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System and organization controls (SOC) audits and reports form beneficial frameworks for reporting and compliance for organizations across all industries. SOC audits have evolved to accommodate the growing reliance on digital technology and advanced cybersecurity
SOC reports are used to confirm the credibility of service providers based on their security, availability, confidentiality and privacy policies. While there's an investment involved in producing SOC reports, this valuable information delivers a competitive
advantage to companies that want to protect critical data and keep their operations going smoothly.
This piece details SOC audits and types, the benefits to the organization, how to determine when SOC reporting is needed as well as guidance to implement the SOC process.
SOC audits and reports examine the effectiveness of internal controls and provide unbiased feedback on how organizational safeguards can be improved. SOC audits can be broken down by type of report.
SOC audits are not limited to large businesses, as small and medium-sized firms must also demonstrate compliance to new and existing clients.
Organizations count on various types of SOC audits to confirm compliance and reliability of third-party service providers.
In addition to SOC 1, 2, and 3 reports, there is a SOC for Cybersecurity report offering and SOC+ reports where other standards can be added, such as HIPAA, HITRUST, and NIST. The AICPA is developing additional SOC offerings to include in the suite.
SOC reports provide assurance that organizational controls effectively protect their client's data and intellectual assets. Organizations use SOC feedback to demonstrate the security and credibility of the third-party systems and service providers they
use. CPA firms follow several key steps when completing SOC reports for system-level controls at a service organization.
READ: Building a Third-Party Risk Management Checklist
SOC audit reports demonstrate that service organization’s strengths in security and compliance throughout key risk areas like financial processing and data management. This audit may reveal areas that need to be improved or confirm the proficiency
of the existing system and organization controls. SOC reports can be used to fulfill contractual agreements or reassure prospective clients that they are working with a reputable provider.
A SOC audit allows service organizations to stay competitive in their industry by demonstrating proficient security and financial compliance. As more businesses voluntarily opt for SOC reporting, these audits are becoming a top priority for organizations,
especially given the constantly evolving technological security landscape.
The biggest benefits of SOC audits include:
READ: Continuous Compliance Best Practices
Although SOC reports are not legally required, they are becoming more common in the highly competitive business landscape. If you're skipping a SOC audit, your organization could fall behind competitor without realizing it. If potential clients are asking
about SOC reports and security compliance, it's beneficial to have that information readily available from annual audits.
While CPAs perform SOC audits regularly, there are still some potential challenges to be aware of. Stakeholder buy-in is one example. If managers and employees don't understand the value of SOC audits, they may not prepare properly. Lack of communication
and awareness can also cause issues with SOC audit preparation, and less than favorable results may come back if the team isn't on the same page.
A readiness assessment before the audit can save time and stress, ensuring any major control failures are addressed ahead of time. Internal control monitoring is an investment, but it's a worthwhile commitment for organizations with significant technology
use. The more prepared a provider is, the more success they should have with a SOC audit, especially when they choose a reputable auditor.
SOC reporting protects the integrity and privacy of internal operations, including payment processing, data storage and software use. SOC audits ensure these controls work as intended, protecting service providers and their clients.
To recap, SOC 1 offers a comprehensive report into controls for financial reporting services, while SOC 2 focuses on security, availability, privacy, confidentiality, and processing integrity. SOC 3 is the best option if you need a detailed report for
public viewing to maximize confidence in a service organization.
Although reasonable efforts will be made to ensure the completeness and accuracy of the information contained in our blog posts, no liability can be accepted by IANS or our Faculty members for the results of any actions taken by individuals or firms in
connection with such information, opinions, or advice.
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