The Effectiveness of SOC Audits: Can Controls Change Within the Period?

SOC
Introduction: –

The objective of this blog post is to assess the effectiveness of SOC audit controls and whether they can be changed in the period. The post will begin with a definition of SOC audit controls before discussing their objectives and how they are typically implemented. The main body of the text will then look at research that has been conducted on the effectiveness of SOC audit controls. This will be followed by a conclusion that will provide an overview of the findings and suggest possible ways in which SOC audit controls could be improved.

The Purpose of a SOC Audit: –

Service organizations used to follow the Statement on Auditing Standards (SAS) Number 70. This was a broadly accepted auditing standard developed by the American Institute of Certified Public Accountants (AICPA). However, it was recognized that a more comprehensive system of evaluation was needed, one that went beyond simply auditing financial statements.

The AICPA released SSAE 16, the Statement on Standards for Attestation Engagements Number 16, in April 2010. It became effective in May 2011 and replaced the Service Auditor’s Examination conducted under SAS 70 with System and Organization Controls reports.

Older SAS 70 and SSAE 16 share many similarities, but SSAE 16 also boasts a number of upgrades from the previous standard. These upgrades include an attestation issued by the company that confirms the presence and full functionality of the described controls.

Public companies are also subject to the Sarbanes–Oxley Act of 2002, which requires them to maintain records and disclose financial information. SOC reporting, as mandated by SSAE 16, also helps companies comply with Sarbanes–Oxley Act’s section 404, which requires them to demonstrate successful internal controls regarding financial auditing and reporting.

In May 2017, AICPA superseded the SSAE 16 by the SSAE 18. SSAE 18 requires a series of improvements to increase the quality and effectiveness of SOC reports. This superseded version also contained the principles, regulations, and standards for the reporting of SOC.

How effective are system and organizations control audit?

System and organization controls (SOC) audits are an important tool to protect your company from financial and reputational harm. An effective SOC audit will help you identify and mitigate risks related to your company’s systems and processes.

The goal of a SOC audit is to assess the design and operating effectiveness of your company’s system and organization controls. The audit will identify any deficiencies in your controls, and provide recommendations for improvement.

A SOC audit should be conducted on a regular basis, preferably every year. The audit will help you ensure that your company’s systems and controls are effective.

Can security and organization control audit Be Changed In The Period?

As a SOC auditor, we are frequently asked whether SOC exam controls can change during the period. The answer is that they absolutely can!

Business operations don’t revolve around the SOC report cycle, and changes are bound to be made throughout the year. While these control changes are inevitable, your auditor will need to audit the prior control and the new control. Therefore, it’s important to plan ahead and communicate with your auditor about the impact these changes will have on the SOC audit.

Assess the impact and make audit plan modifications

Start by asking yourself the following questions to assess the impact of a control change on the audit and SOC criteria coverage:

  • Does the control change alter the intent of the original control?

For this first question, consider whether the change is just the intent of the control itself or more a change in how the control is performed. For example, if you were manually tracking system access requests in emails and implemented an automated ticketing system mid-period, ask yourself whether this control change alters the intent of the original control.

  • Are there other controls and processes that are impacted by the change?

When implementing a change, it is important to consider how it might impact other systems or processes. For example, if you are introducing a new system, it is important to consider whether its authentication requirements are compatible with the current configuration. Other tangential controls may need to be modified as a result of the change, which could impact the risk associated with the control.

  • Does the change limit your auditor’s ability to obtain evidence from before the change?

Can your auditor collect evidence from before the change? It might be simpler to collect audit evidence before disabling the old system/process. For example, if you’re putting in a new accounting system, your auditor will need to get screenshots and configurations of password parameters, lockout settings, user access lists and administrator lists from before disabling the old system.

It’s important to keep track of changes to controls and to inform your auditor so that they can accurately perform a SOC audit. For example, if a daily checklist was implemented on July 12, you should tell your auditor that they should only expect to see checklists from that date forward.

What Factors Will Influence the Decision?

Auditors tailor their approach to each client and engagement, depending on several factors. These include the client’s industry, the scope of work, how effective the client’s internal controls are, and how cooperative the client is.

The most effective and efficient audit approach to use depends on the circumstances. The following general audit approaches are most commonly used:

  • When the Financial Reporting System is Weak

The focus is on identifying and confirming material transactions. There is little to no effort made to assess the strength of the client’s system of controls. This strategy necessitates a significant amount of work to test a sufficient number of transactions.

  • When the Internal Control System is Strong

The focus is on identifying and confirming material transactions. There is little to no effort made to assess the strength of the client’s system of controls. This strategy necessitates a significant amount of work to test a sufficient number of transactions.

  • When the Focus is on Client Risk

The auditor assesses risk in a client’s systems and designs an audit approach that focuses on high-risk areas. Low-risk areas receive less attention.

Conclusion

SOC audit controls are an important part of organizations’ cyber security posture. However, their effectiveness has been questioned in recent research. The objective of this blog post is to assess the effectiveness of SOC audit controls and whether they can be changed in the period. The post will begin with a definition of SOC audit controls before discussing their objectives and how they are typically implemented. The main body of the text will then look at research that has been conducted.