Eliminating Six Years of Service Provider Oversight Risk
In FY 2019, the agency’s external auditors issued a material weakness for insufficient oversight of its service providers’ System and Organization Controls (SOC) reports. The weakness expanded significantly in FY 2020 as the agency administered nearly $1 trillion dollars in COVID-19 relief funding, raising auditor concerns about oversight of high-risk service providers with major financial reporting impact. The agency acknowledged they lacked a centralized inventory of service providers, consistent SOC oversight processes, and the necessary trained personnel. Despite several years of remediation efforts with other advisory firms, the SOC material weakness persisted and continued to grow heading into FY 2025.
In FY 2025, Interclypse assumed the lead role in partnering with the agency for addressing the SOC Material Weakness based on our 5-step corporate remediation strategy below:
Define Problem – Interclypse leveraged prior experience to gain a nuanced understanding of the agency’s SOC oversight challenges, pinpointing root causes associated with ineffective service provider oversight that increase the risk of financial reporting errors.
Conduct Root Cause Analysis – Interclypse engaged all key stakeholders to identify the underlying systemic drivers (processes, systems, behavioral) causing the past SOC oversight failures, not just the surface-level, immediate triggers.
Develop Remediation Plan – Interclypse developed a comprehensive SOC remediation plan with defined tasks, owners, timeliness, and success metrics, ensuring the solutions addressed root causes and secured stakeholder buy-in. Interclypse collaborated with the agency to build their first enterprise-wide service-provider inventory and established a centralized SOC documentation repository, improving leadership visibility, audit readiness, and overall governance across a dozen program offices.
Implement Solution – Interclypse provided hands-on support to agency personnel across all components of a proper SOC oversight environment, ensuring continuity despite staffing constraints while maintaining strong stakeholder relationships and responsive customer service. Additionally, Interclypse served as a primary advocate in auditor discussions, clearly articulating remediation progress and supporting the removal of the Material Weakness.
Ongoing Monitoring – Interclypse implemented ongoing SOC monitoring to ensure SOC oversight procedures operate effectively, and root causes did not recur. Targeted SOC training and continued guidance from the Interclypse team enabled agency personnel to manage SOC oversight more independently and sustain a mature, audit-ready SOC environment.
Results
By the end of FY 2025, all prior-year SOC audit findings were fully remediated and validated by the external auditor. A SOC Material Weakness that had impacted the agency’s financial reporting for six consecutive years was removed.
Beyond remediation, Interclypse helped establish a durable SOC oversight framework, positioning the agency to maintain clean audit results for SOC and focus on its core mission with confidence.
Testimonials
“Interclypse has been instrumental in guiding our team through the SOC oversight process and demonstrated exceptional patience and dedication in helping us understand the audit requirements.”
— Senior Program Office Official
“We could not have closed the SOC material weakness without Interclypse’s assistance. We look forward to continued partnership and professional growth in SOC reporting and management.”
