Video: System and Organization Controls (SOC)

In this lesson, Nick Palazzolo, CPA, demystifies the world of System and Organization Controls (SOC) reports, which play a pivotal role in audit processes. He clarifies the purposes of SOC reports and the key differences between SOC 1 and SOC 2, as well as the less commonly known SOC 3 report. Nick explains the specific focus of a SOC 1 report on internal controls over financial reporting and outlines who primarily uses it. He also differentiates the types within SOC 1 and SOC 2 reports, emphasizing how type 2 reports include the operating effectiveness of controls. With a straightforward approach, Nick ensures that grasping the nuances of SOC reports, their types, and their intended audience is accessible and clear, valuable knowledge for engaging with public accounting and audit exam preparations.