Why You Need SOC Audits

SOC audits assess whether IT systems are compliant with new federal laws and IT international standards.

Summary

  • The AICPA has created SOC standards to address the problem of data security.
  • Federal regulations require that businesses safeguard personal, and nonpublic data.
  • SOC 1 reports replace SAS 70.
  • SOC 2 and SOC 3 reports provide new standards to assure greater data security.

 Cyber espionage has become major problem for information technology in the United States and internationally.  Part of the reason is the system designs and operating effectiveness of the technological information systems used by financial institutions, service organizations and others that process private and nonpublic information do not provide adequate privacy and protection controls    These intrusions have become a serious financial problem for users of information technology systems.  Federal law requires that all financial institutions, service organizations and others handling private and nonpublic utilizing information technology provide evidence that they have incorporated adequate controls for the protection of the data. To provide proof of meeting the law, those processing the data must produce a management description of their system and controls that asserts the suitability and the effectiveness of the controls protecting the system. An independent CPA experienced and knowledgeable about IT systems or a CPA.CITP auditor must be engaged to attest to the suitability of the measurements and effectiveness of the controls described by the management report before the information system  can be certified to be in compliance with the Service Organization Controls (SOC) standards.  The AICPA have issued regulations and guidelines for those performing the audits and preparing reports to determine if the system is certifiable.

The Statement of Standards for Attestation Engagements, No. 16 (SSAE 16) issued April 2010 by AICPA’s Auditing Standards Board became effective on June 15, 2011.  SSAE 16, establishes a universal standard and recommended guidelines for the audit of financial institutions, service organizations and others processing confidential, private and nonpublic data. The standards and guidelines were issued in response to the dictates of the Safeguards Rule contained in the Gramm-Leach-Bliley Act that became law on November 12, 1999. They establish a universal standard for for all SOC audits. SSAE 16 is considered to contain the same requirements as contained in the International Standard on Assurance Engagements (ISAE) 3402. SSAE 16 includes new guidance for assurance audits of Internal Controls over Financial Reporting (ICFR) for Service Organizations that is also effective June 15, 2011 .

The Safeguards Rule requires all financial institutions to design, implement and maintain safeguards to protect customer information. The Safeguards Rule applies not only to financial institutions, that collect information from their own customers, but also to financial institutions such as credit reporting agencies, appraisers, and mortgage brokers that receive customer information from other financial institutions. (For details see Disclosure of Nonpublic Personal Information, codified at 15 U.S.C. §§ 6801.)

The new  uniform auditing standards are set forth in AICPA’s guide; Reports on Controls at a Service Organization Over Security, Availability, Processing Integrity, Confidentiality or Privacy, issued in 2011 and became effective June 15, 2011.  The guidelines document is known as Service Organization Controls , (SOC).  The guidelines describe three types of audits labeled  as SOC 1, SOC 2 and SOC 3.

A SOC 1 audit examines and tests information technology (IT) infrastructures according to the terms associated with ICFR that replaces SAS 70 which are part of the Statement of Standards for Attestation Engagements, SSAE 16- Reporting on Controls at a Service Organization adopted April 2011.

SOC 2 and SOC 3 audit processes are conducted in accordance with AT Section 101 and relies on the recently released AICPA audit guide titled ‘’ Reports on Controls at a Service Organization over Security, Availability, Processing Integrity, Confidentiality or Privacy’’.

These audits include tests of the information systems and controls along with other procedures necessary to enable the auditor to express an unqualified opinion that the information technology systems and controls described by the management assertion allow, in all material respects, conformity with the established standards.

To provide a professional solution for these new standards the team at Integrated Accounting Services (IAS) performs audits for service organizations and their clients during the same testing period where possible.  IAS’s integrated approach to auditing both the service organization and its clients provides increased security, integrity and privacy for all systems. Timely coordinated reports and periodic follow-ups are part of the integrated approach to qualifying service organizations and their user entities and reporting the higher level of assurance to responsible parties.

This article is provided by Integrated Accounting Services for those seeking clarification of IT system and control requirements. Please contact us if you need an assessment of your system and to determine whether you need a SOC 1 or a SOC  2 audit to assure clients of your compliance with new standards.


 

Integrated Accounting Services LLC Issues SOC Certifications

CPA.CITP’s at Integrated Accounting Services are certified by the AICPA to issue SOC certifications as to adequacy and effectiveness of IT controls.

Summary

  • Integrated Accounting Services, LLC is qualified to conduct SOC 1, SOC 2 and SOC 3 audits.
  • SOC 1 audits are limited to a service organization’s controls related to a user entity’s internal controls over financial reporting.
  • SOC 1 audits are conducted in accordance with SSAE 16.
  • SOC 2 audits examine a service organizations controls relevant to security ,availability, processing integrity, confidentiality and/or privacy.
  • SOC 2 audits are conducted in accordance with AT 101.
  • SOC 3 audits are distributed to the public and are SOC 2 audits but contain no detail as to testing and results.
  • SysTrust or SOC 3 certification can be used by service organizations for marketing purposes.

The Integrated Accounting Services, LLC team of CPA.CITP specialists examine and report according to new AICPA standards SSAE 16 and AT 101  on the controls of financial institutions, service organizations and their users processing personal, nonpublic data.  To assist auditors in the selection of the appropriate standard or guide for a particular type of investigation the AICPA has quantified and organized the audit reports and named them the Service Organization Controls (SOC) reports.  Three types of engagements are named. The source of the guidance for performing and reporting each type has been defined and given the following designations:

  1. SOC 1: This audit is performed according to SSAE No. 16, Reporting on Controls at a Service Organization (AICPA, Professional  Standards, AT section801), Service Organization: Applying SSAE No. 16  This examination is limited to data relevant to a user entities’ internal control over financial reporting.   The SOC 1 audit, based on SSAE 16, replaces SAS 70 standards for reporting on the adequacy of controls relevant to internal controls over financial reporting for financial institutions, service organizations and their users. SAS 70 reports are no longer accepted as evidence that financial institutions and service organizations have sufficient security and privacy controls
  2. SOC 2: The SOC 2 audit provides the management of companies such as financial institutions, service organizations, and user entities, with information and a CPA’s opinion about their system and controls relevant to security,availability, processing integrity, confidentiality or privacy. The engagement of an auditor is in accordance with AT 101, Attest Engagements  (AICPA Professional Standards) and the AICPA Guide, Reporting on Controls at a Service Organization Relevant to Security, Availability, Processing Integrity, Confidentiality or Privacy. The SOC 2 Type 2 report also include the CPA’s opinion about their compliance with the commitments in their statement of privacy.   A SOC 2 audit evaluates a management assertion of financial institutions and service organizations as well as their clients to determine the suitability and sufficiency of the measurements and communications of the controls described by the management assertion over a specified period of months.
  3. SOC 3: This report is summary of  a CPA or CPA.CITP’s SOC 2 opinion  about the controls at a financial institution, service organization or user entity relevant to security, availability, processing integrity, confidentiality,  or privacy that can be provided to interested parties seeking assurance of the audited entities compliance with the new AICPA standards. The audit must be in strict accordance with the guidelines of AT  101, and TSP section 100, Trust Services Principles, Criteria, and Illustrations for Security, Availability, Processing Integrity, Confidentiality, and Privacy, (AICPA, Technical Practice Aids).  These guideline address the privacy principle and provide for a CPA’s opinion about compliance  with the commitments of IF systems  in their privacy notice.

 Financial institution, service organizations and entities using IT systems can now provide proof of compliance by obtaining a SysTrust Certificate. Additional protection is now possible for financial institutions and service organization because they have the right to to require  those with whom they are exchanging information with meet new requirements for security and privacy defined by SOC 1 and SOC 2 and qualify for a SOC 3 certification to ensure their compliance with strict standards.

Integrated Accounting Service’s team leader Mike Warren, is a CPA  qualified as a CITP to perform audits on information technology systems in accordance with SOC 1 and SOC 2 and SOC 3guidelines.  A CPA.CITP is approved by the AICPA to issue a SOC 3 (SysTrust) Certificate of SOC Compliance for qualifying financial institutions, service organizations and their users.

To provide a professional solution for these new standards the team at Integrated Accounting Services (IAS) performs audits for service organizations and their clients during the same testing period where possible.  IAS’s integrated approach to auditing both the service organization and its clients provides increased security, integrity and privacy for all systems. Timely coordinated reports and periodic follow-ups are part of the integrated approach to qualifying service organizations and their user entities and reporting the higher level of assurance to responsible parties.

This article is provided by Integrated Accounting Services for those seeking clarification of IT system and control requirements. Please contact us if you need an assessment of your system and to determine whether you need a SOC 1 or a SOC  2 audit to assure clients of your compliance with new standards.

 

 

SOC Audit Standards for Service Organizations

SOC standards define new guide lines for auditors assessing IT systems for compliance.

Summary

  • New federal law requires IT systems that process private and nonpublic personal data have controls to protect data from theft.

  • SAS 70 audits are no longer are evidence of proof of compliance.

  • All business must comply that collect, process, and store private and nonpublic data.

  • A CITP is approved by AICPA to certify IT system compliance to standards.

New standards for entities processing private and nonpublic data were established in response to a federal law requiring that IT systems have adequate controls to protect private and nonpublic data. The uniform auditing standards for assessing compliance are set forth in AICPA‘s guide; Reports on Controls at a Service Organization Over Security, Availability, Processing Integrity, Confidentiality or Privacy, which was issued in 2011. SAS 70 reports are no longer issued or accepted as evidence of sufficient controls for the protection of data.  Service organizations, data centers, financial institutions and others who provide information technology (IT) infrastructure for data collection, processing, storage, and data reporting of financial transactions for clients are now required to comply with the new federal standards.  To receive an AICPA certificate from a Certified Information Technology Professional (CPA.CITP) as being in compliance with the new standards, all entities using an information technology infrastructure to process data must be audited.  A CPA.CITP audit determines the suitability of the system design and operating effectiveness of data controls according to Service Organization Controls (SOC) 2 standards. 

To provide a professional solution for these new standards the team at Integrated Accounting Services (IAS) performs audits for service organizations and their clients during the same testing period where possible.  IAS’s integrated approach to auditing both the service organization and its clients provides increased security, integrity and privacy for all systems. Timely coordinated reports and periodic follow-ups are part of the integrated approach to qualifying service organizations and their user entities and reporting the higher level of assurance to responsible parties.

This article is provided by Integrated Accounting Services for those seeking clarification of IT system and control requirements. Please contact us if you need an assessment of your system and to determine whether you need a SOC 1 or a SOC  2 audit to assure clients of your compliance with new standards.


 

 

 

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