What are the different types of opinions rendered in a SOC examination?
There are four types of auditor opinions: qualified, unqualified, disclaimer and adverse.
- A qualified opinion indicates that controls were not designed and/or operating effectively (Type 2 reports only); in other words, there are significant control deficiencies.
- An unqualified opinion indicates that controls appeared to be designed and/or operating effectively (Type 2 reports only). There can still be issues; however, an unqualified opinion with issues means that the deficiency appeared to be immaterial.
A disclaimer means that the auditor was unable to issue an opinion, usually because information or procedures were limited.
An adverse opinion indicates that SOC report users cannot rely on the organization’s systems at all.
Why do companies undergo SOC examinations?
Leaders of service organizations undergo SOC 1, SOC 2 or SOC 3 examinations for different reasons.
- SOC 1 examinations are relevant to financial reporting and are thus part of financial statement audits.
- SOC 2 examinations may be requested by a third-party, like customers or regulatory authorities, to provide oversight or conduct due diligence on security, privacy and more.
- SOC 3 examinations are often requested by management to demonstrate assurance and confidence in one or more of the organization’s service controls.
How often should a SOC examination be performed?
Typically, SOC examinations cover at least a three-month period and usually up to a one-year period. There are situations where a SOC examination may be valid for slightly more or less time depending on the circumstances and scope.