SOC Reports
Lesson:
Service Organization Control (SOC) reports are critical audit documents that provide assurance about a service organization’s internal controls. Issued by independent Certified Public Accountant (CPA) firms, SOC reports help user entities (clients) evaluate the effectiveness of a service provider’s controls—whether related to financial reporting, data security, or privacy.
There are three flavors of SOC reports:
- SOC 1 - Covers financial controls
- SOC 2 - Covers cybersecurity and privacy in substantial depth
- SOC 3 - Covers cybersecurity and privacy as a brief overview
Reports can also be broken down into two different types:
- Type 1 - Examines the design of controls at a point in time
- Type 2 - Examines the design and effectiveness of controls over a period of time
You're an auditor, trying to figure out which type of SOC report is appropriate.
You've been briefed with the following facts:
- The CEO wants to know if there were any control failures or deviations from the designed procedures during the period under review.
What class(es) of SOC reports are relevant?
Answer:
- Type 2 report
Explanation:
-
A SOC Type 2 report evaluates whether a service organization’s controls are suitably designed and operating effectively over a specified period of time.