SOC readiness FAQ: Examining the basics and complexities

SOC readiness is a consulting project that evaluates an organization’s preparedness to undergo a SOC 1® or SOC 2® examination. The objective of SOC readiness is to understand the organization’s operating environment and develop a roadmap for the future SOC examination. The level of readiness will establish the organization’s posture and determine whether the existing controls are suitably designed and operating effectively to meet the applicable objectives (SOC 1) or trust services criteria (SOC 2) of the organization. The readiness will define the controls that should be in the organization’s SOC report and outline any controls that require remediation before the examination period begins.

You can expect Baker Tilly to provide you with the following final deliverables:

• An inventory of the SOC reports in scope systems, tools and technologies
• A control matrix that outlines details of the in-scope control activities, including the frequency of required actions, control owners and anticipated control evidence
• The comprehensive list of controls identified in the control matrix:
• For SOC 1 readiness: the controls are mapped to control objectives that we assist your organization in developing
• For SOC 2 readiness: the controls are mapped to the applicable in scope trust service criteria (TSC)
• The gaps that were identified through the readiness assessment, as well as recommendations for remediation activities
• An outline of the system description for the future SOC examination report

SOC readiness assessments provide significant value by helping your organization identify and finalize the scope of your future assessment. Customer contracts are reviewed to validate that the scope addresses required risks and applicable service commitments or system requirements. A readiness assessment can help organizations address compliance gaps, mitigate risks, improve processes and prepare for future SOC examinations. By undergoing a thorough assessment, you’ll ensure that any control gaps or remediation needs are identified and addressed, so you can be ready for your SOC examination.

To maximize your success in undergoing these assessments, you can implement leading practices, such as:

• Perform a self-assessment prior to engaging a CPA firm to conduct a full readiness assessment
• Ensure you begin the readiness assessment early enough to provide ample remediation time before your examination period begins
• Dedicate resources to the effort
• Take a crawl/walk/run approach to SOC examinations: After the readiness assessment, start with a Type 1 examination, before moving into a Type 2 examination.

While SOC readiness assessments are essential for preparing organizations for SOC examinations and compliance, they can also be susceptible to various pitfalls. Here are some common pitfalls associated with SOC readiness assessments:

• Incomplete definition of scope: Failure to accurately define the scope of the readiness assessment can lead to incomplete assessments. Organizations may miss key systems, processes, or controls that are within the scope of the SOC examination, resulting in gaps in compliance readiness.
• Lack of policies and procedures: Policies and procedures provide a structured framework for operations, governance, and continuous improvement, contributing to the overall effectiveness and success of the organization. Without formally documented policies and procedures, organizations are at risk of deficiencies due to lack of understanding and/or accountability.
• Lack of evidence: The inability to produce the evidence supporting that controls are in place leads to gaps, and sometimes needing to implement alternative controls for which evidence can be produced.
• Completeness and accuracy of populations: While interviewing personnel and reviewing documentation is essential as part of the assessment, the organization needs to ensure that populations can be validated as complete and accurate.
• Immature vendor management: This can impact financial performance, operational resilience, and regulatory compliance. Establishing robust vendor management practices is essential for mitigating risks, ensuring compliance, and driving a reliable control environment.
• Developer access to production: Introduces significant risks to security, compliance, and can undermine the stability and reliability of the production environment. Access to production may violate compliance requirements or regulatory standards that mandate strict controls over access to sensitive environments and data and can create concerns over data loss or corruption.

Working with experienced professionals can help ensure effective readiness assessments that adequately prepare your organization for future SOC examinations.

As part of the SOC readiness assessment, you need to determine the scope of services by reviewing key processes and services, facilitating discussions with team members and thoroughly reviewing any contractual requirements you may have with clients, to ensure your organization will satisfy them, and in turn, provide added value to report users.

Management’s commitment to compliance sets the tone for the organization’s approach to SOC readiness and fosters a culture of compliance.

Establishing and maintaining a clear and comprehensive outline of policies and processes, as well as any internal control, will drive readiness efficiency. You should consider organizing all relevant documentation in a centralized repository, which will allow for easy reference and retrieval of information when needed.

Additionally, you should retain the services of a professional CPA firm, with extensive experience in SOC readiness and examinations.

Beyond that, you want to identify and involve the key resources required for each area, and identify a primary resource with appropriate knowledge, skillset and authority, who will act as a liaison between the organization and the service auditor. This will facilitate effective communication, create efficiencies and avoid duplication in efforts. The SOC readiness assessment can then be completed in an efficient and timely manner.

The length of a SOC readiness assessment may vary depending on the scope. Factors that may impact the duration of a SOC readiness assessment are mainly the control environment maturity, the number of control objectives (SOC 1) and the trust service criteria (SOC 2). You should allow 6-to-8 weeks to complete a SOC readiness assessment.

We strongly encourage that your organization’s key personnel be involved and engaged throughout the readiness process. This will decrease the out-of-pocket cost to your organization, but more importantly, it will increase visibility and reinforce the importance of internal controls, as well as internal visibility, and encourage the stakeholders’ understanding. Experienced CPA firms are efficient and reduce your investment in time, resources and money, whether you decide your involvement will be minimal or substantial.

This may vary depending on the key reasons for undergoing the readiness assessment. Factors may include client requirements, regulatory requirements, industry best practices and your desire to mature in your organization’s control environment as well as ensure that key risks are sufficiently mitigated with controls.

A SOC readiness assessment is typically recommended when an organization is preparing to establish or enhance its security operations capabilities (such as effectively responding to security incidents). Other reasons are to better protect against cyber threats, prepare for an examination, undergo significant changes, or seek to maintain ongoing compliance with contractual or regulatory requirements and industry standards. Your organization should plan to engage a firm as early as possible, particularly when there are established deadlines, to allow sufficient time for any required remediations.

Retaining the services of a CPA firm benefits your organization in many ways, as experienced firms work with a broad range of clients and situations from which they can draw best practices. Furthermore, because CPAs must maintain certifications and attend regular trainings, your organization can expect that AICPA standards are met and avoid any non-compliances.

Using the same firm for both a SOC readiness assessment and a SOC examination offers several benefits and can result in a seamless, efficient and effective process for enhancing readiness and achieving compliance objectives. You can expect added consistency and continuity by reducing the need to re-explain processes and systems to a new service auditor, saving you time and resources. Your organization can also gain efficiencies in terms of resource allocation and cost savings, given the firm already has familiarity with your organization's systems, processes, and personnel from the readiness assessment. Bundling these services may result in cost savings compared to engaging separate firms for each activity.

Undergoing a SOC readiness assessment is crucial for ensuring compliance, meeting client expectations, managing risks, enhancing trust, gaining a competitive advantage, and driving process improvement within your organization. It lays the foundation for a successful SOC examination and demonstrates your organization’s commitment to maintaining effective internal controls related to financial reporting and/or data security, availability, confidentiality, processing integrity and privacy.

We recommend that key internal stakeholders be involved as much as possible to foster a sense of ownership and increase accountability. We would expect the following to be involved throughout the readiness assessment:

• Key process/control owners
• IT and security teams
• Risk management teams
• Anyone else that could benefit from gaining a deeper understanding of the organization’s key processes and internal controls

You can begin the process by contacting a reputable accounting firm that has the expertise, reputation and ability to perform the readiness assessment. Baker Tilly provides SOC readiness assessments for clients throughout the year.