In this video, we discuss type 2 SOC engagement as covered in the Information Systems and Controls ISC CPA exam.
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A Type 2 SOC (Service Organization Control) engagement is an independent examination of the controls and processes of a service organization. It provides assurance to customers and stakeholders about the effectiveness of the organization's controls over a specified period, usually a minimum of six months. Here's an overview of a Type 2 SOC engagement:

Objective: The primary objective of a Type 2 SOC engagement is to evaluate the design and operating effectiveness of the controls implemented by a service organization to achieve one or more of the Trust Service Criteria (TSC). These criteria include security, availability, processing integrity, confidentiality, and privacy.
Scope: The scope of the engagement defines the services provided by the organization, the systems and processes involved, and the controls that are subject to examination. It typically includes a description of the system, including its infrastructure, software, people, procedures, and data.
Duration: A Type 2 SOC engagement covers a specified period, usually a minimum of six months but often up to a full year. During this time, the auditor assesses the effectiveness of controls over time, rather than at a specific point in time, providing a more comprehensive evaluation of control performance.
Testing Period: Unlike a Type 1 SOC engagement, which evaluates controls at a specific point in time, a Type 2 engagement involves testing controls over a continuous period. This allows the auditor to assess the operating effectiveness of controls over an extended period and to identify any deficiencies or weaknesses.
Audit Procedures: The auditor performs various audit procedures to evaluate the design and operating effectiveness of controls. This may include inquiries, observations, inspections of documentation, and testing of transactions and processes. The auditor may also use specialized tools and techniques to gather evidence.
Report: At the conclusion of the engagement, the auditor issues a SOC 2 Type 2 report. This report provides an opinion on the effectiveness of the controls based on the auditor's assessment. It includes a description of the system, the auditor's opinion on the fairness of the presentation of the description, and the results of the tests of controls.
Management Assertion: As part of the SOC 2 report, management of the service organization typically provides a written assertion regarding the fairness of the presentation of the system description and the effectiveness of the controls.
Use and Distribution: The SOC 2 Type 2 report is used by the service organization to provide assurance to customers, stakeholders, and regulators about the effectiveness of its controls. It may be distributed to customers as part of contractual agreements or made available publicly to demonstrate compliance with industry standards.
Overall, a Type 2 SOC engagement provides valuable assurance to stakeholders about the effectiveness of a service organization's controls over time, helping to build trust and confidence in its services and operations.


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