Archive for June, 2009

What’s in a SAS 70?

Wednesday, June 10th, 2009

What is in a SAS 70 audit report depends on the type of report being obtained.

In a Type I report, the service auditor will express an opinion on (a) whether the service organization’s description of its controls was accurate and (b) whether the controls were suitably designed to achieve specified control objectives.  The report will include sections 1 and 2 below, however sections 3 and 4 are optional.

In a Type II report, the service auditor will express an opinion on the same items noted above in a Type I report, and (c) whether the controls were operating effectively during the period.  The report will include sections 1, 2, and 3 below, however section 4 is optional.
Section 1: Service Auditor’s Report – completed by the Auditor and describes the scope of the audit and the includes the opinion of the auditor.

Section 2: Description of Relevant Controls – completed by the company and describes the control environment, process, and systems being audited.  Additionally, it includes the controls that the company is not responsible for and which the customer should ensure are in place in their organization.

Section 3: Information Provided by the Service Auditor – completed by the auditor and describes the results of control testing.

Section 4: Other Information Provided by the Service Organization – completed by the company and may include management responses to identified gaps, information on business continuity and disaster recovery, or a glossary of terms used in the audit report

See more posts on SAS 70

Benefits of a SAS 70

Wednesday, June 10th, 2009

We’ve talked about SAS 70s in previous posts (What is SAS 70 and who needs it? and Types of SAS 70 Services), but where will your organization see a real benefit?

Efficiency and Cost Reduction – Your company can have one audit performed and provide one report to interested parties.  This allows your company to focus on what it does best and reduces the time required to respond to audit inquiries.

Piece of Mind – It makes good business sense to make sure you have controls in place to prevent/detect unnecessary mistakes, unauthorized transactions, unauthorized modifications to data, and fraudulent activity.  Having an independent party assess your processes and systems can provide a level of assurance that may be unattainable through self assessment.

Strengthen Existing Relationships – Customers value transparency and assurance that your processes and systems are sound.

Attract Customers – New customers want to know that they will be working with a company that has standards in place and has been reviewed by an independent party.

Differentiate from Competitors – If your company has a clean audit opinion and your competitors don’t or don’t have an audit opinion at all, you should stand out in the marketplace.

Compliance – There may be overlapping regulations that a SAS 70 may meet.  The Sarbanes Oxley Act requires your customers to have controls over financially material processes and systems. The Graham Leach Bliley Act requires financial institutions to provide security over customer information to safeguard their privacy.

Are you interested in strengthening existing relationships, attracting new customers and differentiating your company from competitors?

Do you want to reduce the time and cost of audit inquiries?

Types of SAS 70 Services

Wednesday, June 10th, 2009

Now that we’ve discussed what a SAS 70 is and who might need it, let’s talk a bit more about the different types of SAS 70s and the time periods a report might cover.

A Type I SAS 70 assesses the design of internal controls at the service organization.  A Type I is a point in time report, meaning it does not provide coverage over a period of time.

A Type II SAS 70 assesses the design, as well as tests the operating effectiveness of the internal controls at the service organization.  A Type II report covers a defined time frame – usually 6, 9, or 12 months.  These generally take more time to complete, because of the testing over the period.  That being said, because there is evidence that controls are in fact working properly, these reports hold more weight and are most often sought after by customers, auditors, and potential future customers.

SAS 70 Readiness assesses a company’s preparedness for a SAS 70 audit by identifying internal control weaknesses prior to the audit being performed.  If a company is entering the first year of completing a SAS 70, these are often performed so that the actual SAS 70 has a clean opinion.  An approach to reduce the costs of a first year SAS 70 audit is to perform a Readiness Review and a Type I audit in the first year.  Then in subsequent years, perform a Type II.

Does your organization provide an “outsourced” service to companies?  
Have your customers requested to see a SAS 70 audit report?