SOC Auditors: How to Choose the Right CPA Firm

In 2023, 1,802 data breaches exposed 422.1 million records. That's 422.1 million reasons to prove your security measures work.

With a SOC audit, you can do just that –– prove that your systems are secure.

But there's a catch.

Choosing the wrong auditor could prolong the process, spike the costs, and potentially lose you that $700,000 deal you've been eyeing.

In this guide, we'll explain who are SOC auditors, why they matter and how to find the best ones.

What is a SOC audit?

A System and Organization Controls (SOC) audit is a thorough examination of your organization's data protection and service delivery controls. It verifies that your internal controls are effectively safeguarding client data and ensuring your services' integrity.

Think about it like this: Let's say your tech startup is negotiating a $1 million deal with a Fortune 500 company. They're ready to sign but need proof that your data security measures meet industry standards. This is where a SOC audit becomes crucial.

SOC audits come in three main types, each serving a distinct purpose:

Overview of SOC 1

Focuses on controls relevant to your clients' financial reporting. If your services impact a client's financial statements, a SOC 1 audit is essential.

Type I: Assesses the design of your controls at a specific point in time.
Type II: Evaluates both the design and operational effectiveness of your controls over a period.

Overview of SOC 2

Centers on the Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.

Handling sensitive customer data? A SOC 2 audit demonstrates how you manage and protect that information from getting stolen.

Overview of SOC 3

Provides a high-level summary of a SOC 2 report without the sensitive details. It's intended for a general audience, offering assurance about your data security and privacy controls.

What are the benefits of undergoing a SOC audit?

Demonstrate Commitment to Security: Shows clients and partners that you prioritize safeguarding their information.
Meet Regulatory Requirements: Helps you comply with industry regulations—vital in sectors where data breaches lead to severe penalties.
Build Customer Trust: Independent verification by CPAs enhances your credibility, giving customers confidence in your controls.

SOC reports are instrumental in building trust through third-party validation.

Who performs SOC audits?

Only independent Certified Public Accountants (CPAs), certified by the AICPA, can perform SOC audits.

Key guidelines to follow:

Only CPAs Can Conduct SOC Audits: Engaging a non-CPA firm results in an invalid audit. You'll need to redo the audit with a certified CPA, costing more time and money.
Internal Auditors Must Be CPAs: Even if you have an internal audit team, they must hold CPA credentials to perform a valid SOC audit.
Upholding High Standards: Only CPAs in good standing can deliver reliable SOC reports, maintaining professional and ethical standards.

By following these guideline you ensure the audits adhere to professional standards and that auditors maintain objectivity.

What does a SOC auditor do?

A SOC auditor conducts an in-depth assessment of your organization's controls to ensure they're robust and effective. Their role includes:

Conducting Specific SOC Audits: Performing SOC 1, SOC 2, or SOC 3 audits based on your needs.
Evaluating Internal Controls: Examining measures you've implemented to protect client data.
Assessing Design and Effectiveness: For SOC 2 Type II audits, evaluating not just the control design but how effectively they operate over time.
Preparing Detailed Reports: Compiling findings that provide assurance to stakeholders.
Advising on Best Practices: Offering guidance on maintaining compliance and improving security.

Traditional compliance methods can be complex, time-consuming, and expensive.

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Why do you need a CPA for your SOC audit?

Only licensed Certified Public Accountants (CPAs) are legally authorized to perform the audit. This is a mandate from the American Institute of Certified Public Accountants (AICPA) that ensures your audit holds up under scrutiny.

Engaging a CPA is about aligning with the stringent standards that your enterprise clients expect and regulators demand.

Skipping this step or cutting corners could mean the difference between securing a million-dollar contract and watching it slip away.

CPAs bring critical expertise to the table. They adhere to the AICPA's Code of Professional Conduct and the Statements on Standards for Attestation Engagements (SSAEs). This guarantees that your audit is thorough, ethical, and credible.

Can non-CPA organizations legally perform SOC audits?

The short answer is no. Non-CPA organizations cannot legally perform SOC 1 or SOC 2 audits. Only licensed CPAs have the authority to conduct these audits.

Any SOC report from a non-CPA firm is invalid and won't hold up with clients, regulators, or stakeholders.

Engaging a non-CPA firm might seem like a shortcut, but it introduces significant risks:

Invalid Reports: Your report will fail to comply with AICPA standards. This can halt deals, as enterprise clients require valid SOC reports before signing contracts.
Unreliable Assessments: Non-CPAs lack the specialized training and expertise. Their assessments may miss critical security gaps, leaving you exposed.
Costly Do-Overs: You'll need to undergo the entire audit process again with a licensed CPA firm. This doubles your expenses and wastes valuable time — time that could have been spent closing deals.

Are internal auditors allowed to conduct SOC audits?

Your internal auditors know your systems inside and out. But unless they hold CPA credentials, they can't conduct SOC audits that comply with AICPA standards. Relying solely on internal auditors without CPA licensure is a misstep that can invalidate your compliance efforts.

Key considerations:

CPA Credentials Are Essential: To meet compliance standards, the auditor must be a licensed CPA. Internal knowledge can't substitute for this requirement.
State Variations Don't Change SOC Requirements: Some states may allow internal audit leaders to conduct certain audits without CPA credentials. However, for SOC audits, CPA involvement is mandatory across all states.
Additional Certifications Help but Don't Replace the CPA: Certifications like Certified Fraud Examiner (CFE) or Certified Information Systems Auditor (CISA) enhance expertise but don't fulfill the CPA requirement for SOC audits.

To ensure your audit holds up with clients and regulators, CPA credentials are non-negotiable.

Do CPA firms have limitations when performing SOC audits?

While CPA firms are uniquely qualified to perform SOC audits, they operate under strict guidelines to maintain the audit's integrity.

Key limitations include:

Adherence to Professional Standards: CPA firms must comply with all AICPA professional standards and undergo regular peer reviews to ensure quality.
Unwavering Code of Conduct: Following the AICPA Code of Professional Conduct, they emphasize integrity, objectivity, and independence.
No Legal Loopholes: They cannot include indemnification or limitation of liability clauses in their engagements. This means they stand fully behind their work.
Maintaining Auditor Independence: Auditors must avoid taking on management roles during the audit to prevent conflicts of interest.
Confidentiality: Client information must remain strictly confidential, safeguarding your sensitive data.
Avoiding Conflicts of Interest: Providing additional services that might compromise their objectivity is prohibited.

By adhering to these limitations, CPA firms ensure that your audit is credible and meets all regulatory and client expectations.

What happens if you hire a non-CPA firm for a SOC audit?

Opting for a non-CPA auditing firm might seem like a cost-saving move upfront, but it can lead to serious consequences:

Invalid Audit Reports: Non-CPA firms aren't authorized to perform SOC audits. Their reports won't meet compliance requirements, potentially leading to lost contracts and regulatory penalties.
Financial Losses Multiply: You'll need to redo the entire audit with a certified CPA firm. This not only doubles your audit costs but also delays your compliance timeline, affecting revenue.
Eroded Trust with Clients: Clients depend on valid SOC reports to assess your security posture. An invalid report can damage your reputation and lead to lost business opportunities.
Unmanaged Security Risks: Without a valid audit, hidden vulnerabilities may remain unaddressed, exposing your organization to data breaches and compliance violations.

Starting with a licensed CPA firm ensures your SOC audit is valid, recognized, and supports your business growth without costly setbacks.

How do you choose the right CPA firm for your SOC audit?

Landing that million-dollar deal often hinges on one critical factor: SOC 2 compliance.

Yet, navigating the path to compliance can feel overwhelming, especially when it's urgent.

The CPA firm you select for your SOC audit can either simplify the process or turn it into a costly headache. Let's make sure it's the former.

1. Seek Out Firms with Proven SOC Audit Expertise in Your Industry

Not every CPA firm can guide you successfully through a SOC audit. Experience matters. Seek out firms that have helped businesses like yours navigate the SOC 2 compliance landscape.

An auditor familiar with the intricacies of SaaS platforms or the specifics of blockchain technology can spot issues before they derail your progress.

They help you avoid pitfalls, keeping your compliance efforts on schedule and within budget.

2. Find Auditors Who Speak Your Language

Your auditors will become an extension of your team for weeks or even months. Miscommunication can lead to delays and frustration.

Choose a CPA firm that understands your company culture and communicates effectively with your staff. When everyone is aligned, the compliance process becomes smoother and more efficient.

3. Reach Out to EasyAudit for Trusted Recommendations

Unsure where to turn? EasyAudit can direct you to reputable CPA firms. They've already vetted these professionals, saving you time and reducing uncertainty in your selection process.

4. Dig Into Their Specialization and Approach

Your business is unique, and your auditors should reflect that. Ask potential CPA firms about their experience with companies in your sector.

If you're a healthcare startup, do they understand HIPAA nuances?

For fintech firms, are they knowledgeable about the latest data encryption standards?

Also, inquire how they stay updated on evolving regulations. A firm committed to continuous learning ensures you won't be caught off guard by changes in compliance requirements.

Key takeaways

Only CPAs can legally perform SOC audits— engaging non-CPAs leads to invalid reports.
Invalid audits can result in financial losses and eroded client trust.
Selecting a CPA firm with industry expertise and verified credentials is crucial.
Ensure the CPA firm maintains independence and adheres to professional standards throughout the audit.
Utilize resources like the AICPA's referral database and other directories to find qualified auditors.

EasyAudit Has All You Need To Get Compliant

Even with all these resources, selecting the right CPA firm can be a time-consuming and daunting task. The stakes are high, and the clock is ticking.

Luckily, EasyAudit makes things simpler.

EasyAudit not only automates your compliance tasks but also connects you with our network of trusted CPA firms.

We help you find the right auditor quickly, ensuring a smooth and efficient audit process.

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FAQs

What qualifications are required to become a SOC auditor?

Earning a CPA license involves passing the rigorous Uniform CPA Examination and meeting strict state-specific requirements.

Additionally, a CPA must hold a degree in accounting or auditing and fulfill specific educational requirements, including essential coursework in relevant subjects.

Who can perform SOC 1 and SOC 3 audits?

Only independent Certified Public Accountants (CPAs) are authorized to conduct SOC 1 and SOC 3 audits. This exclusivity is designed to ensure that your audit carries weight with regulators and enterprise clients alike.

CPAs are the only professionals authorized to prepare SOC reports. Their expertise enables them to evaluate and report on your organization's controls effectively, ensuring the assessment is both accurate and comprehensive.