Many organizations think that all SOC reports are the same, which likely means all SOC report providers conduct the process identically. Right? Not necessarily. The SOC reporting process requires entity-specific planning that should differ between organizations based on many factors—including their structures, offered services, services being tested, systems, processes, and internal controls.
However, it is often assumed that a SOC report is similar to a quick yes-no checklist instead of the entity-specific, thorough analysis and evaluation that it is. Moreover, some user organizations (who may require SOC reports) and some service organizations (that complete SOC reports) may not know what the report should encompass. And, therefore, service organizations may work with the first identified provider—and inadvertently prepare a SOC report that may not include or validate the appropriate controls within the organization.
To set-up a successful SOC reporting process, service organizations must seek a SOC report provider that will spend time getting to know their organizations, services, and controls in order to deliver a quality SOC report. Therefore, a firm that provides high-quality SOC reports should have the:
1. ability to gain a thorough understanding of the service organization and its service offerings,
2. subject matter expertise to understand both the processes and today’s digital enviornment, and
3. experience in completing a relevant SOC report.
A high-quality SOC report services provider understands that no two organizations are alike. Consequently, each organization has a different set of services and internal processes. Thus, conducting the SOC reporting process as a checklist neglects important nuances that could either clarify a client’s internal control issues or identify more of them. A SOC report service provider should take the time to understand the intricacies of an organization so that it delivers not only a trustworthy report, but also one that directly addresses the entity’s unique qualities in its proposed solutions.
2. SUBJECT MATTER EXPERTISE
The SOC reporting process typically involves three main parties:
· the service organization,
· the user organization, and
· the user organization’s auditors and/or regulators.
In some cases, the SOC reporting process may involve other entities that are associated with the service organization. These are called “sub-service organizations.” The SOC report provider must not only properly define each party and its role, but also provide relevant details to the users of the report. A high degree of subject matter expertise is required to understand, test, and report what matters most to the report’s users—simultaneously ensuring that the reporting process is both effective and efficient. The goal is to avoid these two potential scenarios:
1. The report contains more information than is needed, thereby effectively wasting the service organization’s time—and that of all users of the report.
2. The report presents too little information and omits critical facts about the organization’s controls and data security.
Subject matter experts know which of the service organization’s subsidiaries (or affiliates), services, internal processes, and controls to test. An organization is comprised of a multitude of internal systems, so the service organization must choose – and the SOC report provider must test – those that are most critical for the services offered while excluding the impertinent controls. For instance, one of the more common areas to include is security and restrictions on data access because users want to know that their data are protected under the service organization’s control. Ultimately, user organizations rely on the SOC report for assurance of secure data and other internal controls.
SOC reporting can be daunting even for experienced organizations. Working with an experienced provider reduces the risk of your organization wasting valuable resources or producing an unreliable report. A high-quality SOC report provider has in-depth expertise in efficiently conducting the SOC process. It also has a wide range of industry knowledge. Because of its efficiency, the experienced SOC report provider saves a service organization’s time and resources.
Another differentiator of a high-quality provider is the credentials that its auditors maintain. Because the SOC process includes IT systems and controls, the strongest providers are those with both IT and CPA credentials. These credentials include Certified Information Systems Security Professional (CISSP) and Certified Information Systems Auditor (CISA). IT credentials are imperative because IT controls are generally part of the foundation of an organization’s processes and manual controls. Often, these controls create the reports or automate the functions used to make significant decisions or reconcile accounts. As systems and applications play a greater role in an organization’s day-to-day operations, service providers with IT credentials become more important. These credentials are especially important for an organization that needs a SOC 2 report, which primarily tests IT controls. Simultaneously, the user organization’s auditors and management are the primary audience for this report, so a proper blend of CPA and IT subject matter expertise produces the most useful and relevant reports. Thus, a SOC reporting firm with both types of credentials is excellently equipped to provide service organizations with a report in which both their users and user auditors find value.
CHOOSING A HIGH-QUALITY SOC REPORT PROVIDER
Understanding, subject matter expertise, and experience are indispensable characteristics of a high-quality SOC report services provider. Although it may be easy to let cost be the deciding factor between two or more providers, remember that a detailed SOC reporting engagement is a worthy investment in providing your clients with the information and testing they require to continue to do business with you. Therefore, choose a highly qualified firm to conduct the proper SOC testing and reporting.
Auditwerx produces more than 200 SOC reports annually – and that’s our sole focus. Backed by designations such as CISSP and CISA – as well as Certified in the Governance of Enterprise IT (CGEIT) and Certified in Risk and Information Systems Control (CRISC) – our auditors can help you conduct a successful SOC reporting process. Our volume of SOC reports across a variety of industries illustrates that we know what services to include, what processes and internal controls to test, and how to test them. The SOC report is perhaps one of the most important documents for a service organization. Auditwerx has the understanding, subject matter expertise, and experience to help you protect and grow your bottom line.