Audit

What is SOC audit?

SOC Audit Overview A SOC audit is a way to build trust in the services you provide as a third-party entity. Specifically, it tells potential customers that your company follows best practices for securing and managing the information entrusted to your care. Of course, the ideal way to build trust is to have a fruitful provider-client relationship over many years, but that’s not something you can lay down as table stakes. A report from a SOC audit can be an excellent reference from a known key player in the industry and can help establish trust more quickly with prospects. However, passing a SOC audit is neither quick nor easy. It takes a lot of work to achieve compliance — if it didn’t, a positive SOC report wouldn’t be worth the paper it was printed on. What is a SOC Report and Who Needs One? In a nutshell, a SOC report is issued after a third-party auditor conducts a thorough examination of an organization to verify that they have an effective system of controls related to security, availability, processing integrity, confidentiality, and/or privacy. The report, which is issued by a Certified Public Accountant (CPA), provides reasonable assurance over the design and operating effectiveness of controls and clearly outlines any potential risks for customers or partners that are considering working with the organization. Auditor’s Opinion Once the testing process is complete, you will receive the report containing the auditor’s opinion, although the language of these reports can be tricky to understand. It is important to carefully review the report and understand the different types of opinions, paying close attention to the service organization’s controls that have the capacity to impact your business’s security. Unqualified Opinion – Controls were designed effectively (Type I) or designed and operating effectively (Type II) to address the stated control objectives (SOC 1) or TSC (SOC 2). Qualified Opinion – The auditor cannot deliver an unqualified opinion, but the qualified findings are not severe enough to warrant an adverse opinion. One or more control objectives (SOC 1) or TSC (SOC 2) were not effectively addressed. Adverse Opinion – Testing exceptions are material and pervasive and controls are generally not designed and/or operating effectively. Disclaimer Opinion – The auditor cannot deliver an official opinion because they were not able to obtain the necessary evidence required to develop an opinion. Who Performs a SOC Audit? Audits can only be conducted by a qualified CPA or an agency accredited by the American Institute of Certified Public Accountants (AICPA). Non-accountants might be enlisted to help, but everyone is held to the same set of rigorous standards. Choosing an auditor is one of the most crucial steps in the SOC audit process, yet companies often overlook it. An auditor should have clear experience conducting SOC audits and should be able to point to examples of reports they’ve generated in the past. Frequently Asked Questions: What is SOC audit vs SOX audit? A SOC audit is how organizations can get a SOC 1, SOC 2, or SOC 3 report. It involves an external auditor assessing an organization’s internal controls over financial reporting (in the case of SOC 1) or controls that are relevant to security, availability, processing integrity, confidentiality, and/or privacy (in the case of SOC 2 and SOC 3). SOC audits are voluntary for organizations, although customers may request an organization complete one. A SOX audit is a requirement for organizations to comply with the Sarbanes-Oxley Act of 2022. Management must conduct a yearly audit of their financial statements and controls over financial reporting, and an external auditor must report if they agree with management’s assessment of those controls. A SOX audit is mandatory for publicly traded companies in the US. What are the different types of SOC audits? There are three types of SOC audits: SOC 1: Evaluates an organization’s internal controls over financial reporting. SOC 2: Examines the organization’s controls relevant to security, availability, processing integrity, confidentiality, and privacy. SOC 3: A public-facing report similar to SOC 2 but with less detail, often shared freely on websites or distributed to customers and prospects. Who needs a SOC audit? Organizations that handle sensitive customer data or provide services that impact financial operations typically need a SOC audit. The type depends on the user’s needs: SOC 1: For organizations impacting financial operations. SOC 2: For organizations handling sensitive data related to security and privacy. SOC 3: For organizations that wish to freely share audit results with the public. Is SOC 2 audit mandatory? No, SOC 2 audits are not mandatory, but they are increasingly requested by customers who want to ensure that their data is being handled securely and privately. What happens if you fail a SOC 2 audit? While there is no “fail” in a SOC 2 audit, receiving a qualified, adverse, or disclaimer opinion means the organization needs to address the identified issues before reattempting the audit. CRSP Connect Role SOC reporting offers a comprehensive, repeatable reporting process to help establish trust and transparency between service organizations and stakeholders of user entities. By proactively identifying and addressing risk, businesses can ensure that contractual obligations are being addressed while reducing compliance costs upfront. Our experienced team at CRSP Connect can complete SOC testing independently. © 2025 CRSP Connect – SOC Audit Services