How do I know if I need a SOC audit?

There are two main reasons to have a SOC audit performed:

 

 

 YOUR CUSTOMERS ARE ASKING

The first is easier to explain; because a SOC audit is telling your customers that you have controls in place to make sure their information is properly processed, is kept secure, is done accurately, etc., this provides value to them. In a SOC 1, this may also be particularly valuable to you customer’s financial auditors. If a customer is outsourcing a service to you, and that service has a significant and direct effect on your customers’ financial statements, a good auditor is going to want to know, what you do, how you do it, and the controls around your process of doing it.

 

YOU FEEL IT’S NEEDED

The second reason is because it makes sense to have one. While most people hear the word audit or auditor and cringe, some people actually place value on a third party coming in, independently, and reviewing their operations and systems and providing feedback and pointing out weaknesses. This has the potential to help you improve your processes, streamline your processes and, in a best case scenario, save money.

What are the benefits of obtaining a SOC audit?

Prevention

As we noted above, the biggest value of a SOC audit is getting an independent, third party review of your processes and controls. This can point out weaknesses or gaps which could save you big embarrassment down the road by correcting an issue before a customer of yours has a bad experience.

Efficiency

A second value is less time spent dealing with your customers’ auditors. Especially in a SOC 1 audit, your customers’ auditors can typically fully rely on this report to get everything they need. If you don’t have a SOC 1 audit, expect them to ask a lot of questions, or even ask to come onsite and review your operations, processes, and controls. (This can be a big hassle to you, your employees, and could affect current customers by delaying projects or increasing error rates.)

Differentiation

By having a SOC audit performed, you can set yourself apart from the competition. With today’s aggressive business environment, any competitive edge you can obtain can be the make it or break it deciding factor when it comes to picking a service provider.

Who gets SOC audits?

A SOC audit can be appropriate for a wide range of service providers, but there a few things to think about first. Are you processing or handling financial information? If so, a SOC 1 may be appropriate. Are customers giving you data THEY consider to be sensitive? If so, a SOC 2 might be appropriate. It’s important to note that even though you don’t see the data as sensitive, doesn’t mean your customers don’t. Maybe the data contains industry secrets, or process-specific items which may be just as sensitive to them as employee names and social security numbers. Remember, the customer is king!

Industries commonly needing a SOC 1, SOC 2 or SOC 3 report:

  • Payroll
  • Third party administrators
    • Retirement plans
    • Medical benefits
    • Pharmacy benefits
  • Bank trust departments
  • Data centers
  • Real estate title companies
  • Advertising companies
  • Insurance companies
  • Loan servicing
  • Hospice
  • Software as a Service(SAAS)
  • Secure printing
  • Gambling
  • Locked box services
  • And many more!