Beginning June 15, 2011, three new Service Organization Controls (SOC) report options will replace SAS 70 reports. With the effective date just around the corner, the following are action items for service organizations to consider when implementing the new standards:
- Determine effective date and report period for your organization.
- Communicate with your users and re-evaluate the user needs and the user auditor needs. Discuss reporting guidance under SSAE 16 with your auditor and determine whether the report’s focus is still on internal controls over financial reporting.
- Revise the nature and content of your report as necessary. Determine which reporting option makes sense for you and your customers (SOC 1, SOC 2 or SOC 3).
- Review the scope and impact that subservice organizations will have on the report (carve-out or inclusive) to determine if subservice organization assertions will be required.
- Review existing contracts and any new customer contractual agreements for any potential impact on the report and determine if revisions are necessary for transition to new standards.
- Review the system description and existing monitoring and/or testing processes (services, scope, third parties, risks, control objectives, control activities, testing strategy).
- Review and update the narrative (Section II) to include other aspects of the service organization’s control environment, risk assessment, information and communication systems, control activities and monitoring that are relevant to the services provided.
- Identify risks to control objective achievement.
- Educate management on the additional disclosure responsibilities related to management’s assertions.
- Be proactive: Communicate with everyone involved in the engagement including process owners, auditors and users.
If you have any questions about SOC 1, SOC 2, SOC 3 or SSAE 16, please contact the Internal Audit and Risk Advisory Services Team.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.