Commonly, a SAS 70 Type 1 report contains three sections, and a Type 2 has five sections. That because a Type 2 tests the effectiveness of the controls that a Type 1 says are there.
The first section, the “Independent Service Auditors’ Report,” is basically a letter by the service auditor (the CPE firm performing the SAS 70 exam) to the management of the service company (the company being tested in a SAS 70 exam) providing an opinion, with some standard legal coverage, on the quality of the controls in place at the company.
The paragraph after that, if the report is a Type 2, will also express an opinion based on the tests performed as to the effectiveness of those controls. There will also be a disclaimer that the report only provides reasonable, not absolute, assurance that the controls were in place and operating effectively.
When performing a SAS 70, the auditors are dependent upon what the service organization gives them for information. When I perform logical controls testing, I must ask the service network administrator to give me the information I need for an assessment. We must rely on what the service organization provides us. We do not test the environment directly. Most organizations are loathe to let some auditor have admin rights and go wandering around their network. How, then, do we ascertain the correctness of the information?
The short answer is in the contract. SAS 70 auditors will indicate in a contract for services and in the report that they base their opinion on the information they are given. The onus is on the service company to provide true and accurate information to the auditors.
So this is not a “true” security audit, in the sense that we are not directly testing the environment. (And P.S., only a CPA can perform an “audit.” Everything else is an “exam” or a “test,” or an “assessment.”) But remember that this is a report for your company’s financial auditors, so that they can determine whether the outsourcing agreement with the service bureau is protecting your company’s assets.
But can’t the service company lie to the auditors? Sure. But they take the risk of having their socks sued off if they are committing fraud. That’s also why the financial auditors perform a financial “due diligence” on outsourced companies on an annual basis to make sure they are on sound financial footing. The SAS 70 report is just part of the due diligence to protect your company.
On to the next sections.