System and organization controls (SOC) reporting is standard practice for technology and service providers to help build trust with key stakeholders. SOC and other external controls reports detail how companies secure client data, protect private information and uphold contractual commitments related to data processing and system availability.
But without a structured approach, SOC programs may monopolize more resources than they should and get bogged down in unnecessary complexity. A SOC program may not be integrated with other compliance efforts — and it may even be treated as an afterthought.
Mergers and acquisitions can exacerbate these challenges. PwC has worked with a number of companies that faced challenges related to their external controls reporting as a result of deals activity. Some of these challenges include managing a larger number of SOC reports and other certifications than compliance programs were originally designed to manage, navigating multiple external auditors as well as the costs associated with blending several compliance teams together. There are opportunities to consider that may help an organization navigate some of these challenges, including leveraging technology tools and basic automation to help improve overall efficiency and streamlining and monitoring routine elements of associated reporting tasks.
With these solutions, we have helped clients facing third-party reporting challenges rationalize their inventory of deliverables and streamline their compliance teams. Merging organizations were able to adapt to the changes in their reporting environment, employ industry and in-house technology and tools, and build out existing system capabilities to help improve the interconnectedness and efficiency of the compliance program and reporting efforts.
Thinking about enhancing your own reporting process? Whether you are experiencing M&A activity or not, there may be opportunities to help increase efficiency while you enhance value and build trust. Here are four questions to consider that can help you evaluate your approach to external controls reporting.
Acquiring another company in your industry is a common way to open up new revenue streams or lines of business. Be sure to consider external controls reporting in your risk assessment.
Take, for example, a financial services technology company that acquired an e-commerce tech provider. Rather than assessing and rationalizing the combined reporting work of both companies — which can be significant in highly regulated industries like finance — the acquiring company kept adding single-user, single-product reports for its clients. Management realized the company was producing more than 100 reports and certifications at a cost of $3 million in staffing. They sought help from PwC to assess and rationalize their reporting inventory to provide coverage for their intended users, while also increasing efficiencies and reducing redundancies within their team that supports the delivery of the reports. But they could have likely avoided some associated costs if they had considered the impact of the acquisition on reporting efforts prior to closing the deal.
Companies that rework their approach to SOC and external controls reporting with an eye to helping prevent duplicate efforts, streamline processes and enlist time-saving technology are often better positioned to enjoy a return on their investment in these efforts — greater overall efficiency, smarter use of reporting teams and a curated inventory of reports that current and prospective customers can rely on for assurance around data security and other controls.
More than just providing assurance, SOC reporting and other attestation services can help build trust with your stakeholders and safeguard your company’s most critical assets.
With the right risk and compliance processes in place, you can prepare for what’s ahead, transforming risk into opportunity.
