ISAE 3402 report

What is ISAE 3402?

In a nutshell: an ISAE 3402 report provides information and assurance on internal controls. This concerns outsourced services that are related to financial and underlying processes. There is no established assessment framework for ISAE 3402. This is drawn up in advance jointly. It must be based on potential risks with regard to the financial processes. In this article, we zoom in on the aspects of ISAE 3402, in order to map out the benefits of an ISAE 3402 audit.

Outsourcing

Outsourcing processes to service organizations, also known as outsourcing, makes organizations increasingly dependent on the quality and control of these external services and processes. ISAE 3402 offers a solution for the risks and challenges associated with outsourcing by providing assurance on risk management and internal control.

ISAE 3402 audit

An IT auditor performs an independent assessment of the reliability of financial and underlying processes that have been outsourced to a service organization, resulting in an ISAE 3402 statement (report). The scope of the ISAE 3402 not only includes the controls for financial processes, but also extends to aspects such as the reliability of the primary process, information security, availability and integrity, all of which can be included in the accompanying ISAE 3402 statement.

What is an ISAE 3402 report

The content of an ISAE 3402 report does not have a fixed form, but certain elements must be included. This includes, among other things, a description of the risk management framework, the criteria against which the ISAE 3402 report has been tested, and the measures that ensure that these criteria are met. It is customary to include a general section in the statement with a description of the organization and the risk management framework. In addition, the report contains a control matrix, which describes the control objectives and the associated measures that achieve these objectives. These control objectives must be in line with the annual accounts of the user organization.

Accountant

When a service organization has an ISAE 3402 report, it is not necessary for the accountant of the user organization (user auditor) to audit the processes separately, because these have already been assessed by an external auditor. In the Netherlands, accountants recognize the value of the ISAE 3402 certification and integrate it into their annual accounts audits, thus ensuring a more efficient and effective assessment of processes.

Summary

In today’s dynamic business environment, where outsourcing has become an integral part of operational strategies, ISAE 3402 is a crucial link in strengthening trust and increasing transparency. By providing a thorough analysis of outsourced services with regard to financial and underlying processes, the ISAE 3402 report not only provides certainty but also valuable insights. This report not only enables the service organization to build trust with its stakeholders, but also streamlines the work of the user organization’s accountant, who no longer needs to verify the effectiveness of processes separately.

Would you like to know more about the content of ISAE 3402 or the possibilities within Brand Compliance for auditing it? Please contact one of our specialists, they will be happy to assist you.