Assurance reports play a rather significant role in fostering trust among stakeholders. Two common types of assurance reports are SOC (Service Organization Control) reports and AUP (Agreed Upon Procedures) engagements. This article aims to shed light on some of the important differences between both assurance reports, while also touching on the different types of SOC reports.
An Overview of SOC Reports
SOC reports are a suite of reports intended to convey a service organization control measures. These reports were developed by the American Institute of Certified Public Accountants (AICPA). SOC reports are especially relevant for organizations that handle sensitive client data, such as data centers, cloud service providers, and managed service providers. There are three main types of SOC reports:
1. SOC 1 Reports:
· Focus: Primarily centered around controls related to financial reporting.
· Audience: Pertinent to user entities and their auditors.
· Key Components: Describes the adequacy of design and operational effectiveness of controls.
2. SOC 2 Reports:
• Focus: These reports concentrate on controls that are relevant to security, availability, processing integrity, confidentiality, and privacy.
• Audience: The intended audience for SOC 2 reports includes regulators, customers, auditors, and business partners.
• Key Components: SOC 2 reports evaluate the effectiveness of controls in meeting predefined criteria.
3. SOC 3 Reports:
• Focus: Similar to SOC 2 but provides a general use report suitable for public distribution.
• Audience: The target audience for the SOC 3 reports is broader, and often includes entities that may be interested in an organization’s services or products; essentially, used for marketing purposes.
• Key Components: In addition to evaluating controls, SOC 3 reports emphasize the organization’s commitment to trust service criteria.
Agreed Upon Procedures (AUP) Engagements
While SOC reports provide a comprehensive view of an organization’s controls, AUP engagements are more tailored and flexible. Instead of providing an overall opinion, AUP engagements focus on specific procedures agreed upon by all relevant parties, including the client and auditors. Here are some key aspects of AUP engagements:
1. Tailored Procedures:
• Scope: The procedures are determined based on the needs of all parties involved in the engagement.
• Flexibility: AUP engagements allow for customization to address concerns or risks.
2. Limited Assurance:
• Opinion: Unlike SOC reports, AUP engagements do not provide an overall opinion on the subject matter
• Specific Findings: Reports present findings based on the agreed upon procedures.
3. Diverse Applications:
• Usage: AUP engagements can be utilized for purposes such as meeting compliance requirements, conducting due diligence, and performing specific risk assessments.
Choosing the Suitable Assurance Approach
When deciding between SOC reports and AUP engagements, organizations must consider their specific needs, the expectations of stakeholders, and the nature of the controls being assessed. SOC reports offer a structured and widely recognized framework, while AUP engagements provide a more tailored and flexible approach.
Ultimately, both SOC reports and AUP engagements contribute to building trust and transparency in an organization’s operations. By understanding the nuances of these assurance reports, businesses can make informed decisions that align with their strategic goals and demonstrate their commitment to data security and integrity.