Is SOC 2 a certification?
No, it is an attestation report. It is commonly treated like a certification and often has accreditation logos, but there are some key differences:
- You can achieve a SOC 2 report with exceptions or qualifications (explained further below), but the report itself is still valid with those disclaimers included.
- Instead of a single-page certificate, a SOC 2 report provides details of your compliance scope and processes in a system description. It also includes details of your controls and the auditor’s tests that validated those controls (for Type 2 reports).
Can you fail an attestation audit such as SOC 1 and SOC 2?
The short answer is, No. An attestation audit (such as SOC 1 and SOC 2), means you receive a report and can use the AICPA logo to represent your compliance regardless of the findings raised during the audit. Our approach is designed to set our clients up for success and deliver reports that meet their customer's expectations. The final outcome is either an unqualified or qualified audit, both of which are explained further below.
What types of findings can be noted in a SOC 1 or SOC 2 audit and what is the impact on the audit?
Control Exceptions:
The main finding which can be noted during our audit testing is a control ‘Exception’. In the context of SOC 1 and SOC 2, exceptions refer to instances where a company's practices do not fully comply with the established criteria or controls required for the audit. As the name suggests, think of it as an instance where there has been an ‘exception’ to the normal operation of the control or process.
Impact on the audit:
The presence and severity of exceptions can influence the auditor's opinion. However, minor exceptions are unlikely to impact the overall audit opinion.
These are quite common, especially for a first-time Type 2 audit. However, these can sometimes result in a clean audit opinion if it is clear that the overall control environment is robust and operating effectively against the applicable criterion.
Significant exceptions, or a high number of exceptions, can lead to a qualified opinion (explained further below). This scenario is an unusual occurrence and our approach is to work closely with the client to ensure a positive outcome and establish a clear path forward.
In all scenarios, we emphasize a ‘No surprises’ approach, meaning we notify clients of exceptions upon discovery to ensure alignment and explore all available remediation options.
A brief overview of audit opinions
In a SOC 1 or SOC 2 audit, the auditor’s opinion is a crucial component of the final report, reflecting the auditor's findings on the organization's system and controls.
The audit opinion can fall into one of four categories: unqualified (clean), qualified, adverse, or disclaimer. The most common types for SOC 1 and SOC 2, which are unqualified (clean) and qualified, are summarised below:
- Unqualified (Clean) Opinion
Indicates that the auditor found the organization's controls to be suitably designed and operating effectively to meet the applicable criterion. This is the most favorable outcome and occurs when no significant exceptions or deficiencies are found during the audit period. - Qualified Opinion
Indicates that, except for certain specific issues, the organization's controls were found to be suitably designed and operating effectively. This occurs when exceptions are limited in scope and do not pervasively affect the overall control environment. We proactively work with clients to ensure alignment prior to any issuance of a qualified opinion.