Having robust controls in place is imperative to managing risk and meeting stakeholder expectations. Undertaking an ISAE 3402 report results in independent, third-party assurance over the control environment and will help you ensure your controls meet the required standards.

What is an ISAE 3402 report?

ISAE 3402 (International Standard on Assurance Engagements 3402) is a standard for reporting on controls at a service organisation. The purpose of the report is to provide assurance to the user entities (i.e. key stakeholders such as customers and investors) that the business has adequate controls in place to manage potential risks associated with the services provided.

As part of the ISAE 3402 reporting engagement, business, operational, and IT processes and controls are defined and tested. The report, signed off by a Service Auditor, can be either a Type I or Type II report:

• Type I: Point-in-time assurance on the design of controls.

• Type II: Assurance over a specified time period on both the

  design and operating effectiveness of controls.

Who needs an ISAE 3402 report?

There is no regulatory requirement for an ISAE 3402 report. Obtaining one is typically driven by a stakeholder expectation or request and is often therefore a requirement in order to retain or win new business. If you fall within any of the below categories, you may find yourself being asked to provide an ISAE 3402 report:

• You offer outsourced services, for example payroll, pensions administration, property management/administration or investment management/administration.

• You manage or hold/customer data that needs to be safeguarded.

• You’re required to demonstrate a strong control environment to both internal and external stakeholders.

What are the benefits of obtaining an ISAE 3402 report?

Obtaining an ISAE 3402 report will:

• Provide a robust assessment of the internal control environment.

• Enable independent evaluation of the appropriateness and effectiveness of the controls, specifically related to the services provided.

• Provide an independent opinion, which increases external trust and confidence.

• Give a competitive advantage over other suppliers in the procurement process who do not have a 3rd-party controls assurance report

• Add increased efficiency in the external audit process through reliance placed on the controls assurance report for e.g. the use of one report addressing the collective needs of multiple user entities.

• Contribute to ongoing improvement by applying best practice recommendations.

• Showcase a commitment to transparency amongst both internal and external stakeholders.

Our third-party controls assurance reports are issued in line with the international ISAE 3402 framework and under the AAF 01/20 guidance issued by the Institute of Chartered Accountants in England and Wales (‘ICAEW’).

How we can help

At Buzzacott, we can help you execute your ISAE 3402 reporting requirements with confidence. Our team of experts possess a deep knowledge of risk management and internal control best practice, ensuring that your report is not just a compliance tick box exercise but a value-add tool for your business. We understand that every organisation is unique, and therefore tailor our approach to provide the most relevant and impactful assessment for your specific needs.