Service Organization Controls: Determining the Best Type of Report for Your Business Operations

International service organization reporting standards have recently been updated, and the U.S has responded by introducing the SSAE16 Auditing Standard, to bring American companies into line and up to date with current compliance levels.

A company like Holbrook & Manter SOC Services should be able to provide guidance and assistance on determining the best type of report for your business operations, and in order to get the most out of service organization controls, you first need to establish which type of report is appropriate to your business operation.

Important questions to ask

In order to get the SSAE 16 process up and running successfully and so that you don’t waste valuable time and resources pursuing a route that is not appropriate, there are a number of important considerations and questions that you should seek to answer and clarify.

The most fundamental question that you need to ask is whether your company specifically needs to achieve SSAE 16 compliance and whether you believe that it will be truly beneficial, or are you pursuing accreditation simple because a customer or trading partner has requested it?

You will also need to do the cost calculations to weigh up the pros and cons, which are can you afford to maintain the cost of the reporting procedure, or will the amount of business you might lose by not pursuing the standard prove negligible?

It would also help to establish just how ready you are for SSAE 16 in the first place. If you already have defined business processes and established IT controls, this will make it easier and less costly, than if you have develop and implement these processes from scratch.

Understanding the benefits

There is enough anecdotal evidence around from existing companies who have had their service organization controls audited, to form the opinion that service organizations could derive significant benefits from having a SSAE 16 examination completed.

One of the main attributes associated with this standard, is the fact that it provides a good level of reassurance for anyone looking at your business from the outside, that you have an acceptable standard of organization and auditing processes, which means that are more likely to prove to be a reliable trading partner.

The auditor’s report you receive can help your service business to build a good level of trust with your customers as well as your suppliers and other associates. Another benefit to consider is the fact that the audit process can often identify areas where improvements could be made, which can be viewed as an opportunity to strengthen your business procedures.

Report options

Each type of SOC report is specifically designed to allow service organizations to be able to meet specific user needs.

Understanding the difference between each report will enable you to identify the SOC report that is right for your requirements and appropriate to your needs.


This report is primarily a report that focuses on the internal control measures you have in place regarding financial reporting.

Within the scope of SOC 1, there are two types of report. Type 1 is an assessment of the fairness of of the presentation of your management’s description of the system you have in place and suitability. Type 2 looks more at the effectiveness of these controls.


This report will look at your controls in place in respect of security, confidentiality and privacy issues and include an evaluation of your processing integrity.

In just the same way as SOC 1, there are also two types of report which cover the same aspects already mentioned.


This concentrates on providing a trust services report for service organizations.

Whilst SOC 1 and SOC 2 are primarily used for internal performance purposes, SOC 3 is designed to be shared with external sources, and could even be used as a marketing tool to demonstrate your suitability as a business.

If you need your customers to understand the details of your processing systems and the controls that you have in place, you can take guidance from your auditor as to what you want to achieve from SOC in general and what you intend to use the audit report for.

If you are regularly being requested to comply with audit request from external organizations, having SOC in place and being able to provide a report that answers all of their questions and concerns, could prove to be highly beneficial.

Take the time to determine the best type of report you need for your business and you should be able to derive the maximum benefit from the audit process.


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