Tag: ISAE 3402

SSAE 16 vs ISAE 3402 – Part 2 – Intentional Acts

The first difference between the SSAE 16 and ISAE 3402 Standards is that SSAE 16 requires the service auditor to assess the risk associated with potential “Intentional Acts by Service Organization Personnel”. Under SSAE 16, If the service auditor, while performing their review, notices deviations that could have been a result of an intentional act by an employee of the service organization, the auditor is required to dig into it. The reasoning for this is to determine whether or not the description of the service organization’s system is not fairly presented and that the controls are not suitably designed or operating effectively. So, it seems that in this case, the SSAE 16 standard is a bit stricter. If the auditor is not required to dig into an intentional act committed by an employee of the service organization, how would the Auditing Firm and User Organizations feel comfortable with the report? In my opinion, they shouldn’t. Without any consequences for the service organization (failed report), there is an incentive for the service organization to try and operate outside the control structure as defined as it is unlikely that they would be held responsible for their actions. This might be a question you would want to dig into if you are going to use a company that has only been issued an ISAE 3402 report. Be on the lookout for the next post related to the difference between SSAE 16 and ISAE 3402, Anomalies.

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SSAE 16 vs ISAE 3402 – Part 1

Introduction 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

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