As AICPA states, System and Organization Controls (SOC) is a suite of service offerings CPAs may provide in connection with system-level controls of a service organization or entity-level controls of other organizations.
Everybody is looking for trust and transparency, whether be in your internal or external stake-holders. These SOC review reports helps you provide that confidence to your clients about you. Companies having their SOC reviews done are more likely to win over client’s confidence and hence attain better success than the ones who haven’t done the reviews yet.
What are the different types of SOC Reports?
- SOC 1 – SOC for Service Organizations: ICFR: Report on Controls at a Service Organization Relevant to User Entities’ Internal Control over Financial Reporting (ICFR)
These reports, prepared in accordance with AT-C section 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting, are specifically intended to meet the needs of entities that use service organizations (user entities) and the CPAs that audit the user entities’ financial statements (user auditors), in evaluating the effect of the controls at the service organization on the user entities’ financial statements.
There are two types of reports for these engagements:
- Type 2 – report on the fairness of the presentation of management’s description of the service organization’s system and the suitability of the design and operating effectiveness of the controls to achieve the related control objectives included in the description throughout a specified period.
- Type 1 – report on the fairness of the presentation of management’s description of the service organization’s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date.
Use of these reports is restricted to the management of the service organization, user entities, and user auditors.
- SOC 2 – SOC for Service Organizations: Trust Services Criteria: Report on Controls at a Service Organization Relevant to Security, Availability, Processing Integrity, Confidentiality or Privacy
These reports are intended to meet the needs of a broad range of users that need detailed information and assurance about the controls at a service organization relevant to security, availability, and processing integrity of the systems the service organization uses to process users’ data and the confidentiality and privacy of the information processed by these systems. These reports can play an important role in:
- Oversight of the organization
- Vendor management programs
- Internal corporate governance and risk management processes
- Regulatory oversight
Similar to a SOC 1 report, there are two types of reports:
- Type 2: It is a report on management’s description of a service organization’s system and the suitability of the design and operating effectiveness of controls.
- Type 1: It is a report on management’s description of a service organization’s system and the suitability of the design of controls. Use of these reports are restricted.
- SOC 2 – SOC for Service Organizations: Trust Services Criteria for General Use Report: These reports are designed to meet the needs of users who need assurance about the controls at a service organization relevant to security, availability, processing integrity confidentiality, or privacy, but do not have the need for or the knowledge necessary to make effective use of a SOC 2® Report. Because they are general use reports, SOC 3® reports can be freely distributed.
Benefits of SOC Reporting: –
The most important benefits of SOC reporting are as follows:-
- Reduce the cost of compliance and the time spent on audits.
- Opportunity to showcase confidence infront of your clients.
- Address the risks within the organization with little hustle and expand opportunities of growth and becoming better.
- Foster trust and transparency with your clients and all the stake holders.
SOC Review has become extremely important for every technology related vendors that handles critical data of it’s client and also for the service based organizations.
Synergy Consulting offers world class SOC reporting for your organization that helps you stay ahead in the race and let your product or services be the most preferred ones gaining the trust and confidence of your clients.
Whether conducting the SOC audit for your company or for all your vendors, our SOC audit practices and our experts are highly equipped and experienced to execute to them to the highest lever of professionalism, providing you with assurity of a thorough and timely reporting based on all the latest applicable standards and procedures.
(Data Source: AICPA, PWC)