Key Takeaways
Purpose is Financial Assurance: The core goal of a SOC 1® ICFR (Internal Control Over Financial Reporting) report is to provide an independent third-party opinion on the internal controls that are relevant to a client’s ability to report accurate financial statements.
Comfort for Users and Assessors: This compliance report is essential for providing assurance (or “comfort”) to a client’s own internal and external financial assessors regarding the design and operation of controls at the service organization.
Core Technical Control Areas: Key control objectives monitored in a SOC 1® ICFR typically cover foundational aspects of a system’s integrity, including: Risk Assessment, Logical Access/Security, Physical Security, Monitoring, Change Management, and Backup and Recovery.
Understanding SOC 1®* ICFR
The goal of a SOC 1®* ICFR report is to provide an independent third-party opinion of the internal controls that may affect a user entity’s financial reporting. The report is designed to provide comfort to the organization’s users and the users’ assessors regarding the controls in place at the organization.
Service Organizations: Internal Controls Over Financial Reporting (ICFR)
In some cases, clients might have a request to complete a SOC 1®* report even though they do not impact their client’s financial reporting or conduct transaction processing operations. In such cases, perhaps a SOC 1® ICFR is the appropriate report for the service organization.
Speak to a Compliance Specialist.
SOC 1®* ICFR Control Objectives
The control objectives monitored include the following:
- Risk Assessment
- Physical Security
- Monitoring
- Logical Access/Security
- Change Management
- Backup and Recovery
Your Trusted SOC 1®* Partner
We are here to help you through the SOC 1® reporting process to gain your clients trust and confidence. Unlike most firms, Auditwerx is a true fixed fee firm. Our goal is to provide a service that will not only improve your operations, but also, result in a significant ROI. We are proud to offer high-quality SOC* reporting services to companies of all sizes. If you are ready to start the SOC 1® reporting process, contact us today.
FAQs
What is the fundamental purpose of a SOC 1® ICFR report?
A SOC 1® ICFR report is designed to provide assurance about a service organization’s internal controls that could potentially impact its client’s financial reporting. The report gives clients and their financial reviewers an independent view of whether these controls are adequately designed and operating effectively.
Which specific areas of control are addressed in the SOC 1 ICFR Control Objectives?
The monitored control objectives encompass critical areas necessary for maintaining the integrity and security of the financial environment. These areas include: Risk Assessment, Physical Security, ongoing Monitoring processes, Logical Access/Security controls, Change Management protocols, and Backup and Recovery procedures.
Is a SOC 1® ICFR report always necessary if a service organization doesn't handle client transaction processing?
Even if a service organization does not directly process client transactions or directly impact their financial reports, a client may still request a SOC 1® ICFR. This is often the appropriate compliance report in situations where the services provided still house critical systems or controls that indirectly affect the client’s financial reporting environment.
How does having a SOC 1® report benefit a service organization's reputation?
Obtaining a SOC 1® report helps a service organization build trust and confidence with its clientele. By successfully completing the rigorous control evaluation, the organization demonstrates a commitment to operational excellence and control integrity, which is highly valued by financially regulated clients.
About the Author
