Colorado businesses seeking to become SOC 2 compliant will no doubt benefit from a brief, yet in-depth primer on essential subject matter relating to the American Institute of Certified Public Accountants (AICPA) System and Organization Control (SOC) reporting framework. Colorado’s tech sector is growing like never before, ultimately requiring businesses to perform annual compliance audits, such as SOC 2. From Denver to Boulder, Fort Collins to Colorado Springs – and all other surrounding areas – NDNB is Colorado’s leading provider of fixed-fee audit services, so take note of the following important points regarding SOC 2 compliance.
Important Points Regarding SOC 2 Compliance for Colorado Businesses
It’s about Technology: The SOC 2 Standard, which actually utilizes the little-known AT 101 professional accounting standard, allows service organizations to undertake a SOC 2 Type 1 and/or SOC 2 Type 2 assessment for evaluating one’s internal controls. Additionally, the SOC 2 standard for reporting is generally heavily geared towards service organizations in the technology arena, those such as managed services providers, data centers, software as a service (SaaS), data analytics, and many others.
While the historical SAS 70 audit was a “one size fits all approach” the new AICPA Service Organization Control (SOC) framework provides vastly different reporting options (i.e., SSAE 18 SOC 1, SOC 2, and SOC 3), and this is without question a breath of fresh air, one that was much needed. With today’s complex business models, you know have three (3) different reporting options, for which SOC 2 is gaining much recognition.
Trust Service Criteria (TSC): Please note that recent updates and enhancements regarding the SOC 2 standard includes revisions to the Trust Services Criteria (TSC). More specifically, for reporting periods on or after December 15, 2014, the new TSC framework is to be utilized, which consists of the following 7 general areas:
1) Organization and management
3) Risk management and implementation of controls
4) Monitoring of controls
5) Logical and physical access controls
6) System operations, and
7) Change management
However, the SOC 2 standard still incorporates the following five (5) long-standing Trust Services Criteria (TSC):
• Processing integrity
Start with a SOC 2 Scoping & Readiness Assessment
One of the biggest challenges in undertaking SOC 2 compliance is understanding audit scope, identifying gaps and deficiencies, remediating essential control weaknesses, and more. How do you get a grasp on such issues, confidently moving forward with your SOC 2 audit? Be performing a much-needed SOC 2 scoping & readiness assessment. No, it’s not other fee added to the audit – not at all – it’s a highly useful exercise for ensuring long-term audit efficiency and cost-savings. In fact, we perform SOC 2 scoping & readiness assessments on every new client we engage in, even if they’ve had a prior SOC 2 report from another firm.
Remediation is Critical
SOC 2 Roadmap to Compliance
Knowing the important elements of SOC 2 compliance – specifically, the steps needed for getting your audit done on time and within budget – is critical. Take note of the following SOC 2 roadmap to compliance, courtesy of NDNB, Colorado’s leading provider of SOC 1, SOC 2, and SOC 3 audits:
1. Begin with a SOC 2 Scoping & Readiness Assessment: As a service organization, you need to identity scope, personnel, any gaps and deficiencies within one’s control environment, and more.
2. Remediation of Documentation: Information security policies and procedures are critical for SOC 2 compliance, so expect to spent time enhancing your InfoSec documentation.
3. Security and Technical Remediation: You may also have to re-configure I.T. systems for ensuring they meet minimum security baselines for audit testing.
4. Operational Remediation: Performing a risk assessment, undertaking security awareness training – and more – are just a few examples of remediation commonly needed for various operational areas.
5. Performing the Audit: Time to bring the auditors in for testing – and only after you’ve successfully remediated all gaps and deficiencies within your control environment. Make sure to communicate with your auditor on issues such as onsite visits, testing expectations, and much more. Again, communication is key.
6. Assessing, Reviewing and Finalizing Results: Once the actual SOC 2 audit is complete, it’s time to review the results of testing, review a draft report from the auditors, and then move forward with your final SOC 2 audit report. Some things to remember: It is perfectly acceptable - the norm, to be honest – to have a few testing exceptions. After all, no organization ever has a picture-perfect control environment, and we mean nobody. Also, for exceptions that are exhibited in the report, service organizations are allowed to give their full comments and explanations on what’s being done for remediating such issues.
7. Engaging in Continuous Monitoring: Once you’ve successfully completed your annual SOC 2 report, remember that assessing, monitoring, and enhancing one’s internal controls – a concept known as “Continuous Monitoring” is absolutely critical. In fact, the continuous monitoring aspect of regulatory compliance is often one of the more challenging and time-consuming tasks. You need to either assign an internal auditor such tasks, or outsources these functions to a reputable CPA firm, such as NDNB. We’ve been helping Colorado businesses from Denver to Boulder, Fort Collins to Colorado Springs – and all other surrounding areas – with continuous monitoring initiatives, so contact us today to learn more.
NDNB. Colorado’s Leading Provider of SOC 2 Services
When it comes to offering fixed-fess, high-quality services, and professionalism second-to-none, NDNB stands above other providers. We’ve been helping Colorado businesses in Denver, Fort Collins, Boulder – and beyond – for years, starting with the original SAS 70 auditing standard in 1992. And while times have definitely changed since then, the same concept holds true for our firm – Trust. Integrity. Audit Knowledge.