I wrote about this here as well, but it’s now official: The AICPA has clarified the SAS 70 replacement reports. They are actually officially being referred to as “Service Organization Control Reports (formerly SAS 70 reports)”.
The new SOC reports provide a framework for auditors to examine controls and to help senior management understand the related risks of outsourcing to a service provider.
According to the AICPA:
“Companies had misused SAS 70 to issue reports on controls related to outsourced non-financial data rather than the correct attest standard which was in place. The SOC reports clarify which standard needs to be used and how it should be implemented to meet specific user needs.
- SOC 1 reports are primarily an auditor-to-auditor communication which addresses the controls at a service organization relevant to financial reporting. These reports are restricted use reports and therefore are not designed for promotional purposes. – (This is the functional replacement for the SAS 70 only where financial controls are concerned.)
- SOC 2 reports are in response to the rapid growth in cloud computing and data outsourcing, as well as the marketplace need for clarification on how reports on non-financial controls regarding information, such as data security, confidentiality and privacy should be structured. – (This will likely be the SAS 70 replacement for the vast majority of service organizations)
- SOC 3 reports cover the same subject matter as SOC 2, but in a general use, short form format which may be freely distributed.”
Get used to seeing this logo instead of the myriad of SAS 70 logos:
Most importantly, know what it is…and what it isn’t. Understand why your vendor chose one report over another, and determine if the report is relevant to you, and adequately addresses your concerns. The term “SAS 70” is mentioned 31 times in 8 of the 12 IT Examination Handbooks, so it is a critical element in how the FFIEC expects you to manage your vendor relationships. No word yet on how the FFIEC will address this going forward…