ICAEW.com works better with JavaScript enabled.

What to consider when selling software licenses

Author: ICAEW Insights

Published: 21 Apr 2023

Does your firm licence software or other technology to clients? If your clients sell it on, to one or more third parties, the appointment or reappointment of your firm as the auditor of the end user raises potential independence considerations.

Despite the absence of a legal relationship between the firm and the end user, the firm must consider the commercial substance of the transaction or relationship. This is particularly relevant for Public Interest Entities (PIEs) and Other Entities of Public Interest (OEPIs) due to the prohibition on the indirect provision of services. 

Transactions can be structured in many ways. To promote consistency among firms and audit regulators in the application of independence and other ethical considerations, the Audit and Assurance Faculty has published a guidance document highlighting key areas for firms to consider. 

For each potential threat to independence, an example is provided that describes a positive, neutral or negative situation. 

Positive factors suggest that it is unlikely that the firm may need to look to the end user when considering independence, while neutral and negative factors suggest that there may be such a need.

Although no weighting is applied, negative factors may be indicative of a threat to independence, which the firm is unlikely to be able to safeguard appropriately. 

Determining independence may not be straightforward and the matrix is not prescriptive, but it will assist members in assessing their circumstances to help ensure that relevant independence and other ethical considerations are taken into account.  

Read the guidance

Discover more from ICAEW Insights

Insights showcases news, opinion, analysis, interviews and features on the profession with a focus on the key issues affecting accountancy and the world of business.

Podcasts
Accountancy Insights Podcast
Accountancy Insights Podcast

Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.

Find out more
Daily summaries
Three yellow pins planted into a surface in a row
News in brief

Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.

See more
Newsletter
A megaphone
Stay up to date

You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.

Sign up
}
}