6 Tips to Prepare for Your First SOC 1 Audit

In the first quarter of 2023, over 6 million data records were exposed worldwide through data breaches.

01:53 10 August 2023

In the first quarter of 2023, over 6 million data records were exposed worldwide through data breaches. To fight such threats and ensure strong security measures, businesses turn to frameworks like SOC 1 and SOC 2 reports. 

SOC, also known as system and organization controls, is a widely recognized auditing standard that evaluates the internal controls of service organizations. 

In today's business landscape, where many companies rely on outsourced services to perform critical functions, SOC 1 reports have become essential in assessing the reliability and security of these service providers. These reports help user entities understand how their service organization manages risks and safeguards sensitive data.

If you're reading this, then you’ve probably already started preparing for the SOC 1 engagement. If this is your first time preparing for the SOC 1 audit, you may be feeling overwhelmed. Below, we’ve compiled our top six tips on how you can prepare for a smooth SOC 1 audit.

Perform a Risk Assessment

You will find that any framework, audit, or standard relating to compliance, information security, or both requires a risk assessment. A formal risk assessment will help you prepare for your SOC 1 audit. It can help you identify risks and understand your organization. 

Your assessment should guide the implementation of control measures that are reasonable and practicable. An official written risk assessment should be conducted by employees from various departments.

Consider Client Requirements

Preparing for your first SOC 1 audit can be a daunting task, but it is crucial to ensure that you meet your clients’ requirements and maintain their trust. By evaluating clients’ requirements thoroughly, you can better understand their expectations and tailor your audit approach accordingly.

When embarking on this journey, it is essential to have a clear understanding of your clients’ industries, as this will determine the extent of your audit. This includes identifying the specific controls and processes that need to be assessed, any industry-specific compliance standards your clients’ adhere to, and their desired reporting format.

By engaging in open communication with your clients, you can gain valuable insights into their unique needs and objectives. This will enable you to align your audit processes with their requirements and provide them with accurate and relevant information about the effectiveness of your internal controls.

Outline Regulations and their Implications

To prepare for your SOC 1 audit, you will need to determine your regulatory responsibilities based on the location you are in and your customers. If you serve the healthcare industry, for example, you will be required to adhere to relevant sections of HIPAA/HITECH. If you are in the financial market, GLBA will be relevant. SOX is applicable if you serve publicly traded companies. FISMA is required if you are serving the federal government. You can prepare for a SOC 1 audit by considering the regulatory frameworks that apply to your business.

Review Service Delivery Controls

Operational risks are one of the most important risks that companies may overlook since they are not breaches of security. Auditors look at things like operational efficiency and quality assurance. All of these factors are important and will contribute to a set of service delivery controls. What controls have you implemented during the service-delivery process? To manage controls for service delivery, it is helpful to create a data flow chart of your service delivery model's life cycle.

Look at Written Policies and Procedures

If something isn’t documented, it didn’t occur. A fully written and documented set of policies is essential for a SOC 1 audit because this is what you will be audited against. If your policies say you do A, B, and C, then auditors will want to verify that you actually do A, B, and C. 

A formal set of policies and procedures helps employees understand the company's expectations and consequences. It also guides proper service delivery. Senior management should fully endorse policies and procedures, and the individual authorized to update them should do so at least once a year.

Train Your Employees

Aside from policies and procedures, employee training is also essential to preparing for a SOC 1 audit. To ensure that all policies and procedures are followed, employees need to receive job-specific instructions. Did all staff members attend? Did all employees understand? 

Training should be job-specific, as different departments, such as HR and IT, are responsible for various aspects of the company. Security awareness training is another type of training that is crucial in today's threat-prone business landscape. Annual training should be provided to employees to make them aware of the threats the business may face.

Final Words

If your clients and partners rely on you to protect their information, you may be asked to produce a SOC 1 audit report. By following the tips above, you can prepare for your first SOC 1 audit in the best way possible, demonstrate a commitment to corporate governance, and provide assurance that your systems are secure.