The Ultimate Guide to
Service Organization Control (SOC) 2®
What is SOC 2®?
A SOC 2® report is an important asset for organizations, and it’s becoming more of a mandate than a nice-to-have. But SOC 2® reporting can be time-consuming and expensive, especially if your organization doesn’t have compliance expertise or modern tools to handle the work. Here’s the good news: there is a way to gain control over your SOC 2® compliance program and dramatically reduce your workload.
Developed by the American Institute of CPAs (AICPA), SOC 2® reporting provides insight into internal controls that exist within an organization to address risks related to security, availability, processing integrity, confidentiality and/or privacy. A CPA independently validates the report and uses specific criteria, methodology and expectations that enable consistency in comparison across organizations. Before a SOC 2® report is issued, an independent CPA conducts an assessment of the scope, design, and (for Type 2 reports) the effectiveness of internal control processes. Your organization and your SOC 2® assessor determine the scope of a SOC 2® report.
What are the benefits of SOC 2®compliance?
SOC 2® is a must-have for any organization that manages customer data, or integrates with business partners. If you’re selling software or services, your customers will want to see your SOC 2®report to have confidence that their data will be protected, and that you won’t introduce vulnerabilities into their systems. If your customers or business partners are in highly regulated fields or are publicly traded companies, a SOC 2®report is imperative to be considered as a viable vendor.
A SOC 2® report can also help reduce audit fatigue by eliminating or reducing the need for audits from customers and business partners. As part of their risk management practices, many companies annually audit their customers and business partners. This can result in being bombarded with a high volume of time-consuming audits coming from multiple sources. A SOC 2® report is a great solution for this, as companies will often accept a SOC 2® report in place of conducting a separate audit.
SOC Type 1 vs. Type 2
There are two types of SOC 2® reports – a Type 1 and a Type 2.
SOC Type 1
A SOC 2® Type 1 examination evaluates controls at a point in time. This means that the design of the controls are assessed, and implementation is confirmed, but consistent performance is not evaluated in a Type 1 report.
SOC Type 2
A SOC 2® Type 2 examination covers the operating effectiveness of controls over a specific time, such as over a six- to 12-month period. A SOC 2® Type 2 report has a higher bar than a Type 1 because, in addition to evaluating the design and implementation of control processes, it also assesses that the controls were consistently performed throughout the period. This provides customers and business partners with a greater level of confidence in the effectiveness of control processes.
What industries need SOC 2®?
SOC 2® certification is a need that spreads across industries. Because it’s so widely adopted and acknowledged, many procurement and security departments require a SOC 2® report before they approve the purchase of your software or service. If your business handles any kind of customer data, getting a SOC 2® report will help show your customers and users that you are committed to protecting their data. Healthcare, retail, financial services, SaaS, cloud storage and cloud computing companies are some of the businesses that will benefit from achieving SOC 2® certification.
7 steps to prepare for your SOC 2 audit
- Conduct a comprehensive risk assessment to identify potential security and privacy risks to your systems and data. Prioritize these risks based on severity and develop a remediation plan.
- Establish written policies and procedures that address each identified risk and align with Trust Services Criteria. Communicate these policies to relevant personnel.
- Implement access controls, such as strong passwords, multi-factor authentication, and password reset policies, to restrict access to authorized users only.
- Set up monitoring and logging mechanisms to track system activities. Regularly review and analyze logs to detect any unusual behavior and maintain an audit trail.
- Draft an incident response plan that outlines the steps to be taken during a security incident. Assign tasks to specific roles, provide up-to-date contact information, and train employees on their roles.
- Manage vendor risk by assessing the security controls of your vendors, mitigating identified risks, and monitoring them regularly. Consider requesting a SOC 2 audit from your vendors.
- Perform a pre-audit readiness assessment to review the work done and identify any remaining gaps. Consider hiring an external auditor for an objective assessment.
The readiness assessment may reveal additional remediation work. Investing time in addressing these gaps before the formal SOC 2 audit is more cost-effective than addressing them afterward.
Optimal timing for implementing SOC 2® compliance in your company?
Depending on the current state of your security and compliance program, getting your program in shape to pass a SOC 2® audit can take anywhere between a few months to more than a year. To figure out when it’s the right time to invest in SOC 2®, you’ll need to consider the following key factors:
If you’re looking to sell software or services to B2B customers, you’ll quickly find at least some of your customers demanding to review your latest SOC 2® report before they’re willing to be in business with you.
You need to have established software development processes before you schedule an audit. Security controls (e.g. access controls, change management, logging and monitoring) should be built into your software development lifecycle. If you haven’t developed processes to govern how you develop software at your organization, there isn’t going to be enough content for an auditor to audit.
Auditors will want documentation of your key company-wide processes during an audit. Thus, it is essential to implement certain company-wide processes before engaging with an auditor. Documents and policies you’ll need to have include:
You need someone who has the time and sufficient expertise to drive the SOC 2® readiness process forward. A project leader requires an adequate understanding of your business and your technology stack and be able to figure out what controls the organization needs to create to meet the program’s requirements. Typically, someone with a deep product, engineering and security background should be the one to lead this process. If you don’t have someone internally to lead the process, you may consider outsourcing these duties to a virtual, fractional compliance officer (professional service firms with expertise in delivering compliance-as-service).
You’ll need to invest internal resources in program design and program implementation and reserve some budget towards the SOC 2® audit itself.
Hyperproof partners with professional service firms with proven track records and deep expertise in helping organizations get SOC 2® ready. Our partners help customers design their compliance programs, build them out, and conduct readiness assessments to ensure no surprises when the audit occurs. If you need a referral, we’d love to talk. Get your demo today.
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