SOC Reporting Frameworks and Standards 2 — Questions and Answers
Question 1: Which SOC report type is specifically designed for service organizations that process financial transactions and is most commonly requested by financial statement auditors?
- SOC 1 Type II (Correct answer)
- SOC 2 Type I
- SOC 3
- SOC for Cybersecurity
Correct answer: SOC 1 Type II
SOC 1 reports address internal controls over financial reporting (ICFR) and are the report type most relevant to user entities' financial statement audits.
Question 2: Under the AICPA Trust Services Criteria, which category addresses the system's ability to process data accurately, completely, and in a timely manner?
- Availability
- Processing Integrity (Correct answer)
- Confidentiality
- Privacy
Correct answer: Processing Integrity
Processing Integrity ensures that system processing is complete, valid, accurate, timely, and authorized.
Question 3: A SOC 2 Type I report differs from a SOC 2 Type II report in that the Type I report:
- Covers a period of at least six months
- Tests operating effectiveness over time
- Evaluates design suitability at a point in time (Correct answer)
- Requires a management assertion
Correct answer: Evaluates design suitability at a point in time
A SOC 2 Type I report assesses whether controls are suitably designed at a specific point in time, without testing their operating effectiveness over a period.
Question 4: Which standard governs the performance of a SOC 2 engagement by a CPA firm?
- AT-C Section 205
- AT-C Section 320
- SSAE No. 18 AT-C Section 205 (Correct answer)
- SAS No. 70
Correct answer: SSAE No. 18 AT-C Section 205
SOC 2 engagements are performed under SSAE No. 18, specifically AT-C Section 205 for examination engagements.
Question 5: What is the primary purpose of the complementary user entity controls (CUECs) listed in a SOC 1 or SOC 2 report?
- To replace controls the service organization cannot implement
- To describe controls user entities must implement for the system to achieve its objectives (Correct answer)
- To document the service auditor's testing procedures
- To list exceptions found during the audit period
Correct answer: To describe controls user entities must implement for the system to achieve its objectives
CUECs identify controls that must be in place at user entity organizations to complement the service organization's controls and achieve stated control objectives.
Question 6: Which component of the COSO Internal Control framework relates to the policies and procedures that ensure management directives are carried out?
- Control Environment
- Risk Assessment
- Control Activities (Correct answer)
- Monitoring Activities
Correct answer: Control Activities
Control Activities are the actions, policies, and procedures that ensure management directives to mitigate risks are executed.
Question 7: A subservice organization is BEST described as:
- A user entity that relies on the service organization's services
- A vendor that provides services to the service organization that are relevant to user entity controls (Correct answer)
- The CPA firm performing the SOC engagement
- An internal department within the service organization
Correct answer: A vendor that provides services to the service organization that are relevant to user entity controls
A subservice organization provides services to the service organization that are part of the system relevant to user entities' internal control over financial reporting or other objectives.
SOC Reporting Frameworks and Standards 2
Which SOC report type is specifically designed for service organizations that process financial transactions and is most commonly requested by financial statement auditors?