SSAE 16 is an enhancement to the current standard for Reporting on Controls at a Service Organization, the SAS70. The changes made to the standard will bring your company, and the rest of the companies in the US, up to date with new international service organization reporting standards, the ISAE 3402. The adjustments made from SAS 70 to SSAE 16 will help you and your counterparts in the US compete on an international level; allowing companies around the world to give you their business with complete confidence.
SSAE16 is now effective as of June 15, 2011, and if you have not made the necessary adjustments required, now is the time to find a quality provider to discuss the proper steps. All organizations are now required to issue their Service Auditor Reports under the SSAE 16 standards in an SOC 1 Report.
Who Needs an SSAE 16 (SOC 1) Audit?
If your Company (the ‘Service Organization’) performs outsourced services that affect the financial statements of another Company (the ‘User Organization’), you will more than likely be asked to provide an SSAE16 Type II Report, especially if the User Organization is publicly traded.
Some example industries include:
- * Payroll Processing
- * Loan Servicing
- * Data Center/Co-Location/Network Monitoring Services
- * Software as a Service (SaaS)
- * Medical Claims Processors
What you Need to Know:
Before starting the SSAE 16 process, there are a number of considerations one must take into account that can save considerable time, effort, and money in the long run. Use the following items as a mini checklist for yourself:
- Does my Company need an SSAE16, or, are we doing it just because someone asked?
- Reports on the low end can run at least $15,000 a year, will the business lost be less of a burden than the cost of the report itself?
- Does your company have defined Business Process and IT controls in place, or, will you need assistance developing and implementing them (readiness assessment)?
- Have you determined the controls in place which affect the outsourced services being provided?
- Have key stakeholders been defined and included in discussions?
There are many other issues to consider before engaging a CPA firm to help with your SSAE 16, for a more detailed ‘checklist’ – please see The SSAE 16 Checklist
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This new auditing standard has so many perks because it has made it easier for my accountants in Western Australia to check my financial balance sheet well. There is transparency now and I must say it's because of this new standard.
This review is an impediment to smaller companies trying to compete in this industry. The cost of performing an SSAE16 in many instances is larger than the revenue realized from the customers requesting it of the supplier. A smaller company may be focused on one aspect of the entire process, but the SSAE16 makes no accomodation for that possibility. Instead the entire review would need to be done and the report filled in with a lot of DNA's, and then requireing the signature of a CPA that perhaps has never even visited the company.
SSAE16 is a core operational system for our offshore accounting firm and our partners. It's SaaS structure makes it amenable for VPN collaboration of accounting teams based all over the world.
auditing standard? what does that mean? I just really hoped that I still don't understand what you mean here. ot's going to b so cool then.
thanks,
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