What is a Service Organization? | ISAE 3402

A service organization is a commonly used term in today's regulatory compliance environment. Though country specific standards all have their own exact technical definition, they all carry a similar description, which can best be described as the following:

A third-party organization providing services to a user organization, with these services being relevant to a user organization's internal controls for purposes of financial reporting.

The Official SAS 70 Resource Guide describes a service organization as the following:

"The entity that is providing services to a user organization, with these services being part of the user organization's Information System".

Additionally, the final ISAE 3402 standard, issued in December of 2009, describes a service organization as the following:

A third-party organization (or segment of a third-party organization) that provides services to user entities that are likely to be relevant to user entities internal control as it relates to financial reporting.

Source: International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Service Organization. ISBN 978-1-60815-045-8 | December 2009

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