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 getting a SOC 2® report 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), a SOC 2® report provides insight into internal controls that exist within an organization to address risks related to security, availability, processing integrity, confidentiality and/or privacy. The report is independently validated by a CPA 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. The scope of a SOC 2® report is determined by your organization and your SOC 2® assessor.
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.
Type 1 vs. Type 2
There are two types of SOC 2® reports – a Type 1 and a Type 2.
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.
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 is 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 a greater level of confidence to customers and business partners as to 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.
When should my company invest in SOC 2®?
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 important 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 needs a sufficient understanding of your business and your technology stack, and be able to figure out what controls the organization needs to create in order to meet the requirements of the program. Typically, someone with 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).
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 there are no surprises when the audit occurs. If you need a referral, we’d love to talk.