FAQs about SOC 1 Audits
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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 whitepaper, 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.
Developed primarily for third-party service providers by the AICPA, SOC 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. 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.
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.