The Role of the Third Party Auditor

When a formal audit is invoked, the firm that arrives to count your estate is not Microsoft. It is a third party accounting firm appointed under the audit clause. That distance is presented as independence, and it is real in one sense and limited in another. Knowing the difference is what lets you treat the auditor's draft as a position to challenge rather than a bill to pay.

Where the auditor's authority comes from

The authority to audit lives in the Microsoft Business and Services Agreement, the MBSA. The audit clause gives Microsoft the right to verify compliance and to appoint a third party to carry out the verification. That firm can request deployment records, server configuration data, and usage logs, and the agreement obliges you to provide reasonable access. The authority is broad, but it is not unlimited, and the scope of what must be handed over is itself a point you can manage rather than concede wholesale.

What independence does and does not mean

The auditor is independent in that it is a separate firm with professional standards and its own reputation to protect. It is not a neutral arbiter of your interests. It is engaged to verify against Microsoft's licensing rules, using Microsoft's counting methodology, and it builds its findings on data that includes Microsoft's own telemetry from Azure, Microsoft 365, and management tooling. The framework is Microsoft's. The firm applies it. That is why a result can be both professionally produced and still overstate what you owe.

How the Effective License Position is built

The auditor's central output is the Effective License Position, the reconciliation of what you deployed against what you are entitled to. The firm collects deployment data, applies the counting rules, credits the entitlements it can see, and reports the gap. The weakness in this process, from your side, is that the firm credits only what it is given and counts deployment by rules that favor the higher number where there is ambiguity. Editions, virtual core counting, and downgrade rights are common places where the draft lands high.

Indicative description of the mechanics, not a quoted outcome.

Why the draft is a starting point

The single most important fact about the auditor's report is that it is negotiated after delivery. The ELP is not a sentence handed down. It is the firm's reconciliation, and a reconciliation can be answered with a better one. When you rebuild the position from your own records and credit every entitlement the draft missed, the gap moves. The firm is not your adversary in the way Microsoft's commercial team is, but its draft is built on the framework most favorable to Microsoft, and it will not correct itself unless you bring the evidence.

Working with the auditor without giving away your case

• Provide what the clause requires, and manage the scope rather than volunteering everything
• Keep your own reconstruction of the position running in parallel
• Credit every entitlement, downgrade right, and prior purchase before the draft hardens
• Challenge editions and virtual core counting where the rules were applied to favor the high number
• Treat the draft as the opening of a negotiation, because that is what it is

This is why the first response matters so much, as covered in why you should never reply to an audit letter alone, and why the broader survival sequence in the Microsoft Audit Survival Guide for 2026 begins long before the auditor arrives.

The next step

The auditor will build the Effective License Position on Microsoft's framework. Your defense is to build yours on the evidence. The full mechanics, from the first letter to the final number, are in the survival guide.

If this is live on your desk right now, our Microsoft audit defense service sits between you and the auditor from first letter to final settlement.