As Sky News reported last week, the Competition and Markets Authority (CMA) is proposing a string of reforms following the failures of Carillion this year and BHS before it in 2016.

Chief among them is a recommendation that audits of FTSE 350 firms – the largest companies listed on the London Stock Exchange – be carried out by at least two firms.

The CMA said one of them should be from outside the big four auditors of PwC, KPMG, EY and Deloitte to allow smaller rivals to gain experience and credibility and ensure a “cross-check on quality” at the same time.

Also among the conclusions of the review was the proposal of a cap to limit the number of major firms that any one of the big four could audit.

Crucially, there was also an attempt to remove any potential conflict of interest through splitting audit and, more lucrative advisory businesses within the big four.

The regulator stopped short of recommending the break up of the companies completely – as some critics had demanded.

Its chairman, Andrew Tyrie, insisted trust would be restored through its proposals.

“Most people will never read an auditor’s opinion on a company’s accounts.”

But tens of millions of people depend on robust and high-quality audits. If a company’s books aren’t properly examined, people’s jobs, pensions or savings can be at risk.”

A separate review, carried out by Legal & General chairman and former Treasury mandarin Sir John Kingman, calls for the accounting watchdog to be abolished and replaced with a more powerful “Audit, Reporting and Governance Authority”.

Sir Jon declared that the current Financial Reporting Council (FRC) had failed in its approach to its own governance and a “fresh start” was needed.

Both reviews were launched at the behest of the Department for Business, Energy and Industrial Strategy (BEIS) in the wake of anger about the role of auditors in major corporate scandals at BHS and Carillion.

Accountants have also faced probes into their work on the books of companies such as BT Group, the Co-operative Bank, Ted Baker and Patisserie Holdings.

Sky News reported on Monday how the government was to build on the CMA and Sir John’s conclusions through further work, code-named Project Flora, carried out by London Stock Exchange Group chairman Donald Brydon.

Commenting on the proposals so far the CBI’s chief UK policy director, Matthew Fell, said: “High quality audits are fundamental to good business.

“Where we have seen failures, even if isolated, they can undermine public confidence.

“The CMA and Kingman reviews offer an opportunity to reset the audit market.

“The CMA has recognised the benefits of an integrated audit model and is right to ignore misplaced calls for a break-up of the major firms.

“Instead they have opted for a more targeted approach to improving competition through a new market share cap and by introducing joint audits.

“At the heart of this reset must be a focus on tackling the expectation gap that is undermining trust in corporate reporting.”

A new battleground has been formed in the world of enterprise technology: one between traditional software vendors and their own customers.

Increased move to the cloud has placed new and mounting pressures on those vendors historically reliant on the sale of ‘on-premise’ software. These pressures are, in turn, driving the vendors to ramp up their software audits on customers in order to generate more revenue.

To contextualise the issue: while the cloud market has expanded at pace, Oracle’s revenues have risen by only 7% in six years. Meanwhile, from the start of 2012 IBM saw its revenues fall for 22 successive quarters, only bottoming out this year.

By contrast, since its launch in 2006 Amazon Web Services has gone from non-existent to a $24bn cloud business, while Google has also seen significant success with its G-suite – having launched in 2010, it already turns over $4bn a year.

The result is that traditional vendors are increasingly using contractual rights to initiate software license reviews / software audits.

These appear to be an anodyne process simply to confirm correct usage. The audit request is framed to request access to the customer’s IT infrastructure in order to analyse data regarding the customer’s software usage. But the agenda is simply revenue generation.

Inevitably, some under-licensing is uncovered. And the financial demands then brought are both unexpected and potentially hugely damaging to the organisation.

For almost any large organisation, receiving a notification from an IT vendor that it is going to be conducting a ‘routine software licence review’ can be the start of a long and damaging process.

Software audits have become an increasingly common method for vendors to increase their revenues from existing customers. But why? And what must organisations understand if they are to properly protect themselves against the significant risks posed by a software licence review?