Posts

Rebuilding Trust After a Data Breach

American Perspective on Data Breaches

According to Pew Research Center, half of Americans feel that their personal information is less secure than it was five years ago. Even more so, 64% of American adults have experienced data theft via credit card, account number, email account, social media accounts, Social Security number, loan, or tax return compromises. Yahoo, eBay, Equifax, Target, Anthem, Home Depot – it has become habitual to worry about data breaches, identity theft, and other privacy concerns. Why am I being shown this ad? How much does Facebook know about me? Has my data been sold? Is Google tracking me?

At KirkpatrickPrice, we talk a lot about how to prevent a data breach and put a heavy focus on the “before,” rather than the “after.” But, what happens after a data breach has occurred? How can your business recover? Let’s take a look at three advertising campaigns that aim to rebuild trust after a breach.

Facebook Data Scandal

With GDPR enforcement on the rise and data privacy at the top of digital consumers’ minds, the Facebook-Cambridge Analytica data breach has become one of the largest of all time. Out of the 2.2 billion Facebook users, 78 million were impacted by this breach. The data was used to build a software program that predicts, profiles, and influences voter choices. Now that Facebook’s data privacy practices are in the spotlight, more and more questionable practices are rising up.

The scandal is still unfolding, as Mark Zuckerberg is questioned by Congress and the GDPR enforcement date has officially passed. In an effort to win back user trust, Facebook launched a major advertising campaign, “Here Together,” which promises to protect users from spam, click bait, fake news, and data misuse.

How has the Facebook scandal impacted your use of the platform?

Uber Cover-Up

When Uber announced its breach in 2017, it hit close to home for the millions of drivers and riders who use the app every day. Uber reported that not only did hackers steal 57 million credentials (phone numbers, email addresses, names, and driver’s license numbers) from a third-party cloud-based service, but Uber also kept the data breach secret for more than a year after paying a $100,000 ransom.

The New York Times points out, “The handling of the breach underscores the extent to which Uber executives were willing to go to protect the $70 billion ride-hailing giant’s reputation and business, even at the potential cost of breaking users’ trust and, perhaps more important, state and federal laws.” Uber recognizes that driver and rider trust is the core of their business, and when they announced this cover-up and breach, they knew they’d be facing major backlash.

In response to the breach, Uber began their “Moving Forward” campaign in an effort to rebuild trust. What do you think of this commercial – have they regained your trust? Would you still use the app?

Wells Fargo Incentives

The 2016 Wells Fargo breach was incredibly eye-opening to many consumers because it wasn’t a malicious hacker taking data; it was Wells Fargo. The bank was fined $185 million because of the 5,300 bank employees who created over 1.5 million unauthorized bank and credit card accounts on behalf of unsuspecting customers. Their reason for doing this was incentives; bank employees were rewarded for opening new bank and credit card accounts.

What is Wells Fargo doing now? In an effort to rebuild trust, Wells Fargo completely restructured its incentive plans by ending sales goals for branch bankers. Do you think that firing the 5,300 guilty bank employees and restructuring their incentive program is enough?

We believe that client trust is one of the most valuable benefits of compliance. Undergoing information security audits can help your organization maintain customers and attract new ones, distinguish your business from the rest, avoid fines for non-compliance, and answer to any sort of regulatory body.

How do you perceive this trend of public rebranding – is it convincing? Do you believe that companies like Facebook, Uber, and Wells Fargo have changed enough to rebuild trust?

More Resources

Turning Audit Into Enablement

Incident Response Planning: 6 Steps to Prepare your Organization

What Is an Incident Response Plan? The Collection and Evaluation of Evidence

When Will You See the Benefit of an Audit?

Are you considering going through an information security audit for the first time? Are you contemplating a requirement for all of your vendors to undergo information security audits? Are you looking for an auditing firm who can help your organization utilize the benefits of auditing? Do you need help explaining the value of information security audits to executive management? Are you trying to cultivate a culture of compliance within your organization? We’re here to help.

What are the Advantages to Auditing?

Many people are intimidated by the requirements, price, and efforts of auditing, but we believe the benefits outweigh the cost. Yes, undergoing information security audits is a challenging and time-consuming process for most organizations, but our Information Security Specialists aim to educate clients on the value that attestations and compliance can bring to their business, which range from competitive advantages to reputational improvement. When your organization has completed an information security audit and gained compliance, the challenges you faced will be worth it.

However, getting executives on board with undergoing information security audits can be challenging, because many organizations are fearful of the process. We see many organizations get stuck in the checkbox mentality, where they view auditing as an item to be checked off a list rather than understanding the purpose and benefits. At KirkpatrickPrice, we want to be your audit partner, not just an item to check off on a list. We want to walk through this audit lifecycle with you, enhancing your business by placing security and compliance at the forefront of the current threat landscape.

Are you ready to get started on securing your business? Do you want to ensure your security posture is as strong as possible? Do you want to see how your mindset toward auditing can change over a three-year period?

Get the full report now.

Will I Pass a SOC 1 Audit? What if I Fail The Audit? Reasonable Assurance Explained

Organizations put valuable resources into completing SOC 1 audits: time, money, people, technology, and more. We know that often times, a SOC 1 audit can make it or break it for our clients’ business and we don’t take that lightly. When someone asks us, “Will I pass a SOC 1 audit? What if I fail the audit? What happens if I fail?”, we want to give them the best explanation we can in regards to reasonable assurance.

Reasonable Assurance Explained for SOC 1 Audits

When explaining reasonable assurance, there’s one important lesson to understand: SOC 1 audits do not work on a pass/fail system. The purpose of a SOC 1 report is to provide user entities reasonable assurance that their controls relevant to internal controls over financial reporting (ICFR) are suitably designed and operating effectively. Instead of passing or failing your organization, an auditor will issue a qualified or unqualified opinion. Understanding reasonable assurance changes your mindset from, “What if I fail the audit? Will I pass the audit?” to “How would an auditor assess these controls?”

If an auditor determines that a control was not in place or effective, then a qualified opinion would be issued. This would sound something like, “Except for Control X, reasonable assurance is there. The controls have been suitably designed and operating effectively.” An unqualified opinion means there are no qualifications or significant exceptions being issued and reasonable assurance has been determined.

Understanding the concept of reasonable assurance can help you approach SOC 1 audits in a healthy way. Instead of asking, “Will I pass a SOC 1 audit? What if I fail the audit?”, you can look at your organization’s controls and ask, “Would an auditor see that these controls are suitably designed? Are they operating effectively? Would we achieve reasonable assurance?”

If it’s your first time having a SOC 1 audit performed, we strongly recommend starting with a gap analysis of your organization’s internal controls in order to identify operational, reporting, and compliance gaps and to provide advice on strategies to manage control objectives going forward. If you have questions about SOC 1 audits or want help demonstrating to your clients your commitment to security and compliance, contact us today.

 

Video Transcript

One of the questions that we get all the time is: will I be able to pass the audit? What if I fail the audit? The SSAE 16 (now SSAE 18) does not work on a pass/fail system. It works on a threshold of reasonable assurance. The auditor will issue an opinion about whether or not the controls are suitably designed and operating effectively during a period of time.

An unqualified opinion means that there are no qualifications or opinions being issued and reasonable assurance has been determined. Whereas a qualified opinion would be an opinion where there are some qualifications to that opinion. For example, “Except for this or that, reasonable assurance is there. The controls have been suitably designed and are operating effectively.”

Understanding the concept of reasonable assurance is good way to approach your audit so that you can understand if an auditor can achieve reasonable assurance when they look at your controls and determine if they’re operating effectively.

Do I need a SOC 1 Type I or a SOC 1 Type II Report?

When considering having a SOC 1 audit performed, there are two different report options available. Knowing whether you need a SOC 1 Type I or a SOC 1 Type II report will depend on your client’s needs and timing constraints.

What’s the difference between a SOC 1 Type I and a SOC 1 Type II report?

A SOC 1 Type I and a SOC 1 Type II both report on the controls and processes at a service organization that may impact their user entities’ internal control over financial reporting. The main difference to note is that a SOC 1 Type I report is an attestation of controls at a service organization at a specific point in time, whereas a SOC 1 Type II report audits controls at a service organization over a period of time (minimum six-month period) in order to attest to the operating effectiveness of the controls.

Do I need a SOC 1 Type I or a SOC 1 Type II Report?

If your client has requested a SOC 1 report from you but doesn’t require a specific type, how do you determine whether you need a SOC 1 Type I or a SOC 1 Type II report? If it’s your first time going through a SOC 1 audit, we commonly advise clients to begin with a Type I and then move to a Type II the following audit period. SOC 1 Type I reports are less constraining than a SOC 1 Type II report. SOC 1 Type I reports also give you the opportunity to work with your auditor on designing controls and ensuring that the description of controls would be fair and accurate in the report.

If you’re required to receive a SOC 1 Type II report, additional testing is necessary to determine that the controls are not only in place, but also operating effectively over a period of time. SOC 1 Type II audits take more time to conduct because you’re looking at controls over a period of time.

It’s important to consider these factors, client needs, and timing constraints, when trying to decide if you need a SOC 1 Type I or a SOC 1 Type II report. If you have questions about which type of SOC report you need or want help demonstrating to your clients your commitment to security and compliance, contact us today.

Video Transcript

The type of report that you should receive for your SSAE 16 (now SSAE 18), many times is determined by what your client is asking you to do. Sometimes your request from your client will be an SSAE 18 report, period. There are two types of reports. There’s a Type I and a Type II. If you’ve never done an SSAE 18 report before, it’s a good idea to begin in the first year with a Type I report. If your client is not requiring you to constrain to the Type II report, a Type I report gives you the opportunity to work with the auditor on designing your controls and ensuring that the description of your controls would be fair and accurate in the report. That’s the threshold for a Type I report.

If they are requesting you to do a Type II report, there is additional testing that must take place from the auditor in order to determine that the controls are not only in place, but also operating effectively over a period of time. A Type I is a good place to start because you’re able to address the design and description of the controls as of a certain date, whereas a Type II report takes a little bit more time to conduct because you have to look at those controls having been in place over a period of time. Please consider those factors as you determine if you need a Type I or Type II SSAE 18 report.

 

Everything You Need to Know About SOC 1 Audits

Are you being asked by a top client for a SOC 1 audit report? What is a SOC 1 report? Do you need a SOC 1 audit? In this free white paper, Everything You Need to Know About SOC 1 Audit, you’ll find answers to frequently asked questions about SOC 1 audit reports and learn how your organization can benefit from having a SOC 1 report and what you can expect from your SOC 1 audit process.

What is a SOC Report?

Developed primarily for third-party service providers by the AICPA, SOC (Service Organization Control) reports are issues by Certified Public Accountants (CPAs) and report on a service organization’s internal controls – policies and procedures – which could impact their client’s sensitive data. SOC reports help service organizations’ clients (referred to as user entities) to comply with regulatory and/or contractual requirements. SOC reports allow user entities to obtain an objective evaluation of the effectiveness of controls tat address compliance, operations, and financial reporting of a service organization.

What is a SOC 1 Audit Report?

SOC 1 engagements are performed in accordance with the Statement on Standards for Attestation Engagements No. 18 (SSAE 18), formerly known as SSAE 16. SOC 1 reports are specifically designed to report on the controls at a service organization that could ultimately impact their client’s financial statements. A SOC 1 audit is not a review of a service organization’s financial statements, but rather a review of internal controls over financial reporting.

Do I Need a SOC 1 Audit?

Many organizations are legally required to verify the suitability of internal controls at a service provider prior to engaging with the service provider. Generally speaking, publicly traded companies looking to comply with Sarbanes Oxley (SOX), financial institutions looking to comply with the Gramm-Leach-Bliley Act (GBLA), as well as state and local government, have all standardized on SOC reports to meet this requirement. If your clients outsource any of their information technology systems management activities to your organization, you may be asked for a SOC 1 report, so they can gain a better understanding of the controls at your organization and how they meet specific requirements.

Want all the answers to the SOC 1 FAQs?