SOC Reporting Services
Outsourcing is on the rise despite increasing cybersecurity breaches. In today’s challenging world of Blockchain, AI, IoT, and Cloud, you need to be a step ahead of your competitors. Think of the soc report as your company’s “security best practices”. You need to demonstrate a level of confidence that your organization can handle your clients’ most confidential and valuable information, have the procedures and controls in place to provide the required assurance. A soc report provides this assurance for your clients. Soc stands for system and organization controls.
The SOC engagements can be split into 2 main requirements
SOC 1 OR ISAE3402
Address Controls Related to User Entities’ Internal Control over Financial Reporting (“ICFR”). It is used by service organizations affecting the financial reporting of user organizations.
Reports are for User Auditor, & Management of User and Service Organization.
SOC 2 OR ISAE3000
A SOC 2 report conveys trust and assurance to users of the system that the service organization has deployed an effective control system to mitigate operational and compliance risks that the system may represent to its users. It addresses the System and Organization Controls(SOC) using Trust Services Criteria (TSC) for service organizations to apply and report on controls that may affect users of their service. A SOC 2 report demonstrates an independent auditor’s review of a service organization’s application of criteria related to one or more of the TSC, which are:
Security: The system is protected against unauthorized access (both physical and logical).
Availability: The system is available for operation and use as committed or agreed.
Processing Integrity: System processing is complete, accurate, timely, and authorized.
Confidentiality: Information designated as confidential is protected as committed or agreed. Privacy: Personal information (i.e., information that is about or can be related to an identifiable individual) is collected, used, retained, disclosed, and destroyed in conformity with the commitments in the entity’s privacy notice and with TSC criteria.
SOC 2 Reports are for Knowledgeable Parties.
SOC 3 REPORT
A SOC 3 engagement is similar to a SOC 2 engagement in that the practitioner reports on whether an entity (any entity, not necessarily a service organization) has maintained effective controls over its the system with respect to TSC. A SOC 3 report may not have details of the controls in the report. It is commonly used in B2C environments.
TYPE I AND TYPE II REPORTS
- The report is as of the point in time (i.e., as of 12/31/200X)
- Looks at the design of controls – not operating effectiveness
- Limited use & considered for information purposes only
- Useful for purposes of limited reliance by user auditors
- Generally performed in the first year that a service organization has a SOC reporting requirement.
- The report covers a period of time, generally not less than 6 months and not more than 12 months
- Differentiating factor: Includes tests of operating effectiveness
- May provide the user auditor with a basis for reducing the assessment of control risk below maximum
- Requires more internal and external effort
- Identifies instances of noncompliance of the stated control activity
- More emphasis on evidential matter
A TYPE II REPORT CURRENTLY PROVIDES THE MOST REASONABLE ASSURANCE FOR THE FOLLOWING REASONS:
- SOC Type II report can cover the entire year and the effectiveness of the controls in the place can be reported
- It is a Third Party Period- of-Time assessment and so has Accountability
- Since it is a period of time assessment, it is more like continuous compliance with low risk and high reliability
- Most other assurance programs or audits are usually, at a point in time
- Optionally Covers a Comprehensive Framework for Privacy
- Provides a high-reliability SOC Seal by AICPA