California CPA For SOC Audit Services (SOC-1 Audit Reports)
An SOC report is a great way to show that your business is trustworthy to new customers. Out SOC CPAs can help you conduct an SOC audit the right way.
Stockholders, creditors, and private investors often need assurance that the financial statements accurately represent the true financial position of a company.
Your stockholders, creditors, or private investors have different levels of risk tolerance, so we provide three levels of assurance to meet your needs.
Audit – Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by general practice.
Our work includes a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.
An Audit allows you to…
- Satisfy stakeholders such as employees, customers, suppliers and pressure groups, as well as the investing community, as to the credibility of published information.
- Facilitate the payment of corporate tax, goods and services tax, and other taxes on-time and accurately, thereby avoiding interest, penalties, and investigations.
- Comply with banking covenants.
- Help deter and detect material fraud and error.
- Facilitate the purchase and sale of businesses.
Here’s what you get…
You get the highest level of assurance because we go outside your company to obtain more information. Typically, we’ll have written communication with:
- Your customers, to check outstanding receivable balances,
- Your banks, to confirm cash or debt balances and terms,
- Your vendors, to verify outstanding payable balances, and
- Your attorneys, for information on pending or threatened legal action.
We also perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client’s supporting work papers.
Audits Not Just for Public Entities
All public companies are required to have an annual audit, but some nonpublic entities must undergo an annual audit as well. These include local governments, not-for-profit agencies and other organizations receiving government grants.
Moreover, some financial institutions require audits of nonpublic companies based on the financing amount and/or the bank’s assessment of the company’s risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may order audits as checks of their management teams.
Review – Limited Assurance
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company’s management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.
A review doesn’t require us to study and evaluate your company’s internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: “We are not aware of any material modifications” for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.
Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA’s technical expertise without the work and expense of an audit.
Compilation – Lowest Level of Assurance
In compiling financial statements for a client, we present information that is the “representation of management” and expresses no opinion or assurance on the statements. Compilations don’t require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent CPA as part of their lending covenants.
Which Report Should You Use?
Each type of financial statement report may suit specific circumstances, depending on requirements from your client’s bank or other parties, as well as meet budgetary needs.
Understanding each report’s unique strengths and weaknesses can help you choose the most appropriate one. Please call if you have questions about which type of report is right for you.
Your company can benefit from an SOC report if you provide services to customers. This report will allow clients to ensure that your company’s controls operate effectively. It’s a way to show that your company is trustworthy and that the risk of complications is low if a potential client chooses to work with you. SOC-1 reports can also be used as marketing materials, a catalyst to streamlining processes, and a way to reduce the number of audits that are needed.
If your company would like to build trust with potential clients and their auditors through a SOC-1 report, get in touch with the Roseville CPAs from Cook CPA Group. Our accountants can help your businesses with all types of audits, including SOC-1 M audit reports.
Understanding the SOC-1 Audit Report
The purpose of a System and Organization Control (SOC) is to provide an organization’s clients certainty that they can handle financial transactions with efficiency and confidentiality. It is mostly used by auditors who work with clients of service organizations. Since SOC reports provide information about a company’s controls and financial reporting, they are commonly used as a metric for how well an organization has maintained its accounting.
SOC audit reports are used by companies that provide services, not goods, to customers and clients. Companies that provide services such as data processing bureaus, investment management firms, payroll and billing service providers, claims processing, data management, and tech support are most likely to benefit from SOC audit reports.
Service organizations can reap many benefits from getting an SOC audit report. SOC audit reports can help companies build relationships with clients, customers, stakeholders, investors, potential buyers, and vendors by showing that they are trustworthy and that they have a low risk of liability. SOC reports also provide companies with an assessment of their business, which they can then use for improvements in different areas, whether that means streamlining processes, and identifying deficiencies; the report itself can also be leveraged as marketing material.
Getting an SOC audit report is a way for service organizations to demonstrate their accountability, which can help them keep their loyal clients while attracting potential new clients. Overall, it’s a way to gain a competitive advantage over similar businesses.
Cook CPA Group can provide a full range of SOC audit report services to clients through California. We understand how your clients can use these reports and can deliver them in an efficient and timely manner so that you can reach your goals.
Types of SOC Audits
There are three types of SOC reports, each intended for a slightly different purpose.
SOC-1 Audit Reports
SOC-1 audit reports are the most common type of report among service organizations and mostly address a company’s internal controls. These audit reports are intended to evaluate, test, and report on the effectiveness of these controls. Clients often request SOC-1 audit reports. It’s best to have an SOC report prepared so that you can provide it to them right away. Even if a client doesn’t ask for an SOC-1 audit, having one is a way to be proactive about your company’s information security so that you can prevent future breaches. In some cases, this report can be used as a tool to show that the organization complies with industry laws and regulations.
There are two types of SOC-1 audits that companies can have done. SOC-1 reports are audits that focus on a specific time. Type II reports, on the other hand, are more rigorous and comprehensive than Type I reports and cover a more extended period. Most clients regard the Type II report results as reliable.
SOC-2 Audit Reports
SOC-2 audit reports are used mostly when service organizations are working with IT vendors. This type of audit report examines the company’s internal controls as they pertain to privacy, confidentiality, processing integrity, availability, and security; these reports are usually made to cover specific topics requested by a third party. They are meant to give stakeholders a thorough understanding of what the service organization does, the service they provide, and the organization’s internal controls. Similar to SOC-1 audit reports, there are two types of SOC-2 reports. Type I reports are intended to confirm that controls about these topics exist. Type II reports are designed to verify that the controls not only exist but also work correctly.
SOC-3 Audit Reports
SOC-3 audit reports are, mostly, a summary of SOC-2 Type II reports. It addresses the organization’s internal controls as they relate to privacy, confidentiality, processing integrity, availability, and security, though in less detail than an SOC-3 report. They can only be obtained if a SOC-2 report was also made. This type of audit report is not meant to be thorough but rather a type seal of approval that the company’s internal controls have been verified—it is commonly added to company websites as marketing material.
California Accountants Available to Help with SOC Audit Services
Getting an SOC audit done for your company doesn’t have to be complicated. When you use the services of California SOC audit CPA firm Cook CPA Group, you can get guidance and support throughout the auditing process.