When selecting a firm to conduct a System and Organization Controls (SOC) report, it is crucial to ensure that the firm meets several key criteria. SOC reports are essential for providing assurance about the controls at a service organization, and the credibility of the report depends significantly on the independent auditor conducting the assessment. Here are the most important factors to consider:

1. Ensure the Firm is a Registered CPA Firm

The first and foremost criterion is that the firm should be a registered Certified Public Accounting (CPA) firm. This registration indicates that the firm adheres to the professional standards and regulations set forth by the American Institute of Certified Public Accountants (AICPA). Registered CPA firms are subject to rigorous oversight and must comply with ethical guidelines, ensuring that their work is reliable and trustworthy.

2. Verify the Individuals Assigned to the Engagement are Licensed

In addition to being a registered CPA firm, it is essential to confirm that the firm employs licensed CPAs. Licensed CPAs have undergone extensive education, passed the CPA examination, and meet ongoing continuing professional education requirements, ensuring they possess the necessary expertise and knowledge. Their licensure guarantees that the individuals performing the SOC examination are qualified professionals who adhere to the highest standards of the profession. Additionally, certifications such as Certified Information Systems Auditor (CISA) or CISSP – Certified Information Systems Security Professional indicate a high level of expertise in these professional standards, especially SOC 2 Examinations.

3. Significant Experience in Performing SOC Examinations

When selecting a SOC audit firm, it is important to ensure they possess relevant experience. Firms should be well versed with both SOC 1 and SOC 2 Examinations. Firms must possess thorough technical knowledge in auditing both Business Processes and IT General Controls to perform these engagements and also possess industry experience relevant to your sector. If your organization is also considering an ISO certification, determine if the SOC audit firm is an accredited ISO certification body. Additionally, consider firms with experience in other compliance areas such as PCI DSS, HITRUST, and HIPAA. This broader expertise can be highly beneficial in providing not only an effective audit but also driving efficiencies as one combined audit. Firms with a proven track record in SOC reporting are more likely to understand the specific requirements and nuances of these engagements. Look for firms that have a portfolio of SOC reports for organizations similar to yours, as their familiarity with your industry can enhance the efficiency and effectiveness of the assessment.

4. Confirm Registration with the PCAOB

The Public Company Accounting Oversight Board (PCAOB) is a regulatory body that oversees the audits of public companies (i.e., SEC filers) to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports. While many non-public organizations need to provide a SOC report to their customers, if those customers are public SEC-filers those customers may confirm registration of the SOC report auditor with the PCAOB as one element of their due diligence on the credibility the SOC report auditor. (are not necessarily for public companies), a firm registered with the PCAOB demonstrates a higher level of commitment to audit quality and regulatory compliance. PCAOB registration ensures that the firm undergoes regular inspections and adheres to stringent auditing standards, enhancing the credibility of their SOC reports.

5. Consider Peer Review Participation

While not a mandatory requirement, participation in a peer review program is a significant indicator of a firm’s commitment to quality. Peer review involves an independent evaluation of a firm’s accounting and auditing practices by other professionals in the field. This process helps ensure that the firm maintains high standards of quality and competence. Firms that subject themselves to peer review demonstrate transparency and a dedication to continuous improvement, which can be a strong indicator of their reliability and repute. Ask the prospective firm you are evaluating whether they are being subjected to periodic Peer Reviews and ask to see their most recent Peer Review report from the independent evaluator.

6. Additional Considerations

Client References and Testimonials

Seeking references and testimonials from the firm’s previous clients can provide valuable insights into their performance and client satisfaction. Speaking with past clients can help you gauge the firm’s professionalism, responsiveness, and the quality of their work. Positive feedback from other organizations can reinforce your confidence in the firm’s capabilities.

Technological Capabilities

In today’s digital age, technological capabilities are an important consideration. Ensure that the firm utilizes advanced audit tools and technologies that can enhance the efficiency and thoroughness of the SOC examination. Modern auditing software, including use of the auditee’s Security Compliance Software, can streamline data collection, analysis, and reporting, providing more accurate and timely results.

Fee Structure and Transparency

Finally, consider the firm’s fee structure and ensure it aligns with your budget while providing transparency in their pricing. A reputable firm should offer a clear and detailed breakdown of their fees, avoiding hidden costs. While cost is an important factor, it should not be the sole determinant; the quality and reliability of the SOC report are paramount.

We are here to help!

Selecting a firm for a SOC report is a crucial decision that impacts the credibility and reliability of the report. Ensuring the firm is a registered CPA firm, verifying the presence of licensed CPAs, checking for PCAOB registration, and considering the firm’s peer review status are essential steps in this process. By carefully evaluating these factors, you can select a reputable and qualified firm to conduct your SOC examination, providing assurance to your clients and stakeholders regarding the integrity and security of your systems and processes. Additionally, considering their experience, client feedback, technological capabilities, and fee structure will further ensure you make a well-informed decision.  Please do not hesitate to reach out to us at www.aarc-360.com.

Authored By
Alexis Smith (Client Relationship Manager, AARC-360)www.aarc-360.com