Trust through an ISAE 3402 audit

ISAE 3402 in brief

More and more organizations are outsourcing important financial processes to specialized service providers. Outsourcing these processes offers clear advantages, such as cost savings, flexibility, and access to specialized knowledge. But how can you be sure that these processes are reliably executed by your service provider?

Here comes the ISAE 3402 Report around the corner. In this comprehensive guide, you will read exactly what an ISAE 3402 audit entails, what the benefits are, and how we can support you.

Curious how we can help you?

Be sure to stop by for a (virtual) cup of coffee!

    Trusted by:

    Curious how we can help with carrying out or guiding an ISAE 3402 audit?

    Getting acquainted

    What exactly is ISAE 3402?

    ISAE 3402 is an international standard aimed at organizations that perform financial or administrative processes for their clients, such as payroll processing, pension administration, or cloud services that affect financial reporting.

    Contrary to popular belief, ISAE 3402 is not a certificate but an auditing standard that results in an assurance report. This report indicates whether the internal control measures of a service organization are sufficiently effective and reliable.

    In short:

    • International standard for service organizations that outsource or perform financial processes.

    • ISAE 3402 provides an audit report (not a certification).

    • Focuses on internal controls relevant to the financial reporting of clients.

    • Internationally recognized and aligns with the US SOC 1 framework.

    Why an ISAE 3402 report?

    Obtaining an ISAE 3402 certification is not a legally mandated requirement, but it is increasingly requested by customers, regulators, or business partners. ISAE 3402 reporting offers several advantages:
    Trust and confidence from customers and regulators
    With an ISAE 3402 report, you demonstrate that your organization conducts reliable and controlled processes that comply with legal requirements and contractual obligations. This directly enhances the trust of customers, suppliers, and regulators.
    Optimal internal control
    Through an ISAE 3402 audit, you gain insight into the effectiveness of your internal processes and controls. This improves your risk management and allows you to address any weaknesses in a timely manner.
    Competitive advantage in tender processes and bids
    Companies with an ISAE 3402 certification have a significant advantage in tenders and contract negotiations, particularly in sectors such as financial services, cloud computing, and administration.

    Type I and Type II statement: what is the difference?

    Within the ISAE 3402 standard, we distinguish between two types of reports: Type I and Type II.
    ISAE 3402 Type I Report
    A Type I report is intended to confirm that your control measures are properly designed at a specific point in time. Think of it as a ‘snapshot’: this report says something about the design and existence of internal controls, but does not yet assess their operation over a longer period. Useful as a first step to quickly demonstrate that you have implemented the correct control measures.
    ISAE 3402 Type II Report
    With a Type II report, not only the design and existence of the controls are assessed, but also their operating effectiveness, typically over a period of six to twelve months. This report provides significantly more assurance to clients and auditors. This is the follow-up step to a Type I report when you want to provide extra assurance about the actual functioning of the implemented controls.

    How does an ISAE 3402 process proceed?

    Intake

    We will jointly determine which processes are in scope for the ISAE 3402 audit and clearly define your expectations and objectives.

    Kick-off

    We are organizing a kick-off session with stakeholders to explain the entire process, timeline, and role distribution.

    Self-assessment

    Under our guidance, you will perform an initial test of your internal control measures. This will immediately show you where any bottlenecks may lie. 

    (Optional) Pre-audit

    We optionally conduct a pre-audit, for example, if this is the first time your organization is obtaining an ISAE 3402 report. This allows us to identify points of attention early on, giving you time to resolve them before the formal audit.

    Testing Measures

    Through interviews, document reviews, and sampling, we will assess whether your internal measures are sufficient to achieve the established control objectives.

    Draft report

    We draw up the audit report in accordance with NOREA guidelines.

    Alignment results

    We will discuss the results with your team, explain any areas for improvement, and answer questions.

    (Optional) Implementation improvements

    If necessary, you will implement the improvements (either yourselves or through a third party). We can advise on this, but will not carry out the implementation ourselves in order to maintain our independent audit position.

    Final ISAE 3402 Statement

    Upon completion and any verification of improvements, we will deliver the final ISAE 3402 report. 

    What is the approximate cost of an ISAE 3402 report?

    Determining the exact cost for an ISAE 3402 audit is difficult without a thorough understanding of the environment. Every organization is unique in its processes, controls, and internal control maturity. Factors such as the number of locations, type of service, outsourced work, and the degree of documentation significantly influence the required audit effort.

    Based on our experience with dozens of audits in diverse sectors, the assessment above provides a good foundation. These amounts offer an indication and will help you form an initial impression of the investment required for both Type I and Type II statement.

    Get a cost estimate immediately




    Discuss your situation

    Leave your details and contact us directly about this cost estimate.





    Curious how we can help you?

    Please contact us!


    Email: contact@risguard.com

    Phone 085 060 5121

    LinkedIn