SAIJE Thoughts

Or A SAS70 Apologist

In preparing for SAS70 Audits and assisting other companies for their audits, I came across a document that summarizes well the criticisms of the SAS70. Below, I answer from a non-auditor perspective the misconceptions in each argument.

1. No Objective Standard.  The complaint is that the audited company gets to create their own controls and are only graded on those controls. For example: if the company does not put in a control on having passwords, then they will not get graded on that. Unfortunately, that may be the case if one has hired a poor auditor to validate controls, but in the SAS70s I have been through, there are checks and balances. Specifically, at the beginning of the audit period, the auditor reviews the controls themselves to make sure they are sufficient. While indeed there is not a single objective standard, that is acceptable. The controls for a financial institution should be different than the controls of a software development company, for instance.
2. The SAS 70 Audit Process is Designed to Drive Billable Hours.  There are several complaints rolled into one here. The primary complaint is that audits are expensive because auditors are there the whole time because the controls have to be tested over time. This is not the case. Controls can be tested over time by a thorough review of the evidence near the end of the testing period. One may want an auditor in several times so there are no end-of-the-period surprises, but there is no need to be auditing the during the whole period.  The cost for SAS70 was listed as $100,000 to $300,000 or even greater. This may be the case for some audits, but for smaller companies, I’ve seen audits that are a tenth of that estimate.

   

3. Other Audits Can Serve Better Than SAS70.  The idea here is that you can work with a company that has asked for a SAS70 and provide them other audits or information that will serve just as well. This may work OK when one only has a few customers, but in the light of Sarbanes-Oxley and companies that provide services to hundreds or thousands of customers, the SAS70 is the most viable option. Instead of having to negotiate on an annual basis to ensure each companies’ audit needs are met (imagine having to do this 1000 times a year for example!) , one can complete a SINGLE SAS70 and meet the needs of all your customers on an annual basis. If a customer has a specific need, add that as a control for the SAS70 and solve the need for any future requests as well.
4. ISO17799, NIST SP-800-53, COBIT, etc. provide better controls.  Of course they can, provided they fit your company’s operations and business. However, again, these do not fulfill the need a SAS70 does. The Best Option is to take one or more of those frameworks and use those as the basis for your controls in the SAS70. In that way you get the best of both worlds. I know of one company that used the entire 17799 control set as the basis for their SAS70 control set.

Conclusion:  As with any tool, SAS70 can be misused, intentionally or through a lack of understanding of the purpose and benefit of the standard.  Most of the complaints above derive from a lack of understanding of the SAS70 and how to truly execute a successful SAS70 audit that benefits both the audited company and the companies that use it’s services.

Tags: SAS70

This entry was posted on Friday, December 7th, 2007 at 3:53 pm and is filed under SAS70. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.