SSAE 16 - Reporting on Controls at a Service Organization

SSAE Guide > SSAE 16

Effective June 15, 2011, the AICPA required Statement on Attestation Standard 16 (SSAE 16) to be used when covering the topic of Reporting on Controls at a Service Organization. In plain English, this comes into play when a company under audit uses outside companies to perform significant financial tasks for them. When said outside company is used, how well their controls are operating should be considered when evaluating the controls of the company that is hiring them. Prior to its release, SAS 70 was the accounting standard used for service organizations.

Definitions:
Service auditor - Auditor reporting on controls at a service organization.

Service organization - Typically a business that provides services to other entities. Some examples would be the outsourcing of payroll, employee benefits management, vendor invoice payment, etc.

SSAE 16 states that the objectives of the service auditor are to obtain reasonable assurance about whether management’s description of the service organization’s system fairly presents the system used during the period, as well as the controls related to the control objectives stated in management’s description of the service organization’s system. In short, the controls needed to be designed and working properly during the period in question. This must be reported based on the service auditor’s findings.

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