Insight into SOC Reports for Service Organizations
Why do data centers need to adopt the SOC Report Framework?
In our earlier blog, we explained in detail the different SOC reports that service organizations file for outsourced services. In this blog, we will talk about the need to do so.
The American Institute of Certified Public Accountants (AICPA) Service Organization Control (SOC) reporting framework for service organizations consists of SOC 1, SOC 2, and SOC 3 reports. While SOC 1 reporting is geared towards controls relevant to financial reporting, SOC 2 and SOC 3 reports cater to internal controls outside that of financial reporting.
Organizations opting for these assessments have a qualified auditor draw up a report on the service organization based on the parameters specified in the reporting requirements. SOC 2 and SOC 3 reports are based on the five Trust Services Principles (TSP) of: Security, Availability, Processing Integrity, Confidentiality and Privacy. The actual report itself is broad-based and flexible, with the TSPs providing only a framework. The auditors undertake a mock examination and draw up a readiness assessment based on the examination.
SOC reports are not mandatory, and they have more to do with internal controls rather than statutory compliance. However, data centers would do well to undertake these reports, for the following reasons.
- It sheds light on the efficiency of the data center, such as details of uptime, accuracy of processing, and comparison of stated promises and actual availability or performance.
- It gives an insight into the security system in place in the data center, especially the extent to which the systems are protected against unauthorized access and other threats, the measures in place to protect confidential or personal information and more.
- It confirms whether the data center collects and use personal information in conformation with the declared in-house privacy principles and statutory requirements.
Using SOC 1, 2, and 3 reports, the data center can clearly articulate the specific services they offer and internal control processes they adopt to their clients. Outsourcing data to a data center does not wish away liability connected with the data, especially statutory compliance and data protection requirements. By outsourcing to data centers that subject themselves to SOC attestation reports, clients can evaluate the extent to which the data center meets their requirements and fulfill liabilities on their behalf.
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