System and Organization Controls (SOC) Reporting
System and Organization Controls (SOC) is a suite of service offerings CPA’s may provide about system-level controls of a service organization or entity-level controls of other organizations. Internal control reports on the services provided by a service organization providing valuable information that users need to assess and address the risks associated with an outsourced service. It consists of SOC for Service Organizations (SOC 1, SOC 2 and SOC 3), SOC for Cybersecurity and SOC for supply chain vendors.
- SOC 1 reports on the controls of the service organization that are relevant to the user organization’s financial reporting. This report is for financial executives, compliance officers and financial statement auditors. It is designed to give organizations an idea of the financial reporting piece related to their outsourced service providers.
- SOC 2 reports on the effectiveness of the controls of the service organization related to operations, based on the selected trust services criteria (TSC). This report can also include other suitable criteria, such as HITRUST, the HIPAA Security Rule and others. It is intended for use by information technology executives, compliance officers, vendor management executives, regulators, other specified parties and appropriate business partners. SOC 2 is a very detailed report that provides assurance over the critical systems and sensitive data used to provide the outsourced services.
- SOC 3 reports are very similar to SOC 2 except it is more of a vague report that provides assurance over the critical systems and sensitive data used to provide the outsourced services Since this report is vague and less detailed it can be used by anyone who has the appropriate understanding of the subject matter and who would like confidence in the controls for the service organization. For anyone seeking specifics, they would turn to the SOC 2 report.
- SOC for Cybersecurity is a flexible and voluntary reporting framework to help organizations communicate about their cybersecurity risk management program and the effectiveness of controls within. CPA’s examine their program and report on the description of the entity’s cybersecurity risk management program and the effectiveness of controls within that program to achieve the entity’s cybersecurity objectives.
- SOC for Supply Chain is an internal controls report on a vendor’s manufacturing processes for customers of manufacturers and distributors to better understand the cybersecurity risk in their supply chains. The newest of the SOC reports, so the report is still being refined.
SOC reports are a key component in the vendor management process and helps you evaluate the services, control processes and risks specific to each of your providers. For help understanding which SOC report best fits your needs or with help navigating through the process, contact 2W Tech today. 2W Tech’s Cybersecurity Compliance Program was designed to support businesses with their compliance obligations.
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