SOC® For Supply Chain

SOC® for Supply Chain is a risk management and reporting framework designed specifically for producers, manufacturers, and distributors. Part of the AICPA SOC Suite of Services, it allows organizations to evaluate their internal controls as they relate to their supply chain.

What Is SOC® for Supply Chain?

A SOC® for Supply Chain compliance assessment allows organizations to identify, evaluate, and mitigate risks that could disrupt their operations. The corresponding report also allows organizations to provide prospective customers with relevant information about their production, manufacturing, or distribution system.

As with other SOC examinations, SOC® for Supply Chain can be tailored to the needs of the specific organization. It is appropriate for organizations of any size, in any industry. The scope can include any combination of AICPA Trust Services Categories, including Security, Availability, Processing Integrity, Confidentiality, and Privacy.

Who Needs an Examination?

The AICPA created SOC for Supply Chain to meet the unique needs of:

  • Producers (organizations that prepare raw materials for sale)
  • Manufacturers (organizations that transform raw materials or components into other components or finished goods)
  • Distribution companies (companies that provide or manage all or a significant part of another entity’s logistics, including freight, customs, warehousing, inventory management, fulfillment, distribution, or outbound freight)
  • Commercial software developers (exclusive of software development service )

In contrast, organizations that focus on data or intangible goods (rather than physical products) may find a SOC 2 examination more relevant to their business.

What is Covered in a SOC® for Supply Chain Examination?

Depending on the selected AICPA Trust Services Criteria, it can provide assurance that:

  • An organization’s system is appropriately protected from both physical and logical risks
  • An organization can produce materials in the promised quantities and timeframes, and with the required physical characteristics and functionality
  • An organization is positioned to meet other relevant delivery commitments set forth in their contracts
  • An organization is positioned to distribute their products in accordance with relevant laws for timing, storage, and transportation
  • An organization’s system conforms with industry standards, local and federal laws, and customer requirements
  • An organization can meet specific confidentiality requirements (e.g., the protection of their customers’ intellectual property) and/or their privacy notices and privacy policies

It does not cover the design or performance of the products produced by an organization’s system. It does not guarantee that goods can meet specific performance requirements. It also is not intended to cover financial risks, such as changes to the cost of materials.

Why Complete a SOC® for Supply Chain Engagement?

Supply chains are more complex than ever. This has allowed organizations to become more efficient, but it has also introduced numerous risks. These risks can interfere with a company’s ability to meet contractual obligations, production standards, and privacy expectations.

As a condition of doing business, organizations may need to provide independent assurance that they can meet operational and compliance objectives. A SOC® for Supply Chain report allows companies to communicate relevant information about their system, as well as the design and effectiveness of the controls they use to counteract their risks. Following a common set of description criteria and disclosures, it reduces the burden on companies who regularly receive requests for risk- and system-related information.

What Does a SOC® for Supply Chain Report Include?

A SOC for Supply Chain report will include:

  • A description of the organization’s system
  • Management’s assertion of the description of the system and the effectiveness of the controls
  • An auditor’s opinion on the description of the system and the effectiveness of the controls
  • An auditor’s description of the procedures performed and the results of those procedures

The auditor’s opinion will explain:

  • Whether an organization’s description of their system indicates that the system was designed and implemented in accordance with the description criteria, and
  • Whether the controls included in the description were effective over a period of time

Because the final report includes detailed information about an organization’s supply chain system, it is only intended for a limited audience. End users must have sufficient knowledge of the organization’s production or manufacturing systems, risk profile, internal controls and the applicable Trust Services Categories. This typically includes entity management and select current or prospective business partners.

Navigating the Complex SOC® for Supply Chain

As a licensed CPA firm, 360 Advanced provides a full suite of SOC reporting services, including SOC for Supply Chain. Our auditors have a deep understanding of the AICPA Trust Services Criteria as they relate to production, manufacturing, and distribution, as well as industrial risk factors and regulatory requirements.

Working directly with your management team, our auditors will help you define the system to be examined, the Trust Services Criteria to include in your examination, and the time frame for the engagement. From there, we will recommend ways to make the examination as straightforward as possible – such as leveraging existing evidence to satisfy SOC for Supply Chain requirements. This integrated approach lets you complete multiple cybersecurity and compliance initiatives at the same time, reducing the burden on your team and reducing your overall cost of compliance.

Learn More About SOC® for Supply Chain