Exception and remediation governance

SOC 1 reporting lives or dies on control operation and evidence. Control exceptions happen in every environment: an access review completed late, a change not fully documented, a reconciliation not performed, a dependency outage that breaks a processing SLA. The SOC 1 expectation embedded in this requirement is simple: if an exception or deficiency could affect your SOC 1 assertions, you must track it and its remediation in a governed, repeatable way, and you must be able to show that governance to your auditor and user entities.

This page gives requirement-level implementation guidance for compliance leaders who need to stand up exception and remediation governance quickly without overengineering. The goal is audit defensibility: a clear trail from “what went wrong” to “how we fixed it,” plus proof that leadership had visibility and that closure was verified. You’ll also see where teams typically fail (and why auditors flag it), what artifacts to retain, and a practical execution plan to get to a stable operating rhythm.

Regulatory text

Requirement (SOC 1): “Track exceptions and remediation impacting SOC 1 assertions.” ¹

What an operator must do

You must run a governed process that:

1. Captures exceptions/deficiencies related to SOC 1 in a timely way.
2. Evaluates impact to SOC 1 assertions and the specific controls in scope.
3. Drives remediation with accountable ownership, due dates, and documented corrective actions.
4. Validates effectiveness of remediation before closure.
5. Retains evidence that the above steps occurred consistently and completely over the SOC examination period.
   This is a baseline operational requirement implied by SOC 1 expectations for service organizations ¹.

Plain-English interpretation (what this requirement really means)

SOC 1 auditors do not expect perfection; they expect control operation, transparency, and disciplined remediation. “Exception and remediation governance” means you can answer, with evidence:

• What exceptions occurred that relate to SOC 1 controls?
• Were they isolated events or patterns?
• Who assessed the business impact and the likely impact to SOC 1 assertions?
• What corrective action was taken, who approved it, and when was it implemented?
• How did you test that the fix worked?
• Who decided it was closed, and on what basis?

If you cannot show this consistently, you create a credibility gap. Even if the underlying issue is small, weak governance around exceptions often becomes a reporting problem because it suggests you may not detect and correct control failures reliably.

Who it applies to (entity and operational context)

Applies to: Service organizations that provide services relevant to user entities’ internal control over financial reporting (ICFR) and are pursuing, maintaining, or renewing a SOC 1 Type 1 or Type 2 report ¹.

Operationally, it applies wherever SOC 1 controls exist, including:

• ITGC domains (logical access, change management, operations).
• Business process controls (transaction processing, reconciliations, approvals, data validations).
• Third-party dependencies that support in-scope services (subservice organizations), where exceptions at the dependency can cascade into your control objectives.

Typical owners: Control owners (first line), Compliance/GRC (second line), Internal Audit (where present), and the SOC report program owner coordinating evidence and auditor requests.

What you actually need to do (step-by-step)

Below is a practical workflow you can implement in a GRC tool, a ticketing system, or a controlled spreadsheet. The tooling matters less than consistent operation and evidence.

1) Define what must be tracked (your “intake definition”)

Create a short, written standard for what qualifies as a tracked item:

• Control exception: A control did not operate as designed (missed frequency, incomplete execution, lack of evidence, unauthorized change, late review).
• Deficiency: A design or operating issue identified via monitoring, audit testing, or management review.
• Remediation item: A corrective action created to fix a specific exception/deficiency.

Include a rule: anything that could affect a SOC 1 control or assertion goes into the register, even if you think it is “immaterial.” Materiality is an outcome of triage, not a reason to avoid logging.

Artifact: Exception & remediation governance procedure (1–3 pages) mapped to SOC 1 control set ¹.

2) Stand up a single system of record (the register)

Maintain a centralized register with minimum required fields:

Field	What “good” looks like
Unique ID	Stable identifier used in meetings, evidence, and auditor requests
Date identified	When the exception was discovered
Source	Self-monitoring, control owner, audit testing, incident, customer escalation
Control mapping	Control ID/name and control objective affected
Description	What happened, in plain terms
SOC 1 impact assessment	Which assertion/control objective could be affected and why
Risk rating	Your internal severity scale, consistently applied
Corrective action plan	Specific actions, not vague intentions
Owner	Named accountable person (not a team alias)
Due date	Trackable date; changes require a reason
Validation method	How you will prove the fix (retest, evidence review, sampling)
Closure decision	Closed date, approver, closure rationale, links to evidence

Operational tip: Treat this register like financial close workpapers. If it is not controlled, you will spend the entire SOC fieldwork rebuilding history.

3) Triage and impact analysis (within governance, not ad hoc)

For each new item:

• Confirm it is in scope (SOC 1 control mapping).
• Determine failure mode: design gap vs operating miss vs evidence gap.
• Assess impact: Does it affect the control objective, timing, completeness/accuracy, or a complementary user entity control assumption?
• Decide response: immediate containment, compensating control, or standard remediation.

Artifact: Completed triage section in the register plus supporting notes (meeting minutes, control owner analysis, incident record).

4) Assign remediation with real accountability

Remediation must be concrete:

• Break remediation into tasks that can be completed and evidenced (policy update, automation, additional review step, new monitoring alert, training with attestation, etc.).
• Assign a single accountable owner and a reviewer/approver (often compliance or control owner leadership).
• Require justification for due date extensions.

Artifact: Remediation plan with task-level evidence links (change tickets, screenshots, approvals, updated procedures).

5) Validate remediation effectiveness (do not “close on implementation” alone)

Closure should require proof the fix works:

• Retest the control for a defined period or execution cycle appropriate to its frequency.
• Verify evidence quality: timestamps, approver identity, completeness, and retention location.
• Confirm no regression: check that the same exception did not repeat.

Validation can be done by Compliance/GRC, Internal Audit, or a trained second reviewer separate from the implementer. The key is independence from the person who “did the fix.”

Artifact: Retest results, evidence review checklist, or control testing workpaper.

6) Governance cadence: review, escalate, and report

Implement a standing governance rhythm:

• Operational review: regular working session to review new items, aging items, and overdue remediation.
• Escalation path: criteria for escalating to executive leadership (for example, repeated control misses, high-impact exceptions, or inability to remediate).
• SOC reporting readiness: a view filtered to the SOC examination period so you can respond quickly to auditor inquiries.

Artifacts: Meeting agenda, minutes, action logs, executive readouts, and an “open items” snapshot by control area.

7) Tie exceptions to SOC 1 assertions and auditor communication

Maintain a clean narrative:

• For exceptions that auditors test, be able to show root cause, corrective action, and retest.
• If you use a subservice organization, document how their issue affects your controls and what you did (monitoring, customer communication, compensating controls).

This is where systems like Daydream can reduce friction: you can map exceptions to controls, store evidence in one place, and produce auditor-ready exports without hunting through email threads and ticket comments.

Required evidence and artifacts to retain

Minimum artifact set to make this requirement audit-ready:

1. Exception & remediation governance procedure (scope, definitions, roles, workflow, escalation).
2. Central exception/remediation register with complete required fields.
3. Per-item evidence bundle, linked from the register:
   • detection evidence (monitoring alert, audit test result, incident record)
   • impact assessment notes and approvals
   • remediation plan and implementation evidence (tickets, PRs, approvals, updated SOPs)
   • validation/retest evidence and closure approval
4. Governance meeting records (minutes, attendee list, decisions, escalations).
5. Management reporting artifacts (periodic status reports, aging views, trend summaries).

Retention location should be stable, access-controlled, and searchable by control and by exception ID.

Common exam/audit questions and hangups

Auditors and customer compliance teams typically press on:

• “Show me all exceptions for in-scope controls during the period.” If you cannot produce a complete list, you appear to be managing by anecdote.
• “How do you decide impact to SOC 1 assertions?” They want consistent criteria and documented decision-making.
• “Who can close an item, and how do you validate closure?” Closure without retesting or independent review is a frequent finding driver.
• “How do you handle repeat findings?” Repeats suggest root cause was not addressed.
• “What happens when remediation is late?” They expect escalation evidence, not silent slippage.

Frequent implementation mistakes (and how to avoid them)

Mistake	Why it fails	Fix
Logging only “big” issues	Creates completeness gaps; auditors dislike selective reporting	Log everything potentially in scope, triage after intake
Treating evidence gaps as “not real exceptions”	In SOC work, no evidence often equals no control	Track evidence gaps as exceptions with corrective action
Closing items on implementation	Implementation does not prove effectiveness	Require validation and closure approval with retest evidence
No control mapping	You cannot explain SOC 1 impact or organize auditor requests	Add control ID/control objective fields and enforce completion
Ownership by committee	Items stall, due dates slip	Assign a single accountable owner and an approver
Over-reliance on email	History gets lost, decisions are unverifiable	Centralize decisions and artifacts in the register or GRC system

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement. Practically, weak exception and remediation governance increases SOC 1 reporting risk: exceptions can become unaddressed deviations, or remediation may be incomplete, both of which can affect how issues are described in the SOC report and how customers assess control reliability ¹.

30/60/90-day execution plan

First 30 days: establish the operating baseline

• Name an owner for the workflow (often the SOC program owner in GRC).
• Publish a short governance procedure: definitions, intake, triage, approval, closure.
• Stand up the register and required fields; migrate any existing open issues into it.
• Run the first governance meeting; document decisions and assign owners.

Days 31–60: make it auditable

• Implement a validation standard (what retest evidence is required per control type).
• Train control owners on “evidence equals execution” expectations.
• Add escalation rules and begin reporting aging/overdue items to leadership.
• Perform a quality review of a sample of items for completeness and evidence linkage.

Days 61–90: stabilize and prove repeatability

• Run the governance cadence consistently and keep minutes.
• Trend repeat exceptions by control area; require root cause narratives for repeats.
• Dry-run an auditor request: produce the exception list for the period and pull evidence bundles quickly.
• If scale demands it, move from spreadsheets to a system like Daydream to manage control mapping, evidence, and auditor-ready exports in one workflow.

Frequently Asked Questions

What counts as an “exception” for SOC 1 purposes?

Any instance where an in-scope control did not operate as designed or you cannot produce evidence it operated. If it could affect a SOC 1 control objective or assertion, log it and document triage ¹.

Can I track exceptions in Jira or ServiceNow instead of a GRC tool?

Yes, if you can enforce required fields, link items to SOC 1 controls, retain immutable evidence, and produce a complete list for the SOC period. Many teams fail on control mapping and closure validation when using generic ticketing without a governance wrapper.

Who should be allowed to close remediation items?

The person implementing the fix should not be the sole closer. Require closure approval by a control owner manager, compliance/GRC, or internal audit with documented validation or retest evidence.

How do I handle exceptions caused by a third party or subservice organization?

Log the exception, map it to the impacted SOC 1 control, document the dependency and your response (monitoring, compensating controls, communication), and track remediation actions you control. Keep evidence of third-party communications and your internal decisions.

What do auditors expect to see for “validation” of remediation?

Evidence that the control now operates as designed, not just that a ticket was completed. Retest workpapers, evidence review checklists, or a new control execution cycle with complete evidence are common validation approaches.

We have a lot of small evidence gaps. Do we really need to log them all?

If they relate to in-scope SOC 1 controls, yes. Evidence gaps often cluster around the same process weakness; logging them is how you prove detection, governance, and sustained correction rather than one-off fixes.

Related compliance topics

• 2025 SEC Marketing Rule Examination Focus Areas
• Access and identity controls
• Access Control (AC)
• Access control and identity discipline
• Access control management

Footnotes

1. AICPA SOC 1 overview