Using a Soc-1 Audit Checklist to Prepare for Your Next Security Audit

An audit checklist designed for compliance audits such as SOCI-1 is an invaluable resource for service organizations preparing to undergo security assessments. Conducting a readiness assessment can save time and money due to unpreparedness.

Step one in conducting a SOC 1 assessment involves identifying your services and their effects on user entities’ financial reporting processes.

Defining the Scope of the Audit
Companies relying on third-party service providers for critical business processes like financial reporting or payroll administration often request that these service providers submit a Service Organization Controls 1 report (formerly known as Statement on Auditing Standards No. 70 and since replaced with SSAE 18). To meet customers’ expectations and be successful with SOC audits.

At the beginning of any audit process, it’s essential to define its scope. This means defining which products, data, systems and vendors will be under review as well as creating trust service criteria, type of auditing approach and time period during which controls should be tested.

Assessment is an integral step that should be conducted with assistance from an experienced CPA firm. An effective assessment can identify any risks and determine if your internal control environment provides reasonable assurances that all the specified control objectives will be fulfilled.

Performing a Readiness Assessment
An organization should conduct a readiness evaluation prior to beginning its SOC 1 evaluation process. This allows you to ascertain if it can accommodate the changes required for an audit and provides valuable preparation before the actual evaluation begins.

As part of an effective readiness evaluation, stakeholders who will be affected by the change must be interviewed and addressed as part of this assessment process. Virtual meeting tools may also prove beneficial when holding workshops or meetings with these affected groups across multiple geographic regions.

If the results of the readiness assessment reveal that one group is unprepared for change, then training or additional resources may be required for those affected by it. Taking these steps will ensure the company is ready for an SOC 1 audit without incurring costly delays, while at the same time mitigating risk for both parties involved.

Identifying Internal Controls
Step two of preparing for a SOC 1 audit involves identifying your internal controls. This step is crucial, as it will give your company insight into what type of report to request from its CPA firm.

Establishing control objectives for a SOC 1 report is also essential, and these should help manage customer risks related to financial reporting. You can do this by assessing current controls, mapping them against specific objectives, and closing any identified gaps.

SOC 1 reports are often requested by clients in order to validate the controls of third-party service providers and give them peace of mind that their financial statements are safe from audit. While such companies must conduct their own financial audits, having an SOC 1 report available makes this process go much more smoothly; additionally, it proves to your clients that you adhere to industry best practices.

Developing a Reporting Plan
Preparing for an audit requires creating a reporting plan. This involves deciding which internal controls to include in the audit and how they will be presented in reports. Furthermore, planning should include reviewing documents and continuously monitoring of company controls environment.

Service organizations need to demonstrate to their clients that they are taking appropriate steps to safeguard their data from security breaches so they can build trust with them, giving clients peace of mind that the systems used for processing financial information are safe from external attacks.

Decisions on whether or not to conduct an SOC 1 or 2 audit depend heavily on your business model and customer needs, with both options offering advantages depending on those needs. A SOC 1 SSAE 18 audit might be best for service organizations that relate directly to Internal Control over Financial Reporting while SOC 2 assessments tend to work better for technology driven companies that process and store sensitive information.