Software audits are an irritating and time consuming part of life.
To survive one unscathed you'll need a thorough understanding of your licensing requirements.
'IT executives being thrown into prison' is the usual battle cry of software industry bodies such as the BSA and FAST (despite no executive going to prison in my knowledge in the last 15 years).
The more realistic pain of software audits is unbudgeted cost and distraction from delivery of projects. It takes time to defend an audit; to collect the appropriate data and documentation - precious time that should have been spent focusing on business priorities.
Microsoft, Oracle, Adobe, IBM, SAP, Attachmate and other large software publishers regularly audit their customers. Research with ITAM Review readers in the past suggest that, faced with a vendor audit, Microsoft are said to be most helpful, and Oracle least helpful.