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What is SOC for Supply Chain?

SOC for Supply Chain reports on the internal controls of an entity’s system for producing, manufacturing or distributing goods according to the AICPA’s framework.

Purpose of SOC for Supply Chain

Increased automation and global connectivity are making supply chain process increasingly complicated. Various entities are interconnected with each other throughout the chain to produce and deliver the final product to customers. Although, this connectivity of manufacturers, producers, suppliers, distributors, and other business partners can be beneficial for customers, it also results in more significant risks to the organization’s ability to meet commitments if there is any disruption across the chain.

Top supply chain-related concerns include cybersecurity risks, global environment changes and more. The Coronavirus pandemic has caused disruption to many supply chains in unexpected ways, resulting in many companies seeking a SOC for Supply Chain to prepare for future events.

A SOC for Supply Chains intends to:

1. Provide information to stakeholders about a system used to produce, manufacture, or distribute goods and the related controls within that system.
2. Address risks linked to doing business with manufacturers, producers, and distribution companies.
3. Allow companies to disseminate useful information about their systems, and the controls within their systems, to customers.

Benefits of SOC for Supply Chain

1. Improved clarity of the entity’s processes and controls for current and potential clients.
2. Enhanced entity’s reputation and brand, and a likely market differentiator.
3. Potential decrease of vendor questionnaires or on-site audits.

What information does the report contain?

The report is similar to a SOC 2 report and contains various sections to serve intended users with relevant information about the system in scope. The SOC for Supply Chain report would incorporate the following key items:

1. A description of the system used by the entity to produce, manufacture or distribute products per the AICPA description criteria (DC section 300: 2020 Description Criteria for a Description of a Producer, Manufacturer or Distribution System in a SOC for Supply Chain Report).
2. The specific controls of the entity to achieve the principal system objectives based on the AICPA trust services criteria (TSP section 100, 2017 Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality and Privacy).
3. The CPA’s test procedures performed for the controls listed and the testing results.
4. Management’s assertion along with the practitioner’s assessment of the description of the controls and its effectiveness.

A SOC for Supply Chain can help you prepare for major events that could affect your suppliers and help you maintain stability within your company. National and global firms may especially benefit from managing supply chain risks. Contact us to learn more about the process and get started with our expert team.