that all firms evaluate their exposure and become legal if they are not already so.  The potential embarrassment of your firm being publicly prosecuted can have an extremely negative impact on the partner’s and firm’s credibility. 

According to the Business Software Alliance (BSA), who’s function is to investigate and prosecute software pirates, one of every three business applications in the United States is pirated. This amounts to over $3 billion in lost US revenue to software manufacturers.  The BSA answered over 10,000 calls in North America alone in 1995, which led to over 600 investigations.  The majority of these calls were made by disgruntled employees of those businesses.  

The law on software piracy is simple: it is illegal to make a copy (other than for backup) without the permission of the copyright holder.  Many individuals and firms are in violation of this law, in many cases without even realizing it. Often times, users copy and share screen savers or other programs without giving it a second thought, because it is so easy to do. Partners and managers would react severely if a staff person stole a laptop computer but look the other way and often participate in “soft-lifting.”  

If your firm has illegal copies of software, you could be subject to both civil and criminal penalties. Civil actions can be instigated for damages up to $100,000 per infringement.  If a firm reproduces or distributes 10 or more copies of an application, with a combined retail value greater than $2,500, the violators can be imprisoned for up to five years and/or fined $250,000 in penalties.  

To make your firm compliant, you should implement a strong written policy, document enforcement, and conduct a software audit to assure compliance.  All firms should incorporate an anti-piracy policy in their personnel manual.  If you do not currently have one, a sample policy can be obtained from the BSA or Software Publishers Association (SPA).  New hires should be educated on the firm’s software policy and the penalties for non-compliance.   Terminated employees should be asked to sign a statement that they have not taken any software with them and computer equipment sold to employees should have all firm software removed. 

To protect itself, the firm must actively enforce the anti-piracy policy.  This means that partners and managers are trained to understand and enforce the policy and all staff must be educated on the implications of violating the policy.  The firm must document compliance, reprimand violators and conduct periodic “software audits.”  

A software audit consists of conducting an inventory of all software, found on all computers, which the firm owns.  This can be done using audit software provided FREE from the BSA (Softscan ) or the SPA (SpaAudit ).  This inventory is then compared to the list of licenses the firm has ownership of or is authorized to use.  Software in violation of the policy is either removed from the machines or adequate licenses purchased.  In cases where network licenses are used, many firms have found metering software affective to monitor compliance. 

Overall, software theft is an issue no firm wants to be guilty of.  You, as firm administrator are ideally suited to evaluate your firm’s exposure, implement anti-piracy policies, and bring your firm into compliance.   When software piracy is eliminated everyone wins.

Stop Piracy in its Tracks:
For information on Sample Employee Policies and free audit software, please contact:
Business Software Alliance (888) NO-PIRACY
Software Publishers Association (800) 388-7478 or email: software@bsa.org

InfoTech Partners North America, Inc....your technology partner  (480) 706-1728
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