ALTA Best Practices Reporting Guide

REPORT TYPE SERVICE ORGANIZATION CONTROLS (SOC) REPORTING EXAMINATION AGREED-UPON PROCEDURES REVIEW CONSULTING ENGAGEMENT / CERTIFICATION SELF-CERTIFICATION UNDERWRITER INTERNAL AUDIT PROGRAM
ALSO KNOWN AS SOC1 = SSAE16, SOC2 Exam AUP Review Consulting; Certification Self-Assessment N/A
WHO CAN DO THE TESTING? CPA firm only CPA firm only CPA firm only CPA firm only Any entity, including consulting companies, credit unions, etc. N/A Underwriter’s internal auditors
TESTING PERFORMED Assesses financial risk to lenders (with particular emphasis on escrow accounts); focuses on security, processing integrity, privacy and confidentiality; customized to include all seven ALTA Best Practices pillars; onsite visit(s) performed for maximum testing and additional testing performed remotely Testing includes evaluating policies and procedures, inspecting documents and records, making inquiries of personnel and observing activities and sampling to test specific transations during onsite visit Testing is jointly defined by all parties to the engagement; testing would be developed under that engagement and is NOT required to follow the ALTA Best Practice Assessment Procedures Work is limited to evaluating policies and procedures and making inquiries (including inspection of documents) of personnel; work performed remotely with optional onsite visit (depending on agent size).  No detail testing of transactions is conducted Limited third-party testing No independent third-party testing Unknown
REPORT PROVIDED
  • SOC report
  • CPA attestation report
  • CPA opinion
Attestation report with an opinion Attestation report for specified users only Attestation report with negative assurance (A representation that particular facts are believed to be accurate since no contrary evidence has been found) “Certification” undefined
  • None
  • Unknown
IS INDEPENDENCE REQUIRED? Yes Yes Yes Yes No No No
MONEY BACK COMMITMENT FROM TESTING PROVIDER IF REPORT IS NOT ACCEPTED BY YOUR LENDER(S)? Yes (with HA&W) Yes (with HA&W) None Yes (with HA&W) None N/A N/A
ADVANTAGES Highest level of assurance provided for service organizations; commonly recognized by lenders in the marketplace; provides market distinction and competitive advantage Highest level of assurance provided for ALTA Best Practices; report may be shared in the marketplace; provides market distinction and competitive advantage Lenders must first agree to procedures to be tested Attestation for agents with less than 300 closing that present a lower risk to the lender Varied external cost No external cost Minimal to no external cost (depending on underwriter)
CHALLENGES Significant investment and thoroughness of report may be unnecessary High degree of rigor required to achieve compliance No opinion provided in report; report may not be distributed to a lender that is not party to the engagement contract Medium degree of rigor required; lender may require higher level of rigor to achieve compliance No opinion provided in report; CPA oversight not provided No third-party verification May not conform with ALTA’s Assessment Procedures; each underwriter program is unique and may not conform to the same standards
SUMMARY Recommended for title agents whose lenders require the highest level of assurance, beyond ALTA Best Practices Recommended for title agents who want to offer lenders the highest level of assurance specific to ALTA Best Practices and perform more than 300 closings per year Not recommended Recommended for title agents that perform less than 300 residential closings per year; several lenders have publicly approved reviews as an acceptable form of compliance Not recommended. If performed by a CPA the report can only be used by the title agent Not recommended Not recommended

CPA attestation provides the highest level of assurance to minimize compliance risk.
Contact us and get started today!