In the SOClight: Navigating the hottest topics of SOC reporting

In today’s interconnected business environment, service organizations must prioritize accountability, transparency and robust internal controls. System and Organization Controls (SOC) examinations have emerged as a critical tool in achieving these goals, fostering trust between service organizations and their clients. In a recent webinar, Baker Tilly SOC specialists explored key SOC topics, including common challenges and strategies for optimizing your organization’s SOC compliance requirements, readiness and compliance efforts.

The importance of SOC reporting

As businesses increasingly rely on outsourcing to support critical functions, demonstrating the ability to manage risks effectively is essential. SOC reports provide independent assurance that a service organization’s controls are designed (Type 1) and operate effectively (Type 2) to meet commitments such as financial reporting (SOC 1) or security and privacy standards (SOC 2). However, SOC reports are not one-size-fits-all — they must be tailored to specific service offerings and client needs.

Does your organization need a SOC exam?

Determining whether your organization needs a SOC examination often hinges on your clients’ demands and the nature of your services. Clients increasingly require assurances about how their data is managed and how financial processes are controlled, making SOC reports a competitive advantage — or even a contractual necessity.

Key indicators that your organization may need a SOC examination include:

• Handling financial transactions or reporting: If your services impact financial reporting, such as payroll processing, claims management or inventory control, a SOC 1 report is typically necessary
• Storing or processing sensitive data: Industries like healthcare, technology and finance often require SOC 2 reports to verify robust security and/or privacy measures