Most companies consistently sharpen their strategies to ensure that they stand out against the competition, and service organizations—and their user entities—are no exception. Fortunately, the advent of the AICPA’s Service Organization Control (SOC) Reports enables organizations to leverage the completion of these reports to drive internal and external value and growth for their organizations.
First, obtaining a SOC report can drive value to management reviewing:
(a) Controls over the organization’s financial reporting (SOC-1).
(b) Controls over its security, availability, processing integrity, confidentiality, or privacy controls regarding the data under control of the organization (SOC-2).
The SOC-1 and/or SOC-2 (evaluation of controls over security, confidentiality, availability, processing integrity, and/or privacy) reports provide management with a thorough, independent evaluation of certain key processes and controls. Completion of these reports can drive beneficial changes and add value to the organization’s services provided to its clients. This review is particularly helpful in providing comfort to the service organization’s clients heavily relying on technology.
Secondly, it can create a competitive differentiator for the organization. A SOC-2 report can demonstrate that management takes security, availability, processing integrity, confidentiality, and privacy issues seriously – something almost every client or customer values and may require of a service provider. Having a SOC-2 report essentially states that the entity has met industry standards, or best principles/practices, for the specified controls that were evaluated. This fact sets the bar high for the organization in the field of its competition, demonstrating its accomplishment in these areas of common concern and interest to the public. It also says this services organization is less likely to have a serious breach of security or privacy compared to the general industry. Additionally, it allows the organization to provide services to clients of which a SOC report may be required as a condition of providing services. Because a seal can be obtained by the service organization that completes a SOC report, it can be posted on their website, where potential customers and the public can easily tell that this organization has distinguished itself from others.
Thirdly, it provides an independent means of constantly making the service organization better. There are a number of “programs” whose purpose is to achieve constant improvement (6 Sigma, business process management, Kaizan, total quality management, Baldridge Awards, etc.) and because the typical SOC report is re-performed every 12 months, management has the built-in opportunity to continue to get better at controls in these critical issues over time. One thing is certain, technology is constantly changing, and manual controls generally suffer atrophy over time. Both of these factors affect the effectiveness of controls.
Service organizations that provide IT services, such as cloud computing, data centers, data storage, credit/debit card transactions (or electronic commerce), payroll services, data processing and even those who provide support to highly regulated industries are particularly positioned to enjoy extra benefits in obtaining value and/or growth from SOC reports.
CRI’s SOC Reporting Professionals Are Ready to Help
Do you have questions about SOC reports? For example, what are the differences between the three types: SOC-1, SOC-2, and SOC-3? How does an organization determine which SOC report is needed? And, since there are many common misconceptions regarding SOC reports, what’s fact and what’s fiction? And if you still have questions, contact CRI’s SOC reporting team to help you get started.