SOC (Service Organization Control) examinations are more critical than ever for your business. The examinations, also known as audits, confirm security and integrity in your financial reporting as well as instill confidence in your processes and control design. Below you’ll find an overview of both SOC 1 Type I and SOC 1 Type II audits, as well as our most commonly asked questions regarding the audit process.
SOC audits are invaluable tools that analyze your organization’s financial reliability and processes. They are used to provide customers and stakeholders with accurate information about your organization’s financial reporting, security, integrity, and confidentiality.
There are three major types of SOC audits, the most common being SOC 1. SOC 1 audits are a relatively simple way to provide assurance to your stakeholders and vendors that your processes are running securely and efficiently. SOC 2 audits delve deeper into information security, while SOC 3 audits are a less technical audit report that essentially summarizes a SOC 2 Type II audit report.
The difference generally comes down to what period of time you’re auditing.
A SOC 1 Type I audit report performs a thorough risk assessment to determine if your service organization can achieve control objectives by a certain date. This report details the design and fairness of your organization’s financial processes and how they relate to your goals and customer service. SOC 1 Type I reports do not test operating effectiveness, only your organization’s control design.
SOC 1 Type II reports do all of the above, but they go a bit further. They analyze and test your processes over a set period of time, commonly 6 or 12 months, rather than by a specific date. They also perform a more thorough investigation of your processes. The SOC 1 Type II report is generally thought to be more rigorous than a SOC 1 Type I report.
Both a SOC 1 Type I and a SOC 1 Type II audit report are valid for 12 months from the date the report was issued. You should perform a SOC 1 audit annually or whenever your organization makes significant changes to its processes or structure. It is in your organization’s best interest to provide up-to-date, regular SOC reports.
SOC reports are solely performed by a Certified Public Accountant (CPA), an accreditation designated by the American Institute of Certified Public Accountants (AICPA).
SOC reports are verifiable auditing reports because they are held to a high standard and performed only by those with the accepted CPA licensure. It is a commonly accepted practice for stakeholders and vendors to see a SOC 1 audit performed regularly.
If you have any more questions about the SOC examination process or if you would like our experienced CPA firm to perform your SOC 1 audit, please do not hesitate to contact us today.