Companies rely on various service providers to run their businesses and for continuous functionality of the operations. Cloud computing, data centers, and software as a service are there to justify the truth value of this statement. Such services that are sourced even though will bring convenience, but they have risks. Looking at the internal controls and their implementation in various service providers, you will be able to note their difference. With the system and organization controls, it will be easy to give the stakeholder’s risks mitigation assurance. Hence, here is the definition and importance of the SOC report.
The report will be issued by a third party after examination on various data control attributes. A CPA is the one that will issue the report which will include the potential risks for customers and partners when they are working with the organization. If you are running a company, transparency is key to build trust. For this reason, take time and necessary resources to know the success and failures in the business. When a company is well-reputed, for sure it is considered to be very stable in terms of the services being provided.
Getting a better understanding of the various SOC reports is key. The types come along due to the diversity of the controls that exist between various organizations. Business process and IT control are affected by SOC 1. This is a report which might have a greater impact on the entity financial statement. SOC 1 is suitable for services like payroll processing, medical claims processing, and loan servicing companies. On the other hand, SOC 2 is directed towards the non-financial controls in an organization.
When you want to know the organization performance in the future, this is the best tool. There are many programs in the business that can be overseen. SOC 2 is divided in 5: security, availability, processing integrity, confidentiality and finally the privacy sector. Looking at the classes, they can be split further to get the types. Data centers and network monitoring services are the ones that will benefit here.
It is key for you to know how you will understand the auditor opinion. In the categories, you will find the unqualified, qualified, adverse, and disclaimer opinions about the report generated by the auditor. These reports can also be subjected to further examination for a logical conclusion to be reached. An organization with an unqualified opinion is the best and suitable for both the user entity and the service organization. Therefore, the SOC is a good tool to get to understand the transparency and trust between a company and the stakeholder entities. Therefore, this is the best tool for an organization which struggles to give assurance around risk management and the controls.