A SOC report can be beneficial for your organization. It includes a completed set of procedures and findings necessary to provide a high level of assurance that your controls are adequate. Furthermore, the SOC report may also contribute to showing compliance with various legal regulations. The report is designed to help your organization protect its assets, financial statements, and other areas of any concerns. Along with reviewing your systems and processes, the engagement team also investigates whether all controls can help ensure that risks continue to be managed effectively.
While most companies will request a report after each completed annual audit as part of their annual filing requirements, some require a report at specified points throughout the year. As part of a periodic review program, some companies require SOC Reports annually or semi-annually. While there may not be a need to conduct a complete examination each year, it is prudent to have the SOC report reviewed annually to confirm that minimum operating standards are being maintained.
What is a Bridge Letter in SOC?
A bridge letter is a notice that informs stakeholders your controls have not undergone significant changes or issues over the time between SOC reports. The purpose of this notice is to assure all concerned parties that the findings of the SOC reporting remain valid. This notice is submitted directly to customers with no further intervention by the CPA firm that performed the SOC examination.
What Are Some Benefits of a Bridge Letter?
Bridge letters allow for increased customer satisfaction because it reassures them their business processes and operations will stay secure despite any lapse in security coverage. It also reduces potential liability as there’s proof you’ve taken care to address gaps in your security monitoring, so an issue would need to be more severe before being reported on and requiring additional action by your customers.
A bridge letter also provides dependable visibility into internal controls and security measures that may be operating below the level of your SOC reports but are still necessary to monitor over time. The letter informs stakeholders of those processes and why they are essential to the organization.
Are There Any Disadvantages?
Inherently, there is a risk that if you have significant issues uncovered in your SOC reports which were not addressed by your bridge letter, this will leave customers feeling surprised or misled by the findings. A problem here would depend on how much time elapsed between the two letters and whether or not your controls were operating efficiently during that time. It’s essential to constantly evaluate how to improve security to proactively address any potential issues uncovered in the SOC reports before they become a problem.
Bridge letters aren’t very time efficient. While SOC reports take a significant amount of time to prepare and complete, bridge letters can be created quickly (especially if there are no issues needing addressing). Still, they also need to be sent out right away. They will still generate additional customer correspondence, which may not be ideal for those who don’t maintain a strict schedule for when the mail comes in.
Bridge letters also aren’t very flexible — they are a one-size-fits-all type of solution. They don’t allow much of a change or customization to address specific circumstances or needs.
What Should It Include?
- Date of your most recent SOC report’s start and end
- Brief description of changes in internal controls and reason why they were not significant enough to require updating the SOC report
- Your management’s name and contact information for customers to reach out to if they still have concerns about your security practices or findings
- Any other noteworthy information
Also, consider including a disclaimer: A disclaimer is just an agreement that the CPA firm issuing the letter isn’t responsible for any liability or legal repercussions arising from its contents, however minor those consequences may be. Disclaimer is a common thing you will have been asked to include in your SOC reports if an issue arose during your last security review. For more information regarding this, you can read the section in your SOC report, which outlines the recommendations for such a disclaimer.
What Makes a Good Bridge Letter?
A good bridge letter should not only provide a detailed insight into the findings from your most recent SOC reporting period. It should also highlight any improvements that have been made to enhance security practices and plans going forward. It’s important to outline how controls have been fine-tuned based on what is contained in the previous report.
If there are any significant differences between your current SOC report and this bridge letter, then these should be highlighted as well.
It is important to note that you don’t need to discuss every little detail in your letter. Just include what is necessary for customers to understand why there was no update to your last report (or changes in the controls) over that period.
In conclusion, bridge letters are a way to provide customers with updates on security practices and findings over a specific period. They are not as flexible or detailed as SOC reports, but they can come in handy when you don’t have the time or resources for a full report. A bridge letter is a perfect way to reassure your stakeholders if there is a time-lapse between the termination of your fiscal year and the end date of your report.