As business for an organization grows, there are some non-essential functions that the organization does not wish to focus upon. These functions do not occupy the core of business operations for the organization and are usually outsourced to a third party organization that handles all aspects related to this function. Although, these functions might not be core to the business, their failure may impact the operations or even survival of organization. In such a scenario, one needs to be absolutely sure that the organization handling the non-core functions performs its duties efficiently. An ISAE 3402 Service Organization Report one of the ways of gauging the quality of outsourcing services provided by a service organization.
For organizations operating out of Canada or those who handle operations for an organization that has Canadian clients, one can even obtain a (Canadian Standard on Assurance Engagements) CSAE 3416 report. The CSAE 3416 standards are aligned with the ISAE 3402, and also cover requirements that are applicable under SSAE 16, the US counterpart for CSAE 3416, thereby allowing organizations to serve clients in both the countries.
In case of a ISAE 3402 audit, the auditor tries to establish whether the service organization has sufficient controls in place for conducting business to ensure that the user organization’s finances are not impacted due to its own actions. The assurance generated in this report helps an organization assure their stakeholders that the outsourcing process has minimal impact on its financial reporting.
There are usually two kinds of ISAE 3402 reports. A Type 1 report summarizes the design and implementation of the internal controls at a service organization on the day of the audit. Such a report can help a service organization demonstrate to a client that it has sufficient controls in place for smooth running of operations. A Type 2 report, on the other hand, is the result of a larger audit conducted over a large period of time, typically over six months, that assures the client that the service organization’s controls were in place and were effective throughout the period of the audit.
At SOC Assurance, our highly experienced staff can help your organization align your processes and controls in line with these globally accepted standards. We also provide audit services and Type 1 and Type 2 reports for service organizations that looking to demonstrate their capabilities to prospective clients. Our services are availed by leading organizations in Canada, US and other countries.