Video: CUECs Effect on SOC Reports

In this lesson, Nick Palazzolo, CPA, dives into the complexities of Complementary User Entity Controls (CUECs) and their critical role in SOC (Service Organization Control) reports. He begins by defining CUECs and explaining their function within the framework of service organizations like ADP, which handle processes for user entities such as Microsoft. Nick elaborates on how these controls are integral for achieving the objectives outlined in a service organization’s system description and underscores their necessity for a positive SOC report outcome. He differentiates between SOC 1 and SOC 2 reports, noting that SOC 1 focuses on the internal control over financial reporting, while SOC 2 centers on trust services criteria related to IT security and operations. Through engaging examples and historical analogies, Nick illustrates the importance of implementing and understanding CUECs to maintain the integrity and effectiveness of service organization controls, stressing the shared responsibility between service and user entities in managing risks and enhancing control effectiveness across financial and IT environments.