In any successful organization, the quest for continuous improvement is ingrained in the corporate culture, setting the tone for how operations are run and defining every interaction with a client.
Service Organization Control (SOC) audits are examinations performed by a service auditor to report on the controls at a service organization. In more simple terms, SOC audits help service organizations to:
- Improve operating efficiency
- Minimize risks
- Increase the quality of services being provided
As a result of this process, service organizations can ensure that their company is best structured to provide reliable services, especially through the protection of client data.
Which SOC audit applies to your company?
SOC 1 audits target service organizations whose services affect the financial statements of the client company. In order to understand the scope of the SOC 1 audit, it is important to look at the standard from which it was created, being the SSAE 16 standard and its Canadian counterpart CSAE 3416.
SSAE 16/CSAE 3416 standard
Both the Standards for Attestation Engagements No. 16 (SSAE 16) and the Canadian Standard on Assurance Engagements (CSAE) 3416 were created to outline how service companies must report on compliance controls and act as the reporting standard for all service auditors. The main difference between the standards is that SSAE 16 is the reporting standard for the U.S., whereas CSAE 3416 pertains to Canada.
Both of these standards have been updated in order to be in alignment with the international standard, ISAE 3402. The updates in these standards allows North American businesses to be more competitive in the global marketplace, as they are now in alignment with International Service Organization (ISO) reporting standards.
If your company is providing services that will affect the financial statements of the user organization, your clients will likely require that you provide a clean SSAE 16/CSAE 3416 Type II Report before they will accept services from your company.
Unlike SOC 1, the SOC 2 report focuses on the operations at a service organization rather than the financial aspect, and is built around the following 5 trust principles:
- Security of a service organization’s system
- Availability of a service organization’s system
- Processing integrity of a service organization’s system
- Confidentiality of the information that the service organization’s system processes or maintains for user entities
- Privacy of personal information that the service organization collects, uses, retains, discloses and disposes for user entities.
What value does a SOC provide?
A SOC audit can be a huge step in the right direction for a company striving for continued progress in overall efficiency and profitability, by increasing the pool of potential customers and speaking to the values and standards held by the company.
Many potential clients will automatically eliminate your company as a potential service provider if you’re not operating in accordance with the industry’s standard. For service organizations, achieving a clean SOC report demonstrates their compliance with industry standards to current clients and potential clients.
In the case of many clients, the knowledge that your company has successfully achieved a positive SOC 1 or 2 report speaks to the commitment on the part of the organization to providing credible and quality services to clients.
How can we help?
Behind any success story is the preparation that went into it. A great way to increase the likelihood of receiving a positive SOC report is having a review of your system done before the SOC audit occurs. We are equipped to provide a SOC readiness review, which delivers a road map for procedures, controls and documentation that should be in place before the formal audit occurs.
We will help you prepare for your SOC audit by evaluating the essential elements of your organization’s internal controls, including: structure, accountability and control environment.