SSAE 16 and ISAE 3402 are two widely used auditing standards for service organizations. Many assume SSAE 16 is just the U.S. version of the international ISAE 3402 standard, which at a high-level it is. However, there are several key differences between that have important implications for risk management and compliance.
Why Global Organizations Are Adopting ISAE 3402
In recent years, ISAE 3402 has gained prominence as the preferred international standard. The AICPA and other governing bodies now design frameworks using ISAE 3402 as a foundation. This reduces costs and complexity for organizations requiring worldwide compliance and auditing. ISAE 3402 was intentionally designed to allow for minor modifications to adjust for local protocols and existing frameworks.
The Major Differences Between SSAE 16 and ISAE 3402
While SSAE 16 was influenced by ISAE 3402, it diverges across nine dimensions:
- Intentional Acts: places more emphasis on intentional fraud by service organization personnel.
- Anomalies: has more rigorous guidelines for addressing anomalies detected during audits.
- Internal Auditors: provides clearer rules around using internal auditors.
- Subsequent Events: has detailed requirements for handling events after the audit period.
- Use of Audit Reports: restricts how audit reports can be used to prevent misuse.
- Documentation: sets more stringent standards for audit documentation completion and retention.
- Engagement Rules: provides more comprehensive directives around audit engagements.
- Disclaimers: SSAE 16 allows for audit opinion disclaimers not found in ISAE 3402.
- Reporting Elements: Certain reporting elements are optional in ISAE 3402 but required in SSAE 16.
When These Differences Matter Most
For organizations operating solely in the U.S., the choice between SSAE 16 and ISAE 3402 may not be material. However, the differences have major implications for global organizations who want to effectively compete worldwide.
While SSAE 16 and ISAE 3402 have geographic associations, their differences extend beyond borders. From reporting to anomalies and documentation, these standards diverge in meaningful ways. Understanding the nuances of your compliance requirements and expectations will prevent duplicative efforts and facilitate customer security inquiries.