System and method for auditing for usage of licensed software in which a client executing the software generates and transmits a license key and a covert key to a server via network connection. The license key is transmitted to the server upon activation of the licensed software at the client. The covert key is generated based on at least a portion of the software code activated at the client and is transmitted to the server at random or at predetermined time intervals after transmission of the licensed key so as to avoid detection by a user. The license and covert keys are each associated with a device fingerprint that uniquely identifies the device transmitting each one of the respective keys. Unauthorized software usage at a client is determined at least when a covert key does not correspond to a device fingerprint having an associated license key.