About SOC 1

The System and Organization (SOC) 1 report is an examination of a service provider’s controls relevant to their client’s internal control over financial reporting (ICOFR). Formerly known as SSAE 16 and SAS 70, this report now follows the SSAE 18 attestation standard and is most applicable when the service provider performs financial transaction processing or supports a transaction processing system.

Purpose and Use

A SOC 1 report is used by organizations that outsource a specific service or system that likely impact their internal controls over financial reporting. Control objectives are not pre-defined in a SOC 1 report but usually consist of both general information technology controls (i.e., logical access, change management, and operations) and business process controls (i.e., completeness and accuracy of transaction processing).

SSAE 18 Audit Standard

Effective May 1, 2017, SSAE 18 attestation standard applies to SOC 1 examinations. Specifically, AT-C section 320 within the new standard establishes the requirements that supersede SSAE 16. This update is designed to simplify and unify international standards. The changes include a stronger focus on risk assessment, vendor management, and monitoring subservice organizations.

Who Needs a SOC 1 Report?

Organizations that should consider a SOC 1 report include Cloud ERP service providers, financial services, payroll processing, healthcare claims processing, and data center colocation. If your organization plays any role in client financials, then a SOC 1 report may be right for you.

Benefits of a SOC 1 Report

A SOC 1 report demonstrates the effectiveness of your processes and procedures to your clients. Not only will this differentiate your organization from competitors, but additional benefits include:

  • Increased level of trust from your clients, resulting in client retention and acquisition
  • Less need for frequent audits, resulting in decreased cost for your organization
  • Improved risk management and control
  • Satisfaction of audit requirements

Types of SOC 1 Reports

Type 1 Report

The SOC 1 Type 1 Report (referred to as a point-in-time report), includes an opinion over the suitability of the design of controls at the service organization at a specific point in time. An initial type 1 report often serves as the starting point for subsequent type 2 reviews.

Type 2 Report

The SOC 1 Type 2 Report (referred to a period of time report) includes an opinion over the suitability of the design of controls at the service organization and the operating effectiveness of the controls throughout a specified period of time. This type of report is often issued annually.

Why BARR for SOC Reporting

  • BARR’s SOC clients report services lead to a 70% reduction in customer compliance questionnaires
  • SOC clients spend 75% less time spent on internal resources needed to pass audit
  • 100% referral and satisfaction rate from clients
  • Proven practical, adaptive approach that simplifies SOC reporting processes
  • Team members serve on task forces responsible for developing SOC reporting standards
  • Competitive, fixed rates to accommodate growing enterprises

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