Third Party Administrators (TPA’s) and the Need for a SSAE 16 (SOC 1) Report in Today’s Competitive Market

Orange, CA (PRWEB) March 14, 2012

SSAE 16 Professionals has unveiled a specialty service line focusing on SSAE 16 reports for Third Party Administrators (TPA's) . A TPA is an organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity. This can be viewed as "outsourcing" the administration of the claims processing, since the TPA is performing a task traditionally handled by the company providing the insurance or the company itself. The TPA may also be hired if a company is self-insured. In that case, the TPA will not only handle claims from the common pool of money for that purpose, it will also coordinate payment of catastrophic illness premiums and other details of the insurance program.

An insurance company may also use a TPA to manage its claims processing, provider networks, utilization review, or membership functions. Third party administrators also handle many aspects of other employee benefit plans such as the processing of retirement plans and flexible spending accounts. Many employee benefit plans have highly technical aspects and difficult administration that can make using a specialized entity such as a TPA more cost effective than doing the same processing in house.

Outsourcing such important tasks to TPA’s carries a large risk to companies. A SSAE 16 audit provides transparency around the TPA’s internal controls. In fact, many companies will not even consider outsourcing to a TPA who does not have a SSAE 16.

“Many TPA’s are choosing SSAE 16 Professionals to perform their SSAE 16 audit because of our personalized approach,” says Jim Jimenez, Managing Partner at SSAE 16 Professionals. “We have a unique blend of TPA expertise coupled with good old fashioned client service.”

Industry Need

The Sarbanes-Oxley Act (SOX) requires publicly traded companies to perform an annual financial statement audit, which includes key processes that may impact the company’s financial statements. If these public companies outsource one of these key processes to your company, you will need to undergo an SSAE 16 audit. The SSAE 16 report can eliminate the need for your company to be subject to multiple audits from your customers and their respective auditors, most likely eliminating the need for your company receiving multiple visits from your customers’ auditors, which can place a huge strain and operational burden on your company’s limited resources. Even if your clients are not public companies, current and prospective clients are more likely to trust your organization with their data or performing an important business process on their behalf because they will have the ability to review your SSAE 16 report and verify the effectiveness of your controls. This allows your clients to manage their risks and exposures while outsourcing key business services to your company

SSAE 16 (SOC 1) Report Overview

SSAE 16 (SOC 1) Reports, which have effectively replaced SAS 70 reports, will be prepared in accordance with Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization. SOC 1 reports retain the original purpose of SAS 70 by providing a means of reporting on the system of internal control for purposes of complying with internal control over financial reporting. SSAE 16 Professionals completes both SSAE 16 Type I Reports and SSAE 16 Type II Reports.

   •      SSAE 16 Type I Reports - A report on policies and procedures placed in operation as of a specified point in time. SSAE 16 Type I Reports evaluate the design effectiveness of a service provider’s controls and then confirms that these controls have been placed in operation as of a specific date.
   •     SSAE 16 Type II Reports - A report on policies and procedures placed in operation and tests of operating effectiveness for a period of time. SSAE 16 Type II Reports include the examination and confirmation steps involved in a Type I examination plus include an evaluation of the effectiveness of the controls for a period of at least six calendar months. Most user organizations require their service provider to undergo the Type II level examination for the greater level of assurance it provides. SSAE 16 Readiness Reviews

Additionally, many service organizations undergoing the SSAE 16 audit for the first time choose to perform a SSAE 16 Readiness Assessment. SSAE 16 Readiness Assessments are consulting engagements that are designed to assist service organizations in assessing their preparedness for a SSAE 16 audit. SSAE 16 Professionals works collaboratively with management teams to perform a detailed readiness review and provide a gap matrix that identifies controls that would pass right away, controls that would partially fail, and controls that would fail and require remediation (in priority order with recommendations for remediation). Some firms go right into the SSAE 16 and realize there are issues which result in a qualified opinion. By that time, the service organization has spent a lot of time and money only to get a qualified report (which is useless to both the service organizations and its clients).

Benefits of Performing a SSAE 16 Audit

There are many benefits of performing an SSAE 16 audit, including:

   •     Annual Investment – Many companies view SSAE 16 audits as an annual investment with a proven ROI, increasing your prospective client base, organizational productivity, customer retention and accountability.
   •     Financial Audit Requirement for Public Companies - Auditors of your Clients will increase their scrutiny of the “system of internal control” during their audits of the financial statements (Sarbanes-Oxley), which will result in more requests for your SSAE 16 report.
   •     Competitive Advantage - SSAE 16 can be a key differentiator to your prospective clients.
   •     One Time Audit - Avoids user auditors (auditors of your clients) continuously contacting your personnel for separate audits throughout the year. Rather, your clients request and rely on the SSAE 16 report.
   •     Increased Trust and Transparency with Clients - Clients are more likely to trust your organization with their data or performing an important business process on their behalf because they will have the ability to review your SSAE 16 report and verify the effectiveness of your controls. This allows your clients to manage their risks and exposures while outsourcing key business services to your company.
   •     Increasing Organizational Efficiencies and Cost Reductions – We take a consultative approach to each engagement. This allows us to “think outside the box” and provide value added recommendations to improving your business.
   •     Build Efficiencies with RFP’s – if your company receives RFP’s throughout the year from client prospects, your SSAE 16 can reduce the overall effort in completing the RFP. Client prospects are concerned with risks to their information, many of which will be independently tested within the SSAE 16 report. Additionally, if your company does not perform a SSAE 16 and the RFP includes a question requiring the report, you face the possibility of being eliminated from the bidding process, even if you are the most qualified service provider. The SSAE 16 Professionals Difference

SSAE 16 Professionals differentiates itself from local, regional, national, and “Big 4” CPA firms in several distinct ways

   •     Experience – our leadership team has over 80 years of business management, operations and related information technology (IT) experience.
   •     Resources – our detailed and collaborative approach also helps to identify opportunities for improvement within our clients’ operations. Our proven methodology, flexible delivery methods, efficient economic operating model and focus on adding value for our clients is evident in everything we do.
   •     Personal Touch – the partners and managers at SSAE 16 Professionals take a very active role in each engagement. We do not disappear after the proposal process.
   •     Fixed Fee Engagements – many firms quote a low fee with a lot of assumptions and then hit the client with change orders when the work inevitably takes longer. Our quote is set in stone (fixed fee), and we will write off any excess time to get the work done properly (any time incurred on top of our fixed fee would be our first year investment in hopes of establishing a long-term SSAE 16 relationship with our clients).
   •     Leverage Model – our low overhead model allows us to pass the cost savings on to our clients. We not only charge competitive fees, but we can reduce the number of hours required to complete the work. Experience is on our side. We have in depth knowledge of SSAE 16 rules, execution of jobs, and knowledgeable professionals.
   •     Full Readiness – we do a full/complete SSAE 16 readiness run through of all controls/areas and provide detail on what needs to be done to pass every test. About SSAE 16 Professionals

SSAE 16 ProfessionalsCISA (Certified Information Systems Auditor), CIA (Certified Internal Auditor), CISSP (Certified Information Systems Security Professional), CRISC (Certified in Risk and Information Systems Control) and/or MBA (Master of Business Administration). For more information, please visit http://www.SSAE16Professionals.com.

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