The AICPA (American Institute of Certified Public Accountants) emphasizes the importance of risk management in an increasingly complex and globalized economy. To analyze these supply chain risks, they have introduced a SOC for supply chain management.
A System and Organization Controls (SOC) report is a market-driven examination of a business’s performance and information management. It is designed to outline risk management efforts in a clear and concise fashion in order to mitigate said risks. This report is most often used by the company’s executives, investors, analysts, and board of directors, but certain SOC reports are also freely distributed to the public.
Undergoing an annual SOC for supply chain management is a critical step to instilling trust in your key stakeholders. Companies with a complex multinational supply chain are under higher scrutiny than ever, and the pressure to meet distribution, manufacturing, and/or production commitments is intense. A SOC for vendor supply chains is a relatively simple step to take to ensure your business is meeting the highest industry standards.
As SOC reports are performed independently by highly certified accountants, your company runs zero risk of internal bias. A licensed CPA firm will be able to identify major risks and performance issues that could threaten your ability to meet your commitments.
The AICPA asserts that SOC for supply chain management reports are market-driven, flexible, and voluntary in order to best suit an organization’s goals and provide the utmost transparency in supply chain management. With regular efforts to uncover your greatest liabilities, you’ll be able to mitigate risks before they present themselves.
A SOC report expires annually and is updated on a regular basis. SOC reports hold to modern technology standards, and as such, an outdated SOC report does not instill much confidence in your stakeholders. You should aim to obtain a SOC for supply chain management at least once a year.
In addition to annual reports, you should also undergo a new audit every time your business undergoes a significant event. If your business is undergoing a merger, acquisition, or other significant events, your stakeholders expect and appreciate a renewed analysis of your processes. Timely, consistent SOC for vendor supply chains is often indicative of timely, consistent business practices.
If you’re considering obtaining a SOC report for your company but are unsure which one is most beneficial for your company, we encourage you to read our overviews on the types of SOC reports. If you’d like to get started or wish to discuss your options with one of our staff, contact us here.