System and Organization Controls Report – SOC 1

A SOC 1 Report is a third-party assurance report on internal controls at a service organization relevant to user entities’ internal control over financial reporting (ICFR). It replaces SAS70 and SSAE 16 under SSAE 18 (since May 1, 2017).

Who Needs a SOC 1 Report?

SOC 1 provides assurance that internal controls are designed (Type I) or designed and operating effectively (Type II). Examples of organizations needing SOC 1:

Payroll processors
Medical claims processors
Loan servicing companies
Data centers
SaaS providers affecting customer financials

Benefits of a SOC 1 (SSAE 16) Report

Builds instant credibility with clients
Improves third-party trust and confidence
Confirms that your processes function as intended
Provides independent validation of controls
Reduces compliance workload for partners
One report can satisfy multiple stakeholders

Project Phases

Phase I – Determination of Objectives

Identify key business and user entity objectives.

Phase II – Gap Analysis

Analyze existing controls against SOC 1 requirements. Recommend remediations.

Phase III – Control Design & Documentation

Define controls, assign responsibilities, nominate risk stakeholders.

Phase IV – Tracking

Weekly compliance tracking and internal documentation review.

Phase V – Performance Tracking

Measure control effectiveness, detect risk deviations, fine-tune procedures.

Phase VI – Internal Audit

Perform internal audit to prepare for final attestation and readiness.

Why It Matters

SOC 1 certification strengthens your position with enterprise customers by showing your control over financial data processing. It reduces vendor due diligence, eases audit overhead, and affirms your commitment to compliance.