Insights
Inventory of intangible assets or audit of information technology
The crux of the problem: the Government Resolution On the Approval of Inventory Rules (hereinafter - the Rules) states that in order to assess the de facto compliance of intangible assets (licenses, programs, etc.) with documents, an information technology audit should be performed, unfortunately this is not mentioned anywhere in the Rules.
The Rules provides for the obligation for all entities, both business and non-profit organizations, to carry out an inventory of both assets and liabilities.
The document is old and, although it is being updated from time to time, it is not complete.
The text of the Rules marked in grey below - uncertainties and ambiguities remaining due to proper inventory of intangible assets.
Paragraph 40 of the Rules states: “During the inventory of software, the actual documents of its acquisition and the available license agreements are inspected, the actual quantity of software used and its compliance with available acquisition documents and license agreements are determined”.
Available purchase documents do not always show the truth. For example:
- The purchased accounting software gives access to, for example, five people. However, these circumstances are not specified in the purchase invoice. This can only be determined from the terms of the maintenance and service contract. Another similar case is the purchase of one or more empty databases (accounting software), where access is given to four employees. The purchase invoice contains a fee only for the purchase of databases (modules), but there is no information on how many employees can use these databases.
- Microsoft Office licenses come in couple forms:
- “one-time” - associated with the corresponding newly purchased computer
- “group” - when there are, say, three licenses, and they are granted for several years.
- It is more difficult in educational institutions when the educational institution orders the required number of licenses from the ministry.
- Demo version of the application has been downloaded.
- Some entities, or program developers, grant the right to use the program for free, say, to a solid entity, most likely in the hope that the entity will acquire it in the future.
There is only one way to check what is used on the computer for illegal programs and licenses - information technology audit. Unfortunately, this is a very expensive pleasure and there is no legal obligation to do so.
Some companies order to conduct IT audit on their own initiative. This would be especially expensive in cases where there are hundreds or thousands of computers in use in a company.
Due to the ambiguity of the Rules, we submitted a written request to the Ministry of Finance of the Republic of Lithuania. Unfortunately, the answer received was not gratifying, as it merely repeated the theoretical text from the Rules. I would venture to suggest that either the response is a semi-official automatic response or, in the absence of a real solution, the response was, as always, tacit.
It is often remembered that a decade or so ago, the company was very much attacked by operational staff with the requirement to provide documents proving the legality of licenses and programs. A smile appears on a face (though, in fact, even not funny) when you realize that the most important thing is to show the purchase documents, which do not really say anything to the end.
In the presence of uncertainties and ambiguities, it is always very convenient to wander, as this avoids delving into unpleasant problems. I think that the time has come for change - it is necessary to specify the situation due to the uncertainties provided for in the Rules: how to make an inventory of intangible assets and whether or not an IT audit is mandatory. The answer that intangible assets must comply with certain acquisition and licensing documents is not considered sufficient, but rather superficial, incomplete and even rejected.
In the annexes: