Organizations currently have a variety of third-party reporting options, raising key questions about the most effective means to convey the control environment in place to users. The American Institute of CPAs has designed multiple system and organization control (SOC) reports to communicate those controls, but organizations must understand which report can help users best assess the risks of outsourcing providers.
For example, SOC 1 reports focus on internal controls over financial reporting, with Type 1 reports assessing the design and implementation of controls as of a point in time and Type 2 reports assessing the design and implementation as well as the operating effectiveness of controls over a period of time. However, a SOC 2 or SOC 3 report may be more appropriate for users who are more interested in security, availability, processing integrity or privacy.
The AICPA developed several SOC reports to reflect a company’s control environment, but organizations must know how to make the best choice.
In addition, as cybersecurity risks expand and evolve, the AICPA has developed a SOC cybersecurity reporting framework to help users gain a stronger understanding of an organization’s cybersecurity risk management approach.
Read our white paper to learn more about the components of the service organization system, as well as the objectives and differences between each SOC reporting option. In addition, we provide additional detail into SOC 2 and 3 options, with insight into the specific trust service categories (availability, confidentiality, processing integrity and privacy) that companies can provide detail into beyond security, which is a required category.
While SOC reporting may seem like a complex initiative for service organizations, understanding the differences between the reports and preparing for an attestation upfront can greatly streamline the process.