Business Monkey News brings together the latest news from the network related to the world of new technologies, companies, economics, and marketing, Helping you as an entrepreneur.

3  Different Types of SOC Audit Reports in Texas

by Byrne Anderson
0 comment

A Service Organization Control (SOC) is a suite of reports that are written after an audit is conducted in a company. Service organizations use these reports to give validated reports concerning the information system’s internal controls to the people who use those services. Only a Certified Public Accountant (CPA) approved by the American Institute of Certified Public Accountants is permitted to carry out SOC audit Texas and other states in the United States. A SOC report is essential in informing people if financial audits are performed or not, the effectiveness and efficiency of the conducted audits, and if the audits were conducted according to set guidelines. There are different types of SOC reports issued in Texas, and these include the SOC 1, SOC 2, and SOC 3 reports. The details on each type of SOC report are discussed below.

SOC 1 Report

The SOC 1 reports are used to address the internal control of a company over its financial audit. This report pertains to the check-and-limits applications. According to the SSAE, SOC 1 is defined as the audit done on the financial and accounting controls of a third-party vendor. The report describes in detail the metric of how orderly a firm stores its book of accounts. There are two types of SOC 1 reports- the SOC 1 Type I and SOC 1 Type II. The SOC 1 Type I report details the report of the audit that took place on a specific date and time. The SOC 1 Type II report detailed more rigorous data based on control testing over a more extended period. The type II report is more reliable because it offers data for more extended periods than the type I report.

SOC 2 Report

The SOC 2 report is a mandatory report when dealing with IT vendors and is the most sought-after report. This report deals with a service organization’s controls examination using one or more Trust Service Criteria, i.e., privacy, availability, security, processing integrity, and confidentiality. This report also has two types, which are type I and type II. Type I report addresses the existence of the controls, while type II confirms the existence of the controls as well as their effective functioning.

SOC 3 Report

The SOC 3 report is a summarized version of the SOC 2 Type II report. Therefore, this report is not as detailed as the type II SOC 2 report. It is designed to be a less detailed and technical audit report, which can be read and interpreted faster.

Every business needs to request and examine the SOC reports from their vendors. It offers invaluable information that guarantees that enough controls are in place and work effectively and efficiently. The SOC 1, SOC 2, and SOC 3 are the common types of SOC audit reports in Texas, which every business needs to request to monitor their effectiveness. These tests are crucial in ensuring that a company complies with all the necessary regulatory measures.

You may also like