SOC 1 Audits: How Important Are They?

The rise in SaaS adoption among all organizations has been rapid. According to a recent survey, the global public cloud services industry grew an estimated 18 percent in 2017 to $247 billion, versus $209 in 2016—an indication that more organizations are using some form of cloud-based software.

This is important because these SaaS companies are providing a wide variety of outsourced services to organizations in a variety of industries. SaaS providers that process sensitive data like financial transactions become an extension of the user entity’s IT control structure—and by extension should be subject to the same security protocols and compliance regulations.

This is where a Systems and Organization Controls (SOC) report becomes a vital tool and important window into the operations of third-party vendors and whether or not they have the proper security controls in place concerning data storage and confidentiality.

A SOC 1 audit report focuses on the general business processes and effectiveness of IT computer controls that a service provider has in place. The audit also confirms that the controls have been in place as of a specified date.

A SOC 1 audit is typically required when any third-party vendor is used to process financial information—payroll, for example—for an end user (your organization). Usually, the main customer

for a SOC 1 report will be your company’s chief financial officer or a company auditor.

This is a restricted use report, meaning it is available only to the following individuals or departments:

• Service organization management (management of the organization that is the subject of the SOC 1 audit report)
• The service organization’s clients
• User entities’ financial auditors

In some cases, it is a good idea to have a readiness assessment performed prior to having the SOC 1 audit performed. And even if your organization is not required to have a SOC 1 audit, there may be some benefits to having one performed.

Trust as a Marketing Tool

Trust is more than just a feeling when you are working with a customer’s private data and financial information. With a SOC 1 audit, your claim that you have the proper security processes and controls in place to protect your client’s data is backed by the certification auditor.

The audit can also be a valuable marketing tool for future clients when they request proof that the systems and controls you have in place are locked down and consistently secure.

Saving Time and Money

Generally speaking, SOC 1 audits are not inexpensive. However, imagine multiplying these costs when dealing with several client requests for audits simultaneously. Having a current SOC 1 report available for client review will save a tremendous amount of time and money any time a potential client requests to see a recent audit report.

Read Further: 6 Reasons Your Organization Needs an IT Compliance Audit

Identifying Inefficiencies

There are all too many organizations that think the systems and controls they have in place are adequate and don’t need fixing, but sometimes the systems are woefully inadequate to protect against today’s ever-mutating cybersecurity threats.

Investing the money to have a third-party auditor identify inefficiencies in your IT systems and controls will undoubtedly make your organization a more well-oiled machine when it comes to security. The audit will also be a long-term money saver and will encourage confidence in your client base that your security protocols are up to date and efficient.

The increased use and acceptance of cloud storage and productivity platforms like Dropbox and OneDrive, for example, could allow users to upload and store malware or other security threats to the network environment. A SOC 1 audit could identify whether or not adequate controls are in place to stop these threats before they can do damage.

Greater Risk Management

A 2017 report by security consultancy Symantec revealed major increases in cyberattacks using malicious emails, and that living-off-the-land exploits and ransomware are increasing exponentially. In addition, the report indicated that the average U.S. organization uses a whopping 928 cloud-based apps―a significant security risk for organizations that don’t have adequate IT security controls in place.

A SOC 1 report gives auditors a window into your business’s security processes with detail that will more than pay for itself long after the audit is complete. The benefits will outweigh the costs on the back end, and your customers will have a greater incentive to invest in your company as a client and partner based on your proactive approach toward greater IT security and control in your day-to-day operations.