Audit Checklist for SOC 2

If your company is a service organization and your customers trust you with their data, you may need to pass a SOC 2 (System and Organization Controls 2) audit.

Compliance and certification are the goals of a SOC 2 audit. Because the integrity, confidentiality, and privacy of your customers’ data are on the line, they’ll want you to prove that you have internal controls to protect that data. The SOC 2 compliance audit gives them that assurance.

What is SOC 2?

SOC 2 is a set of standards developed by the American Institute of CPAs (AICPA) for managing client data based on five “trust service principles”: security, availability, processing integrity, confidentiality, and privacy.

SOC 2 reports are unique to each company, unlike PCI DSS, which has strict criteria. Instead, each builds its controls to comply with one or more trust principles following its business practices.

These internal reports tell you (alongside regulators, business associates, suppliers, and others) how your service provider maintains data.

Is SOC 2 Required For My Industry?

SOC applies to the majority of service companies. The SOC is also incorrectly referred to as “Service Organization Controls.” The most prevalent types of service organizations to which the SOC applies include, but are not limited to:

• Software as a service (SaaS) businesses that offer software, applications, and websites
• Providers of corporate intelligence, analytics, and management services
• Companies that manage, assist, or consult on money or accounting processes
• Companies that provide customer service and other client-facing services
• Managed IT and security service providers, including those who help with SOC 2 compliance

If your business falls under any of these classifications or is similar to one of these service organizations in general, you may be required to comply with SOC. While these service companies are SOC’s core focus, additional regulatory requirements provided by AICPA inside the SOC framework extend its safeguards throughout the supply chain and beyond.

SOC 2 Compliance Checklist

This SOC 2 audit checklist will help you prepare for your next SOC 2 audit.

Develop a SOC 2 Audit Framework

The first thing you need to do is determine what you’re going to test for and why. Next, you should establish a framework to meet your customers’ needs and guarantee them that you meet the necessary SOC 2 requirements.

Be sure your framework allows your SOC 2 auditor(s) to accurately assess that you meet the requirements for SOC 2 compliance.

Define the Objectives of Your SOC 2 Audit

Determine what your clients want to learn from your SOC 2 audit. However, if they’re going to know something specific about your internal financial controls, you’ll likely need a SOC 1 audit. If your clients are worried about cybersecurity, you’ll have to prepare materials for a SOC cybersecurity audit.

Determine the Scope of Your SOC 2 Audit

SOC 2 is designed for service organizations that store customer data in the cloud, including software-as-a-service providers. Before 2014, cloud storage providers only had to meet SOC 1 (previously known as Statement on Standards for Attestation Engagements no. 16 or SSAE 16) compliance requirements.

The scope of your SOC 2 audit typically addresses infrastructure, software, data, risk management, procedures, and people.

There are two types of SOC 2 audits: SOC 2 Type 1 and SOC 2 Type 2 (SOC 2 Type II). A service organization that undergoes a SOC 2 audit tells the auditor whether to perform a SOC 2 Type 1 or SOC 2 Type 2 audit.

The type of SOC 2 report you need will depend on your specific objectives and requirements.

A SOC 2 Type 1 report attests to the design and documentation of a service organization’s internal controls and procedures as of a specific date. However, the SOC 2 Type 1 report doesn’t include the actual operation of the controls.

A SOC 2 Type 2 report also provides evidence of how a company operates its controls over a certain period (usually between six months and a year).

A SOC 2 Type 1 report is a fast, efficient method to assess the design of your controls. However, a SOC 2 Type 2 report can offer greater assurance by more rigorously examining your internal controls for extended periods.

Select the Trust Services Criteria/Principles to Include

The scope of your SOC 2 audit may revolve around infrastructure, software, procedures, people, or data while covering the trust services principles (security, availability, confidentiality, processing integrity, and privacy).

So you’ll have to determine which trust services criteria, also referred to as trust services principles, you want to test for. Any trust services criteria you include will increase the scope of your audit. Therefore, select the trust services criteria that are appropriate and applicable to your services.

During a SOC 2 audit, your auditor will review the internal controls your service organization has implemented that are relevant to the following five trust services principles as defined by the AICPA:

• Security: Information and systems are protected against unauthorized access, unauthorized disclosure of information, and damage that could compromise the availability, integrity, confidentiality, and privacy of that information or those systems.
• Availability: Information and systems are available for operation and use to meet your service organization’s objectives.
• Processing integrity: System processing is complete, valid, accurate, timely, and authorized to meet your service organization’s objectives.
• Confidentiality: Information designated as confidential is protected to meet your service organization’s objectives.
• Privacy: Personal information is collected, used, retained, disclosed, and disposed of correctly to meet your service organization’s objectives.

These categories above all share a common set of standard criteria.

• Control environment
• Communication and information
• Risk assessment
• Monitoring activities
• Control activities – which are further broken out by:
  • Logical and physical access
  • System operational effectiveness
  • Change management
  • Risk mitigation

The only criterion the AICPA requires for SOC 2 audits is security. The other four are optional, so when preparing for a SOC 2 audit, you can decide which criteria to apply and how.

You should talk with your customers to identify which trust services criteria to test for in addition to security. Then, think about the trust services principles that pertain to your client’s requirements.

For example, availability might apply if you store your customers’ data but don’t process it, while processing integrity would not apply. But if you manage your clients’ transactions, processing integrity is likely necessary.

Perform a Readiness Assessment

Preparing for a SOC 2 audit can be daunting, especially if it’s your first SOC 2 audit. Performing a readiness assessment, however, can enhance the effectiveness of your SOC 2 report because it enables you to find problems in your control framework.

A readiness assessment can help determine your preparedness for your SOC 2 audit. You can perform a readiness assessment on your own or hire an auditing firm to fulfill your readiness assessment. In addition, a readiness assessment allows you to identify any issues before you complete your official SOC 2 audit.

Perform a SOC 2 Gap Analysis

Once you’ve completed your audit preparation, you should perform a gap analysis. This process typically takes about two months and will help you identify problems and risky areas in your cybersecurity practices.

While performing your SOC 2 gap analysis, you must select an audit firm to conduct your SOC 2. Then during the SOC 2 audit, your auditor will test your organization’s internal controls by running several activities, including an in-depth review of your policies and procedures and interviews with your employees. After completing the testing, your auditor will review key findings and record any exceptions. Then your auditor will issue the SOC 2 report.

Reviewing this SOC 2 audit checklist before you start will help prove that your client’s data is secure.

Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 defines criteria for managing customer data based on five “trust services principles”:

• Security
• Availability
• Processing integrity
• Confidentiality
• Privacy

The AICPA created SOC 2 to establish an audit standard that addresses the ongoing trends of cloud computing and software as a service.

Compliance with SOC 2 tests a service organization’s internal controls. These internal controls aim to help measure how well service organizations protect customers’ data and ensure clients that they can be trusted to keep their data secure.

A SOC audit aims to achieve a SOC certification or SOC attestation. To accomplish a SOC attestation, you must be audited by an independent certified public accountant (or CPA firm) who determines if you have implemented the appropriate safeguards and procedures.

A SOC 2 report is one of the SOC reports created by the AICPA. A SOC 2 report describes the internal controls that a company uses to process data. The SOC report also details the security and privacy of that data.

The AICPA developed SOC 2 reports to meet the needs of end-users, including regulators, business partners, and customers, that require detailed information and assurances about the internal controls deployed by their service organizations.

What Are the Benefits of SOC 2?

SOC 2 reports can play a crucial role in the following:

• Organizational oversight
• Vendor management programs
• Risk management processes and internal corporate governance
• Regulatory oversight

If a customer demands an audit report or industry regulations require that you conduct one, you’ll likely have to provide proof of SOC 2 compliance to demonstrate that you’ve properly secured your clients’ data.

Your service organization can benefit from a SOC 2 audit report in other ways.

SOC 2 reports can uncover information that can help you operate more efficiently and securely. In addition, SOC 2 compliance can help your service organization bolster its financial statements, stability, and reputation by documenting, evaluating, and improving your internal controls.

Let ZenComply Help You Maintain SOC 2 Compliance

Reciprocity ZenComply, a compliance and audit management system, provides a faster, smoother, and brighter road to compliance by reducing time-consuming manual procedures, expediting onboarding and keeping you informed about the status and efficacy of your programs.

You may begin your first audit using ZenComply in less than 30 minutes. A prescriptive workflow walks you through picking frameworks and scoping requirements and controls step by step. You may prevent audit fatigue while maintaining an efficient and uniform process by employing a “ask once and comply with many” approach to sharing and reusing rules across frameworks.

ZenComply provides you with the visibility you need to analyze the progress and success of your compliance activities and their influence on risk reduction. Schedule a demo today and start complying with SOC 2 in a breeze.