SOC for the Supply Chain: Strengthening Security and Compliance
Jun 11, 2023
To aid organizations, its customers, and business partners, in identifying, assessing, and addressing supply chain risks, the AICPA has developed a solution to cultivate greater transparency in the supply chain —a flexible, market-driven, and voluntary privacy framework commonly known as SOC for supply chain.
This framework helps organizations exchange information about their supply chain risk management efforts and evaluate the effectiveness of system controls that address and mitigate those risks.
What is SOC for supply chain?
SOC for Supply Chain is a risk management and reporting framework tailored specifically for producers, distributors, and manufacturers. Included in the AICPA SOC Suite of Services, it enables organizations to assess their internal controls linked to their supply chain.
A SOC for Supply Chain compliance assessment allows organizations to address risks that could disrupt their operations. The corresponding report helps organizations win the trust of prospective customers with relevant information about their production, distribution, or manufacturing system.
Any combination of AICPA Trust Services Categories can be part of the scope, including Security, Processing Integrity, Availability, Confidentiality, and Privacy.
Who needs SOC for supply chain?
The AICPA implemented SOC for Supply Chain to meet the unique needs of:
- Producers: Organizations involved in preparing raw materials for sale
- Distribution companies: Organizations that manage or provide all or a significant part of another entity’s logistics, including warehousing, freight, customs, distribution, inventory management, fulfillment, or outbound freight.
- Manufacturers: Organizations responsible for transforming raw materials or components into finished goods or other components.
- Commercial software developers: Excludes software development service.
Also check out: SOC 2 audit for small businesses
Why is SOC for supply chain examination required?
Completing a supply chain assessment can provide assurance regarding the security, processing integrity, availability, confidentiality, or privacy of your products as well as, within the supply chain, information from your suppliers.
SOC for the supply chain has the following additional benefits:
Shows that you honor your commitments
You probably have production standards to maintain, customer privacy expectations to honor, and contractual obligations to keep. SOC for Supply Chain can aid you in identifying and addressing the risks of these so you can prevent them.
Reduce your burden of new inquiries regarding risk
Everyone is much more aware of security threats, and that means you’re among those getting hammered with questions from customers or prospective vendors about your safeguards and systems.
You’ll be able to provide them with one document, instead of responding individually, every time–your independently audited and validated SOC for supply chain report.
Enables you to focus on your core business practices
You have more time and resources available if you have fewer inquiries challenging you to prove your security, thus allowing you to focus more on your business relationships or simply improve your processes.
Gaining that competitive advantage
All compliance reports provide this kind of benefit, but SOC for supply chain offers a specific window view into your controls and processes in place to safeguard supply chain activities. They address very particular questions your stakeholders might have.
What does SOC for supply chain examination include?
A SOC for supply chain report will include the following:
- A description detailing the organization’s system
- The effectiveness of the controls and management’s assertion of the description of the system
- An auditor’s opinion on the effectiveness of the controls and description of the system
- An auditor’s description of the procedures implemented and the results of those procedures
The auditor’s opinion will brief on the following:
- Whether an organization’s description and implementation of their system indicates was designed and implemented as per the description criteria, and
- Whether the controls described in the description proved effective over a period of time
As the final report provides detailed information about an organization’s supply chain system, only a limited audience has access to it. End users must have sufficient knowledge of the organization’s manufacturing or production systems, internal controls, risk profile, and the applicable Trust Services Categories. This typically includes selecting current or prospective business partners and entity management.
Organizations that focus on data or intangible goods (rather than physical products), such as storing data on third-party cloud infrastructure, may find a SOC 2 examination more relevant to their business.
Sprinto automates your SOC 2 compliance journey by mapping risks to SOC 2 controls and enabling you to run automated checks to ensure continuous compliance for your SOC 2 audits.
Sprinto helps you get SOC 2 compliant 10x faster and strengthens your cybersecurity posture. Get in touch with our experts today to learn more.
What is a SOC vendor?
Performed by a public accounting firm, it’s the final report from an independent audit of internal controls. The report attests to the existence as well as effectiveness, of type II audits, of controls specified by the business being audited (your vendor).
What does SOC mean in production?
SOC for Supply Chain is tailored to address the needs as well as risks of organizations that have an increased interdependence on distributors and suppliers, including software companies. It can help you and your vendors identify and mitigate specific risk areas.
What are the 2 types of SOC?
There are two main kinds of SOC 2 compliance: Type 1 and Type 2. Type 1 certifies an organization’s use of compliant processes and systems at a specific point in time. Conversely, Type 2 certifies compliance over a period (usually 1 year).
Ayush Saxena is a senior security and compliance writer. Ayush is fascinated by the world of hacking and cybersecurity. He specializes in curating the latest trends and emerging technologies in cybersecurity to provide relevant and actionable insights. You can find him hiking, travelling or listening to music in his free time.
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