Today, businesses have become increasingly dependent on third party service providers for critical operational activities, such as financial reporting and data storage activities, as well as IT services. Security, accuracy and compliance of these services are crucial to companies that handle sensitive information. SSAE 18 Certification now bridges the gap and fills the void where we left off. This is a key standard in proving that service organization’s dedication to proper control mechanisms and secure processes can be provided.
What does SSAE 18 Certification mean?
SSAE 18 Certification is the American Institute of Certified Public Accountants (AICPA)’s Statement on Standards for Attestation Engagements No. 18. SSAE 18 was introduced in 2017 and came to replace SSAE 16, functional updates of the requirements for service organizations that provide outsourced services affecting the financial reports of parties.
This certification assures service organizations in maintaining strong internal controls that are sufficient to ensure that the services they provide are proper. Companies that are SSAE 18 Certified pass through a rigorous SSAE 18 Certification process that is conducted by independent certified auditors who examine a company’s internal control processes, risk management, and security and financial reporting controls.
Why SSAE 18 Matter
Building Enhanced Trust and Credibility
The major reason for the need of SSAE 18 Certification is to build the trust between service organization and its clients. Outsourced services such as payroll, cloud services, or data processing require business assurance that service providers use best in class data protection and operational control practices. SSAE 18 certified organisations are highly accountable and transparent, and this makes it easy for them to develop a good relationship with clients.
Regulatory Compliance
SSAE 18 Certification aids businesses in these regulated industries by assuring compliance with the a wide range of regulatory requirements. It also matters whether the company has SSAE 18 standard for HIPAA, SOX, or GDPR. For example, a company that meets SSAE 18 for HIPAA ensures its client information, as well as integrity of the financial, is protected. SSAE 18 certification is required in many instances for businesses to require their service providers to be SSAE 18 certified.
Internal Control and Risk Management
SSAE 18 makes risk management a focus by making sure service organizations not only identify but also take proper action to manage risks. The SSAE 18 Certification is a service providers evaluation of its controls and reporting of any risks that other than adversely affect service providers clients financial reporting. That’s why organizations need to put in place a proactive approach that helps them be against a security breach or data mishandling, thereby lowering the possibility of these pricey incidents.
Client assurance and Competitive Edge
Clients who wish to work with third party (vendors) service providers want reassurances that their data security and operations are in safe hands. Attaining SSAE 18 Certification enables organizations to distinguish themselves from their competition; clients will have their confidence in organizations’ adherence to industry’s best practices. In industries where security and compliance are non negotiable, it becomes a selling point.
Operational Improvements and efficiencies
Often, SSAE 18 certification results in operational improvements within an organization. When they go through the regular audits, which they have to do, they look at their processes and review and refine their internal processes. It serves to identify inefficiencies or weaknesses of their systems, which can be corrected to make service delivery better or more efficient. In fact, these improvements eventually provide more reliable operations and help improve business performance as a whole.
SSAE 18 Certifications: How to Obtain
In order to reach SSAE 18 Certification, an in depth evaluation of internal controls and risk management of an organization is essential. Type I or Type II audit is performed by a Type of independent auditor who evaluates if the organization’s controls are effective designed (Type I) or effective over time (Type II). An organization may be targeted at different services it provides, and the audit may concentrate on financial processes, data security, privacy and business continuity measures.
The organization, after the successful completion of an previous audit, confirms SSAE 18 certification for a valid term, after which it needs to go ahead with subsequent audits to comply.
Conclusion
As service organizations serve in our ever more interwoven business landscape, SSAE 18 Certification is necessary. The fact that a company maintains high standards of internal control, security and compliance shows its commitment to doing its best. Securing the SSAE 18 certification will facilitate service providers to satisfy the regulatory requirements, enhance the client relationships as well as be able to be more efficient operationally as well as in the market.
