Auditing Information Systems, Second Edition

13.4. SOFTWARE PIRACY

Software piracy is the act of copying a copyrighted software program for personal use or for resale to another party, thereby denying the rightful owner royalties and any other legal benefits to which they would otherwise be entitled. In its 1991 Worldwide Report, the Business Software Alliance (BSA) reported that the annual cost of software theft worldwide ranged from $10 billion to $12 billion. The Institute of Internal Auditors (IIA) reported that an independent study commissioned by BSA and the Software and Information Industry Association (SIIA) found that, in 1996, the cost of software piracy worldwide was estimated at $11.2 billion. The study also found that about half of all new software applications used in 1996 were pirated.^[]

More recently, BSA says the total dollar losses from software piracy have actually trended down from $12.2 billion in 1999, to $11.8 billion in 2000, to $11 billion in 2001. But BSA estimated that 40 percent of all new software installed in businesses in 2001 was obtained from the black market.^[] These reductions are due to increased successes in prosecutions and settlement, sting operations, changes in domestic laws such as the U.S. Digital Millennium Copyright Act (DMCA), which was signed into law on October 28, 1998, and successes in getting foreign governments to crack down on piracy.

Because of these heavy losses, software industry trade groups have been formed in numerous countries, including Australia, Argentina, Belgium, ...