When a Microsoft audit produces a finding, it has two parts that behave very differently. The cost of the licenses you are genuinely short tends to be fixed: if you used it, you owe it. The penalty side, the part that pushes the number above the plain license cost, is where judgment lives. That judgment is shaped by what your records show about intent, governance, and the nature of any gap. This is why good faith evidence matters. It does not deny the shortfall. It frames the shortfall as an honest, contained reporting issue rather than a careless or willful one, and that framing moves the penalty.
This article sets out what counts as good faith evidence, why it works, and how to assemble it before you need it. For the wider method, the Microsoft audit survival guide puts it in the context of the full defense.
Why the penalty side responds to evidence
Penalty pricing exists to discourage under licensing, so it is heaviest where under licensing looks deliberate or unmanaged. The same logic works in reverse. Where an estate shows a genuine effort to license correctly, regular internal review, prompt correction of errors, and clear governance, the case for a heavy penalty weakens. The shortfall reads as the residue of an honest process rather than evidence of indifference. The negotiation then becomes about the size of an honest miss, not about punishment.
The back charge answers what you used. Good faith evidence answers how you tried to get it right.
This is not about persuasion in the abstract. It is documentary. A claim of good faith with nothing behind it carries no weight. The same claim backed by dated records of internal assessments, correction logs, and a governance routine is hard to dismiss. The evidence is the argument.
The evidence that carries weight
Not all documentation is equal in this setting. The records that move a penalty are the ones that show an active, ongoing effort to stay compliant, ideally predating the audit. The strongest categories are these.
- Records of regular internal license assessments, with dates, showing you reviewed your own position
- Correction logs that show errors were found and fixed promptly once identified
- A documented governance routine: who owns licensing, how often it is reviewed, and against what
- Procurement and deployment approvals that show purchasing was tied to a process, not ad hoc
- Evidence that any gap was contained, isolated to a known cause rather than spread across the estate
The common thread is that each of these existed before the auditor arrived. Evidence created in response to the audit can still help, but it is the standing record, the routine you were already running, that most convincingly shows good faith. That is the practical case for building an internal assessment habit long before any letter lands.
What good faith evidence does to a finding
The figures below are indicative and exist only to show the direction of travel. Take a finding where the plain license cost of the shortfall is the same in both columns, but the surrounding evidence differs.
| Element | Thin record | Strong good faith record |
|---|---|---|
| License cost of shortfall | Fixed | Fixed |
| Penalty posture | Treated as unmanaged | Treated as honest, contained |
| Negotiating room | Narrow | Wide, anchored in documents |
| Typical outcome | Penalty near the top of range | Penalty pushed toward the floor |
The license cost does not change. What changes is everything built on top of it. With a strong record, the penalty conversation starts from a position of an honest miss by a well run organization, and that is a far better place to negotiate from than silence.
Assembling the evidence before you need it
The uncomfortable truth is that good faith evidence is hardest to produce in the moment it would help most. By the time an audit letter arrives, the window to have been running a clean governance routine has already closed or it has not. This is why the most effective penalty defense is built quietly, in advance, as ordinary practice.
The good news is that the same routine that produces good faith evidence also keeps your real exposure low. A quarterly internal assessment surfaces gaps while they are small and cheap to fix, and it leaves a dated trail that proves you were paying attention. The governance that protects you in a negotiation is the governance that prevents the negotiation from being severe in the first place.
How a buyer side advisor uses it
A buyer side advisor knows which records the auditor and Microsoft weigh and which they discount, and it assembles your evidence to speak directly to the penalty decision. We help you build the standing assessment routine that generates good faith evidence as a matter of course, and when a finding lands we marshal that evidence to push the penalty toward the floor of the range while challenging the underlying count.
Our guarantee holds throughout: we reduce your exposure or we reimburse our service fee, and with gainshare you pay only from verified savings, zero retainer, no risk to you. For the complete approach to defending a Microsoft finding, download the Microsoft audit survival guide.
If an auditor is already asking questions, our Microsoft audit defense team manages every exchange with the auditor on your behalf.