System and Organization Controls for Service Organizations 2 (SOC 2) compliance isn’t mandatory. No industry requires a SOC 2 report. Nor is SOC 2 compliance law or regulation.
But your service organization ought to consider investing in the technical audit required for a SOC 2 report. Not only do many companies expect SOC 2 compliance from their service providers, but having a SOC 2 report attesting to compliance confers added benefits, as well.
Having the report benefits your service organization in other ways, too.
Here are six reasons to obtain a SOC 2 compliance report:
- Customer demand. Protecting customer data from unauthorized access and theft is a priority for your clients, so without a SOC 2 attestation (or SOC 3, which uses the same audit but whose report is designed for public consumption), you could lose business.
- Cost-effectiveness. Think audit costs are high? In 2018, a single data breach cost, on average, $3.86 million—and that figure rises every year. A SOC 2/SOC 3 audit is a proactive measure to help avoid those costly security breaches.
- Competitive advantage. Having a SOC 2/3 report in hand gives your organization the edge over your competitors who cannot show compliance.
- Peace of mind. Passing a SOC 2 audit provides assurance that your systems and networks are secure.
- Regulatory compliance. Because SOC 2’s requirements dovetail with other frameworks including HIPAA and ISO 27001, attaining certification can speed your organization’s overall compliance efforts—especially if you use GRC software or software-as-a-service (SaaS) that provides you with that big-picture view.
- Value. A SOC 2 report provides valuable insights into your organization’s risk and security posture, vendor management, internal controls governance, regulatory oversight, and more.
SOC: A Short History
The American Institute of Certified Public Accountants (AICPA) developed SOC 2’s predecessor, SOC 1, to determine the effectiveness of service organization controls on financial reporting. They followed up with SOC 2 in response to growing concerns over data privacy and security.
SOC 2 applies to all service providers that process and store customer data. In producing the SOC 2 attestation of compliance, auditors refer to the AICPA’s Statement on Standards for Attestation Engagements No. 18 (SSAE 18), which emphasizes data security.
SOC 2 requires organizations to establish and follow strict information security policies and procedures, encompassing the security, availability, processing, integrity, and confidentiality of customer data—the five “trust service categories” (formerly “trust service principles”). Having the SOC 2 report attesting to your enterprise’s compliance means you can rest assured that the data you process is protected—no small thing, in today’s world.
Once you’ve obtained the SOC 2 Type 1 report, which attests to your compliance at a single point in time, you can follow up with annual Type 2 (or Type II) audits, which measure ongoing SOC 2 compliance—so that you know you’re always covered. A quality governance, risk, and compliance (GRC) software can do the heavy lifting, saving you time, money, and sleep.