Our site is full of complex information about SOC reports. However, sometimes it is good to go back to the basics. Especially for readers who are just learning about SOC reports and thier benefits.
What exactly is a SOC report? And why is it important? In simple words, a SOC report is a document that verifies a company’s information security practices. You might need a SOC report if you are in an industry that requires compliance with certain regulations or if you need to assure your customers about the safety of their data. Let’s take a closer look below:
What is a SOC Report?
SOC stands for “System and Organization Controls.” SOC reports are standardized assessments of a company’s controls over the security, availability, processing integrity, confidentiality, and privacy of its information systems. There are three main types of SOC reports – SOC 1, SOC 2, and SOC 3. Each of them covers different aspects of a company’s controls, with SOC 1 focusing on financial reporting, while SOC 2 and SOC 3 focusing on non-financial reporting. SOC 2 reports are the most common type of SOC report and cover controls related to security, availability, processing integrity, confidentiality, and privacy.
Understanding the Components of a SOC Report
A SOC report typically consists of two parts – a description of the company’s system and controls (known as the SOC Control Objectives) and a report on the auditor’s opinion of the effectiveness of those controls (known as the SOC Audit Report). The SOC Control Objectives detail the policies and procedures that a company has implemented to ensure the security, availability, processing integrity, confidentiality, and privacy of its information system. The SOC Audit Report contains the auditor’s opinion and any other observations or comments.
How to Get a SOC Report
To obtain a SOC report, a company must work with an accredited CPA firm with experience in SOC engagements. The CPA firm will conduct an audit of the company’s information systems and controls and then prepare the SOC report. The SOC audit may include testing sample transactions to verify that the controls are operating effectively. After the audit, the CPA firm will issue the SOC report.
Why is a SOC Report Important?
A SOC report is important because it provides independent assurance that a company’s controls are effective and meet relevant standards. Having a SOC report can help a company gain trust and credibility with its customers and stakeholders. In addition, some companies may require a SOC report before doing business with you, especially if you handle sensitive data or process transactions on their behalf. Finally, having a SOC report can help you identify areas where you may need to improve your controls.
How to Use a SOC Report
When evaluating a SOC report, it’s essential to understand what it covers and how it relates to your business needs. If you require a SOC report for regulatory compliance, make sure to obtain the correct type of SOC report that covers the relevant controls. Similarly, if your customers require a SOC report, make sure to provide them with the appropriate SOC report that includes the information they need. Finally, when reviewing a SOC report, pay attention to any areas where the auditor identified weakness or deficiencies in the controls and take steps to address those issues.
In conclusion, SOC reports play a crucial role in assuring the security and effectiveness of a company’s controls. While SOC reports may seem complicated, understanding their components and how to use them can help you improve your control practices and gain credibility and trust with your customers. By working with an experienced CPA firm and obtaining the correct type of SOC report for your business needs, you can successfully navigate the world of SOC reports and ensure the safety of your data and systems.
Reach out to Holbrook & Manter today to begin your SOC journey. We would be happy to assist you.