SSAE18 compliance demonstrates a commitment to data security, risk management, and operational excellence. It is mandatory for certain types of organizations. Here is a straightforward guide to who needs to be SSAE18 compliant and what that means in practice for different categories of organizations.
SSAE 18, also known as Statement on Standards for Attestation Engagements 18, is a set of guidelines developed by the American Institute of Certified Public Accountants (AICPA) that define the requirements for attestation engagements.
The standard outlines the guidance for independent auditors to evaluate and report on the controls at a service organization related to financial reporting. It replaced SSAE 16 in May 2017, which itself replaced SAS 70.
SSAE 18 emphasizes the importance of risk assessment and expands the scope of the auditor’s engagement beyond the controls’ description and design to include operating effectiveness testing. It requires service organizations to assess and disclose information about their controls and processes for managing risks associated with their services.
The short answer to the question “Who needs to be SSAE18 compliant?” is service organizations, financial institutions, and healthcare organizations. There are, however, some other organizations that will also need to be SSAE18 compliant. Here is a straightforward overview of the different categories of SSAE18 compliance.
Service organizations are companies that provide services to other organizations or individuals, rather than selling physical goods. These organizations are often hired to perform a specific task or provide a particular service to their clients and are responsible for maintaining the confidentiality, availability, and integrity of their clients’ sensitive data.
Service organizations can be found in various industries such as technology, healthcare, finance, and manufacturing. Examples of service organizations include payroll processing, data center hosting, software-as-a-service (SaaS) providers, call centers, and transportation companies.
These companies often have access to critical financial information, personal data, and intellectual property of their clients, which makes them a high-risk target for cyber-attacks and fraud. Service organizations must maintain proper internal controls over financial reporting to mitigate the risk of fraud and errors, and ensure the accuracy and completeness of financial information.
Financial institutions refer to entities that offer financial services, including banking, investment management, insurance, and lending, among others. These entities act as custodians of their clients’ money and investments and have the responsibility to ensure that their clients’ funds are protected and secure.
As a result, financial institutions are subject to strict regulatory requirements and are obligated to implement effective internal controls over financial reporting to prevent fraud and ensure compliance with regulations.
Some examples of financial institutions include banks, insurance companies, investment firms, mortgage lenders, and credit unions. Because financial institutions handle sensitive financial data, such as transaction records, account balances, and investment portfolios, they are susceptible to cyber-attacks and fraudulent activities.
To maintain the accuracy and completeness of their financial statements and protect against fraudulent activities, financial institutions must maintain adequate internal controls over financial reporting.
Healthcare organizations refer to entities that provide healthcare services, such as hospitals, clinics, pharmacies, and medical laboratories, among others. These organizations are responsible for maintaining the confidentiality, availability, and integrity of their patients’ medical records and other sensitive healthcare information.
Healthcare organizations are subject to stringent regulatory requirements, including the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act, which mandate the protection of patient health information. In addition to regulatory requirements, healthcare organizations must also ensure the accuracy and completeness of their financial statements and prevent fraudulent activities, which can negatively impact patient care.
Healthcare organizations must implement adequate internal controls over financial reporting to prevent errors, misstatements, and fraudulent activities in financial reporting, which can ultimately impact patient care.
Examples of internal controls over financial reporting for healthcare organizations may include but are not limited to, segregation of duties, monitoring of cash receipts and disbursements, and ensuring compliance with billing and coding standards.
Other organizations refer to entities that do not fall under the financial, healthcare, or service organization categories, but still handle sensitive data or provide critical services to their clients.
These organizations may include government agencies, non-profit organizations, educational institutions, and retail companies, among others. Although the nature of the data or services provided by these organizations may vary, they are all susceptible to cyber-attacks, fraud, and other financial reporting risks.
As a result, these organizations must implement adequate internal controls over financial reporting to prevent errors, misstatements, and fraudulent activities in their financial reporting.
Examples of internal controls over financial reporting for these organizations may include segregation of duties, regular monitoring of financial transactions, and ensuring compliance with applicable regulations and standards.
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