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An IT auditor notes that an organization has outsourced software development for critical applications to a third party. What should an IT auditor recommend in order to protect the organizations financial investment?
Due diligence activities should be performed on the software vendor.
A periodic audit of the vendor facilities should be executed.
A high penalty clause should be detailed in the contract.
There should be a source code escrow agreement in place.
A source code escrow agreement is primarily recommended to help protect the enterprise's investment in software because the source code will be available with a trusted third party and can be retrieved if the third party goes out of business or if the software company goes out of business. While due diligence, quarterly audits of vendor facilities and penalty clauses are best practices, they do not ensure availability of the source code.
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