System and Organization Controls Audit Services
SOC 1 and SOC 2 Audits
As a service provider, your clients need to know that your processes and security controls meet their standards in order to conduct business with you, which is both a competitive advantage to your service organization, and an assurance to your clients.
And as a company, you should know the strengths and weaknesses of your service providers to assure their systems and processes do not present risk to your financial reporting or data security.
What is a System and Organization Control (SOC) Audit?
SOC Audit definition
Many service companies have the potential to impact financial reporting of their customers via financial data that they provide, or to which they have access. Auditors of company financials require assurance that the controls and processes of those service providers are in full compliance so that the integrity of company financials are intact.
System Organization Control Audits, or SOC audits, are an analysis and report given on a service organization’s controls, operations, and security measures surrounding process integrity, confidentiality, and privacy of said service organization.
These audits provide assurance to auditors of companies that the processes company service organizations are utilizing will not have a negative impact on financial reporting and the confidentiality and privacy of financial data.
Who should have a SOC Audit?
Companies that should have a SOC Audit
Any service organization that houses or services confidential and private financial data should consider performing a SOC audit of their organization.
-Service providers to insurance brokers and banks
Additionally, those serving high risk industries including:
- Financial services
- Professional services
What types of SOC Audits are required?
SOC Audits are organized into several types including SOC 1 and SOC 2, under the auspices of the AICPA (American Institute of CPAs) under the SOC reporting platform.
SOC 1 Report
The SOC 1 report focuses on a service organization’s controls relevant to an audit of a customer’s financial statements.
SOC 1 - Type I & II
- SOC 1 – Type I audit report focuses on a description of a service organization’s controls and how relevant and effective those controls are designed to achieve the control objective as of a specified date.
- SOC 1 – Type II audit report contains the same features of a Type I, however it adds an opinion on the operating effectiveness of achieving the control objectives through that time period.
SOC 2 Report
The SOC 2 report focuses on service organizations controls that effect operations and compliance, as outlined by the AICPA’s Trust Service criteria in relation to security of data, processing integrity, confidentiality and privacy. The SOC 2 report is a detailed account of the service auditor’s test of controls in place and the results of said controls. In addition to the Trust Service Criteria, SOC 2 audits can focus on cyber security as well.
If you are a SaaS company, payment processor, or a company servicing financial institutions, a SOC audit can provide a powerful advantage to your business.