Compliance for Third-Party Administrators

The business trend today is for companies to outsource anything and everything that is not their primary line of business. This has provided opportunities for third-party administrators processing claims and performing other administrative services, usually in the field of employee benefits such as workers’ compensation. Third-party administrators handle the administration of their customers’ plans that include: processing, adjudication and negotiation of claims, record-keeping, and maintenance.

Increased demand for security, privacy and regulatory compliance has escalated the need for third-party administrators to become SOC 1® compliant. The SOC 1® attestation plays an important role for third-party administrators by establishing credibility and trust with their customers and has been used as a marketing tool to enter new markets or expand existing market share.

Information security is not the only relevant component of the SOC 1® attestation. Third-party administrators are responsible for recording and processing transactions that have a financial impact to their customers. Their SOC 1® attestation should have an appropriate balance of information technology and quality control procedures over the transaction processing to ensure that customer’s records are secure and account balances are accurate and reliable.

A Third-Party Administrator’s SOC 1® attestation involves the following critical areas:

  1. Organizational Level Controls: also known as “tone at the top” and is the evaluation of management’s oversight and internal operational level controls.
  2. Physical Security: the protection of information systems as it relates to third party data.
  3. Environmental Security: the protection of information systems and data from environmental threats.
  4. Data backups: the availability and protection of third party data.
  5. System Availability: the availability of information systems to user organizations.
  6. Application Change Control: the processing and procedures used to ensure that systems function per user requirements.
  7. Information Security: the logical protection of data from unauthorized system access.
  8. Data Communication: the data maintains its integrity and security as it is transmitted between third parties and the service organization.
  9. Receipts: the deposits/credits received from customers equals the amount credited to their account.
  10. Distributions: the distributions are documented, authorized and made to the proper authority/party.
  11. Transaction Processing: Roosa CPA, LLC will work with management to include within our scope any transaction processing control objectives related to workers’ compensation or liability claims.

The scope of the SOC 1® attestation is determined by the service organization. Accordingly, a well scoped attestation can clearly demonstrate your organization’s quality of service and ensure that sufficient information is provided to your user organization to communicate your stringent controls over physical security, environmental security, authorized access and continuous availability of services.

SOC 1 Compliance Process

We tailor every attestation engagement to our client’s requirements. However, we have a fundamental four phase process that normally meets our clients’ needs and creates an efficient, unobtrusive attestation that enables you to focus on your business while we focus on your compliance.

<h2 style="display:inline;">Scope</h2> (Phase 1): Not every SOC 1<sup>®</sup> attestation has the same requirements. Each company can vary depending on the type of services they perform for their customers. We have years of experience working with just about every industry and work with our clients to ensure that we cover the appropriate scope to ensure your customers’ needs are satisfied. While the scoping phase of our attestation is normally covered during our initial quoting process, we offer a formal meeting with our clients to ensure we have a mutual understanding of the attestation goals.
<p> <h2 style="display:inline;">Plan</h2> (Phase 2): We offer two options for the planning phase of your attestation:</p><!-- [et_pb_line_break_holder] --><ol><!-- [et_pb_line_break_holder] --> <li>We provide our in-house developed questionnaires and request list that are based on industry leading compliance frameworks such as CobiT, ISO 27000, PCI and HIPAA. Customers benefit from this approach by getting to work at their own pace with just a deadline in mind.</li><!-- [et_pb_line_break_holder] --> <li>The other option is an onsite visit to perform walkthroughs of the relevant service offerings. We then customize our attestation plan and deliver a detailed document request list to prepare our clients for phase three (fieldwork).</li><!-- [et_pb_line_break_holder] --> </ol>
<p><h2 style="display:inline;">Fieldwork</h2> (Phase 3): Our service auditors have a minimum of five years of experience with the Big 4 global CPA firms, large consulting firms and smaller boutique firms that specialize in SSAE 18 / SOC 1<sup>®</sup> attestations. Due to this, we are efficient and understand what is required for each attestation.</p>
<p> <h2 style="display:inline">Report & Market</h2> (Phase 4): Your SOC 1<sup>®</sup> service auditor’s report is essentially the product for which you pay. We provide well defined and quality written reports that focus on providing your customers with everything they need from a third-party assurance perspective. We take pride in delivering professional quality reports in a timely manner; we stand behind everything we issue. Publicizing or marketing your service auditor’s report is the opportunity for your attestation to pay for itself. A major benefit from completing the SOC 1<sup>®</sup> attestation is the tangible return on investment that is created from having your company examined under the SSAE 18 standard for SOC 1<sup>®</sup>. We provide customized press release information and a SOC for Service Organizations logo to place on your web site, all included in our fixed fee pricing.</p>

Project Timeline: Four Phase Attestation

For More Information Speak to a Service Auditor at Roosa CPA, LLC (877) 410-8516

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