Supply chains for manufacturers, producers, and distribution companies have been pushed to their limits, if not broken, during the current pandemic. Even during a normal business environment, managing a complex network of vendors, products, and services poses significant, complex challenges that could threaten the success of your organization or any organization within your supply chain.
In March 2020, the American Institute of CPAs (“AICPA”) released a new risk reporting framework, “SOC for Supply Chain”, to help your organization, your suppliers, and your customers identify and manage supply chain risks.
What is the SOC for Supply Chain Framework?
At a high level, SOC for Supply Chain is a voluntary framework, created by the AICPA, that might be the most efficient approach for your organization to:
Prior to SOC for Supply Chain, most organizations would typically rely on a variety of non-standard and other sources to obtain an understanding of supply chain risks – information provided by the supplier themselves, the organization’s internal auditor findings from assessments performed at each (or key) suppliers, or other programs such as from the International Organizations for Standardization (“ISO”) certification.
The SOC for Supply Chain is one of three frameworks within the AICPA’s suite of System and Organization Controls (“SOC”) services:
SOC for Supply Chain is a comprehensive framework that culminates in an assurance report from an independent CPA firm. The following section describes the contents and purpose of each section of the report.
Components of the SOC for Supply Chain Report
The SOC for Supply Chain report is the key deliverable from the framework. This report provides information that is intended to be shared with your suppliers and business partners, and includes the following components:
What are the Benefits of SOC for Supply Chain?
The SOC for Supply Chain framework provides your organization with a formal process for identifying and managing the risks that have potential to result in lost revenue, lost customers, additional costs, and wasted time. Additionally, SOC for Supply Chain examination and report provides many other benefits, such as:
The SOC for Supply Chain framework released by the AICPA in March 2020 is a powerful tool that can be implemented by manufacturers, producers, and distribution companies to affect positive changes within your organization and throughout your supply chain. SOC for Supply Chain provides a formal approach to comprehensively, efficiently, and effectively identify and manage supply chain risks that threaten the business goals and objectives of your organization and your customers.
For more information on SOC for Supply Chain, please contact FGMK. Michael Becker is a Director that leads FGMK’s Risk & Controls practice with a primary focus on SOC services, and Michael Fenske is a Managing Director who co-leads the management consulting practice which includes supply chain services.
The summary information in this document is being provided for education purposes only. Recipients may not rely on this summary other than for the purpose intended, and the contents should not be construed as accounting, tax, investment, or legal advice. We encourage any recipients to contact the authors for any inquiries regarding the contents. FGMK (and its related entities and partners) shall not be responsible for any loss incurred by any person that relies on this publication.
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