What is an assurance statement?
An assurance statement is an official document issued by an independent auditor that confirms the accuracy and reliability of a company’s financial reports and procedures. The statements play a crucial role in modern business by providing stakeholders, including partners, customers, and other interested parties, with a high degree of confidence that the company’s financial statements are true and fair, and that its internal controls are effective and appropriately designed to manage relevant risks.
ISAE 3000
ISAE 3000 is an international standard focused on data protection and personal data processing. The clients of service providers use an ISAE 3000 assurance statement if the service provider processes personal data on behalf of the client. The assurance statement includes a review of the procedures and controls the company has implemented to comply with the data protection regulation, and is also a check that the company meets the requirements set out in its data processing agreement.
ISAE 3402
ISAE 3402 is an international standard that verifies the reliability and security of a company’s IT systems. It ensures that the company’s internal controls and systems are effectively implemented and maintained. Consequently, an ISAE 3402 assurance statement serves as the official proof that the service provider not only complies with relevant IT security regulations and standards but also fulfills its stated obligations and policies regarding IT governance.
The difference between type I and type II statements
The difference between a type I and a type II statement lies in the depth of evaluation and the period the statements cover.
- Type I statements assess the company’s internal controls at a given point in time.
- Type II statements evaluate the effectiveness of implemented controls over a specific period, typically at least six months, and therefore involve a more detailed review.
The importance of these standards
ISAE 3000 and ISAE 3402 are of significant importance to organizations as well as their stakeholders. They contribute to increasing transparency, accountability, and trust in connection with IT solutions and data handling. Organizations that adhere to these standards demonstrate a solid commitment to good corporate governance and risk management.
Benefits of the assurance statements
- Increased trust from customers and partners: A company that can present assurance statements appears more reliable and security-minded.
- Compliance with legislation and standards: The assurance statements ensure that the company not only complies with applicable laws but also keeps up with the best practices in the industry.
- Improved risk management: Through the rigorous process required to obtain these statements, companies identify and address potential vulnerabilities, thereby increasing their ability to manage risk.
FAQ
What does ISAE stand for?
ISAE stands for International Standard on Assurance Engagements. ISAE statements are issued by an independent certified auditor who audits relevant and pre-agreed processes and procedures at a service provider.
What is the difference between ISAE 3000 and ISAE 3402?
In short, ISAE 3000 covers the audit of non-financial information, mainly data protection and personal data processing, while ISAE 3402 focuses on the internal controls of service organizations over financial reporting, including the reliability and security of IT systems.
Why are ISAE standards important for companies?
ISAE standards are important because they ensure that an organization engages in best practices for managing internal processes and controls. They provide additional assurance to customers and partners and demonstrate a company’s commitment to high quality and reliability in its service delivery.
Who needs an assurance statement?
An ISAE assurance statement is particularly relevant for companies that offer outsourced services, including cloud storage, data processing, and financial services, where reliability and security in handling data and financial information are critical.
How does a company obtain an ISAE 3000 or ISAE 3402 assurance statement?
To obtain an assurance statement, a company must undergo a comprehensive audit performed by an independent, certified auditor. This includes an evaluation of the company’s internal controls, procedures, and systems to ensure they meet the relevant standards and requirements.
Is an annual assurance statement necessary?
Yes, to maintain the validity of an ISAE assurance statement, the company must undergo an annual audit to confirm that it continues to comply with the requirements and standards set by ISAE.