The demand for ISAE 3402 certification has witnessed a significant surge within the realm of IT outsourcing and Cloud services. The ISAE 3402 registry now boasts an impressive roster of ISAE 3402 certified SaaS and hosting providers. What’s driving this heightened demand in the IT sector, particularly in the Cloud Services Industry, encompassing SaaS, IaaS, PaaS, and datacenter services? While ISO 27001 is a vital international certification standard for information security, there are specific reasons behind the increased demand for ISAE 3402 certification in the IT sector. The answer to this question finds its roots in the financial sector.
Financial Institutions: Financial institutions are mandated by legal and regulatory frameworks, such as the Pensions Act and the Wft, to demonstrate their effective risk control mechanisms concerning outsourcing. An ISO 27001 certification, however, is not deemed sufficient by either the Dutch Central Bank or the AFM. The Dutch Central Bank considers ISAE 3402 as a robust guarantee and, in some cases, even requires such a report as a legal requirement.
Accountants and Corporates: Accountants play a pivotal role alongside financial institutions. Organizations subject to audits are increasingly relying on Cloud services. Consequently, accountants must incorporate Cloud-based processes into their annual audits. To facilitate these audits, accountants often depend on ISAE 3402 assurance reports provided by specialized service auditors. Moreover, the structured standards framework of ISAE 3402 is a significant factor.
Standards Framework – ISAE 3402 vs. ISO 27001: In contrast to ISO 27001, ISAE 3402 boasts a standardized framework tailored to the annual accounts, including all processes that are essential to the internal organization of the user organization, particularly those related to financial processing in the annual accounts. Many organizations store operational data in the Cloud or outsource operational processes to SaaS providers or hosting parties. These operational processes almost invariably have a direct or indirect impact on the financial statements, making them a focal point for auditors during annual audits.
In contrast to ISO 27001, ISAE 3402 does not entail detailed standards for information security. In practice, the CobiT 5 framework is often adopted because it sufficiently guarantees information security for annual accounts. Therefore, an ISAE 3402 report often holds more value for user organizations and their accountants. This is because, in addition to security components similar to ISO 27001, it encompasses all processes that influence the annual accounts.
Cloud Security: Looking ahead, a fundamental question revolves around Cloud Security. The location of data within the Cloud and its compliance with regulations like the General Data Protection Regulation (GDPR) remain uncertain in many cases. The U.S. government mandates that all cloud service providers for government entities adhere to FedRAMP guidelines, although such requirements are not yet established for private entities, even under the American Sarbanes Oxley (SOx404 requirements). In the context of outsourcing by publicly listed organizations, compliance with SSAE18 requirements is essential, which largely align with ISAE 3402 requirements. ISAE 3402 certification also offers an opportunity in this context, as compliance with SSAE18 can result in certification according to SSAE18 requirements with relatively limited effort.
In summary, ISAE 3402 serves multiple purposes, allowing organizations to demonstrate effective control over outsourced processes to clients and facilitating external audits by auditors.