Technology is evolving rapidly. Across the globe, organizations are developing and deploying new technologies to solve persistent problems and integrate information. Software as a Service (SaaS) companies have been at the forefront of this data consumption revolution.
But with innovation comes responsibility. Protecting client data and remaining compliant with both regulatory and industry security standards is crucial and must be considered when deploying a SaaS model. Clients, prospects, and organizations looking to invest in cutting-edge SaaS providers want assurance over the adequate security and availability of their data. Similarly, the venture capital (VC) firms that invest in SaaS companies require financial statement audits to protect their investment and to put their portfolio companies in a strong position when it’s time for an exit event.
Challenge
Founded out of the MIT Media Lab in 2010, Luminoso builds text analytics products for analyzing conversational text data like support tickets, open-ended survey responses, and reviews. Using common-sense artificial intelligence to understand language, Luminoso empowers organizations to discover, interpret, and act on their gathered information. Requiring little setup, maintenance, or training, Luminoso combines world-leading natural language understanding technology with a vast knowledge base to learn words from context (like humans do) and instantly analyze text. Luminoso was named to the Inc. 5000 list of fastest-growing companies in 2021, and has been recognized by BostInno as the top company in its “Blazer” software category.
For Luminoso, the challenges were twofold. The first challenge was finding a CPA firm with a deep understanding of System and Organization Controls (SOC) standards, and with experience applying those standards to SaaS companies. Since this was Luminoso’s first SOC 2 audit, having a firm that would be a true partner and be willing to ensure the team understood the process was critical for a successful first audit—and future audits as well.
The second challenge was to find a CPA firm that understood the accounting complexities and financial statement audit challenges of a SaaS company, and could work with Luminoso to get answers on complex accounting issues and complete their financial audits in a timely manner.
Solution
Wolf worked diligently to assist the company in both efforts, beginning by performing the SOC 2 audit in two phases. First, we performed a comprehensive SOC readiness review to identify any policy or implementation gaps that would keep Luminoso from receiving an unqualified opinion. Once the readiness report was delivered, the Wolf team stayed connected with Luminoso’s internal team through periodic check-ins to track remediation process. Then, once all identified gaps were remediated, the SOC audit was scheduled and successfully executed.
Soon after the issuance of the SOC 2 audit, Wolf’s team tackled the financial statement audit. Working together with Luminoso’s internal team, Wolf provided the necessary structure, expertise, and continuous communication to successfully execute the plan and provide the audited financial statements under a tight timeframe. The project and communication plan that was created helped Luminoso feel confident that no surprises would arise during the engagement that would prevent the successful completion of the audit.
Result
Luminoso now has a SOC 2 audit that sets them apart from their competitors and alleviates the constant struggle of answering security questionnaires from prospects. Luminoso also found a financial audit partner in Wolf that has a dedicated, technology-focused financial audit team that can meet their needs, provide timely responses to their questions, and ensure efficient financial statement audits.
“Wolf’s depth and breadth of knowledge on both SOC 2 and Generally Accepted Accounting Principles (GAAP) for SaaS organizations was the key factor in helping to ensure successful audits. Their commitment to adding value beyond the audit and fostering open and transparent communications has laid the groundwork for a long-term relationship,” said Karibeth Nealon, Vice President of Finance for Luminoso.
Takeaway
- Advanced industry experience helps SaaS company prepare for a successful future by providing necessary services now
- Collaborative approach allows for a streamlined process
- Vast technology expertise leads to audits tailored to the needs of SaaS companies
