The ISAE 3402 audit is an internationally recognized standard for auditing internal control systems at service organizations. It is particularly aimed at service providers who perform processes on behalf of their clients – for example in IT, cloud or payroll. The goal of the ISAE 3402 audit is to create transparency about the appropriateness and effectiveness of implemented controls. The ISAE 3402 certificate signals to clients and auditors that important requirements for security, availability and compliance are met. Companies benefit from market trust and a stronger competitive position. The ISAE 3402 audit is typically conducted in a first step as a Type 1 audit (point-in-time) and in a second step as a regular Type 2 audit (period-based). The underlying internal control system can be designed individually for each company – depending on business activities, risk profile and customer requirements.
As certified public accountants, we conduct ISAE 3402 audits at your company and support you in setting up a service-related internal control system!
What is behind an ISAE 3402 Audit?
In the ISAE 3402 Type 1 audit, the service organization's internal control system (ICS) is examined for appropriateness at a specific point in time. The audit focuses on the design and implementation of relevant controls – that is, whether the control processes are suitable to effectively manage risks and achieve their control objectives. Additionally, the description of the service organization's ICS is audited. An ISAE 3402 Type 1 report is ideal for companies having their service organization's ICS certified for the first time. The Type 1 variant of the ISAE 3402 audit provides a solid foundation for trust and is the first step towards a comprehensive Type 2 audit. It is particularly helpful for companies that need a certificate on short notice or have just established new processes and associated controls.
The ISAE 3402 Type 2 audit extends the focus of the Type 1 audit by adding the time dimension. While Type 1 only examines the status at a specific point in time, the Type 2 audit evaluates whether the implemented controls have demonstrably functioned effectively over a defined period – typically twelve months. The ISAE 3402 Type 2 report documents both the existence and suitability of controls as well as their operational effectiveness in ongoing operations. Thus, the ISAE 3402 Type 2 audit provides reliable assurance about the actual implementation of the internal control system. For clients and their auditors, this is crucial evidence of reliability. Particularly in regulated industries, the Type 2 report represents an important component for meeting compliance requirements.
Advantages of an ISAE 3402 Audit
With an ISAE 3402 audit, you build trust, minimize risks and secure competitive advantages
Building trust with clients and partners
A successful ISAE 3402 audit signals that your services meet the highest security standards – this strengthens the trust of clients and business partners.
Reduce audit efforts
Instead of coordinating individual audits and inquiries from each client, simply provide the audit report after a successful ISAE 3402 audit. This way, you answer key control questions centrally – saving significant time and resources internally.
Meet compliance requirements
An ISAE 3402 audit can verify your compliance with regulatory requirements – particularly from the financial, healthcare or IT sectors. Controls that specifically address legal requirements such as BAIT, DORA, NIS 2 or comparable regulations can be specifically integrated into the service organization's internal control system (ICS). This way, you not only demonstrate process security, but also compliance with relevant legal and industry-specific obligations – concisely, transparently and audit-proof.
Competitive advantage through ISAE 3402 audit
With an audited service organization's internal control system, you stand out from your competitors. Many clients today require a successful ISAE 3402 audit. You secure a long-term competitive advantage.
Leverage international recognition
ISAE 3402 is an independent, internationally recognized audit standard for service organization's internal control systems. The ISAE 3402 audit is understood and accepted worldwide – creating trust with local and multinational clients, business partners and auditors alike.
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FAQ
What is an ISAE 3402 audit?
The ISAE 3402 audit is an internationally recognized audit standard for assessing service organization's internal control systems. It is aimed at companies that perform processes on behalf of their clients – for example in IT, cloud, HR or finance. The goal of the ISAE 3402 audit is to demonstrate the appropriateness and effectiveness of controls required for secure and compliant service delivery. The result of the audit is an ISAE 3402 certificate that creates trust with clients and their auditors, thus providing a clear competitive advantage.
What is examined in an ISAE 3402 audit?
In an ISAE 3402 audit, the internal control system (ICS) of a service organization that is relevant for providing customer-related services is examined. The focus is on controls to ensure availability, confidentiality, integrity and compliance. The auditor assesses whether the controls are appropriately designed (Type I) and – in a Type II audit – whether they have been effectively applied over a defined period of at least six months. The ISAE 3402 audit is based on internationally valid audit standards and provides a reliable foundation for your clients' trust in your organization's control environment.
What is an ISAE 3402 certificate?
An ISAE 3402 certificate is an official audit report that confirms that a service organization has implemented an effective internal control system (ICS). As part of an ISAE 3402 audit, it is assessed whether the controls are appropriately designed (Type I) and – in the case of Type II – have functioned effectively over a defined period. The certificate creates transparency and strengthens the trust of clients, business partners and auditors. The scope of the certificate includes a detailed description of the audited controls, the underlying processes and the system and organizational environment – including a presentation of which services were specifically included in the audit.
Are there requirements regarding the scope of the internal control system?
In an ISAE 3402 audit, there are no fixed requirements regarding the scope of the internal control system – it is tailored individually and risk-based to the respective service organization. What is decisive is that all relevant processes that are essential for the outsourced services to the client are included in the control system. The system can also consider specific legal or regulatory requirements – such as from BAIT, DORA or NIS2. The scope of the ISAE 3402 certificate is therefore always based on the actual services, contractual obligations and client expectations.
Who may conduct an ISAE 3402 audit?
An ISAE 3402 audit may only be conducted by independent auditors or audit firms that are authorized to conduct audits under national law. They must work according to the requirements of international audit standards (ISAE) and have relevant experience in the field of internal control systems and service processes. Only in this way is it ensured that the ISAE 3402 certificate is considered reliable and recognized by clients, auditors and supervisory authorities. - contact us now at Contact.
How often must an ISAE 3402 audit be conducted?
An ISAE 3402 audit should be conducted regularly – typically annually – to demonstrate the continuous effectiveness of the internal control system. While a Type 1 audit captures a specific point in time, the Type 2 audit examines the effectiveness of controls over a longer period (at least six months). For many clients, a current ISAE 3402 certificate is a prerequisite for continuing cooperation with service providers – therefore, an annual audit is common practice and is expected as proof of trust in the market.
How does an ISAE 3402 audit differ from other standards such as SOC 1 or IDW PS 951?
The ISAE 3402 audit is an internationally recognized audit standard specifically aimed at assessing service organization's internal control systems. In comparison, SOC 1 is the US version based on the same principles but conducted according to American audit standards (SSAE 18). IDW PS 951 is the German audit standard of the Institute of Public Auditors and is often used as a national alternative. The ISAE 3402 audit is particularly the preferred choice for internationally operating companies, as it is universally understood and compatible – ideal for client relationships across borders.
Is ISO 27001 helpful or a prerequisite for an ISAE 3402 audit?
ISO 27001 certification is not a formal prerequisite for an ISAE 3402 audit, but can be supportive. While ISO 27001 is an international standard for information security management systems (ISMS), it applies to the entire company and focuses exclusively on information security aspects. The ISAE 3402 audit, on the other hand, evaluates the internal control system (ICS) related to a specific service, e.g. in IT outsourcing, cloud services or billing processes. In addition to IT security, control areas such as availability, process integrity, data protection or compliance are also included. An existing ISO 27001 can therefore serve as a foundation, but does not replace the specific control and documentation required as part of an ISAE 3402 audit.
What is meant by a description of the service organization's internal control system (ICS)?
A description of the service organization's internal control system (ICS) includes all organizational measures, processes and controls that a service provider implements to ensure security, proper conduct and regulatory compliance in operating its services. It forms the basis for the ISAE 3402 audit, as it describes the implemented processes and controls for the service. The description is created independently by you as the audited company.
THESE ARE YOUR CONTACTS
Justus Franke
Managing Director,
Auditor
Justus Franke is managing partner at ADVANTA. As an auditor and consultant, he supports companies in developing, implementing and auditing management and control systems – with a particular focus on process-oriented management, risk management and compliance.
Lena Franke
Managing Director, Auditor
Lena Franke is managing partner at ADVANTA. She advises companies on developing, enhancing and auditing management systems – with particular focus on quality management as well as energy and environmental management. Her emphasis is on practical implementation of normative requirements and continuous improvement of operational processes.
Nils Lingthaler
Manager,
ISO 27001 Auditor
Nils Lingthaler is manager at ADVANTA. As an industrial engineer and certified ISO 27001 auditor, he advises companies on IT compliance, information security as well as management and control systems. His focus is on introducing and developing management systems as well as practical implementation of regulatory requirements.