SOC 2 Audit Tips for Small Businesses

For every business, large and small, data security should be a paramount concern.

Not only does attention to security safeguard your customers’ private information; it also demonstrates your company’s ability to handle sensitive data with professional care. That ability will give you a competitive edge in the market – and for a small business, every edge matters.

To demonstrate that commitment, organizations can seek to comply with the SOC 2 assurance standard for cybersecurity and privacy.

SOC 2 compliance isn’t required by law; many enterprises, however, won’t do business with technology vendors and other service providers that haven’t achieved the SOC 2 attestation of compliance from an independent certified public accountant (CPA) or a CPA firm.

For startups and small businesses, SOC 2 compliance might seem daunting- but it doesn’t need to be. While SOC 2 audits are a lengthy process, this guide to SOC 2 compliance can dispel that confusion and help you prepare for the journey.

What Does a SOC 2 Audit Include?

The SOC 2 audit assesses your organization’s ability to protect confidential information and customer data. The criteria for assessing this ability are guided by five Trust Service Categories developed by the American Institute of Certified Public Accountants (AICPA).

• Security
• Availability
• Confidentiality
• Processing integrity
• Privacy

What Are the Two Types of SOC 2 Audits?

SOC 2 audits are grouped into one of two types. A SOC 2 Type I audit assesses whether the vendor’s controls are appropriately designed based on the described rules of the service organization’s management. A SOC 2 Type II audit tests whether those controls actually work as intended over a period of time (usually six months or a year).

Put more simply: Type I audits only provide a snapshot of your security controls at one moment in time; Type II audits provide assurance across a long period of time. So most companies start by undertaking a Type I audit, which provides a baseline understanding of your security controls. You can then proceed to the longer, more substantial Type II audit sometime after that, to provide ongoing assurance.

What Is a SOC 2 Report?

All SOC 2 audits culminate in a report, and this is an important point to understand. A company is not “certified” as SOC 2-compliant. Rather, the company undergoes an audit of its security controls by an independent, competent auditor; and that auditor then writes an opinion about the strength of the company’s security controls.

In theory, if your security controls are poor, the auditor could give you a failing report. But since SOC 2 audits aren’t required by law (as mentioned above), companies have no incentive to undertake a SOC 2 audit until you’re confident that you can pass the audit. Hence preparing for your first SOC 2 audit is so important.

How Should a Business Prepare for a SOC 2 Audit?

All businesses preparing for a SOC audit should plan their approach methodically; a failed audit can be worse than not seeking SOC 2 compliance in the first place.

Small business owners should look at the internal controls they have that satisfy risk management objectives. For guidance, look to the internal control framework developed by COSO, the Committee of Sponsoring Organizations.

COSO’s controls are grouped into five major components: control environment, risk assessment, control activities, information and communication, and monitoring. Using the internal control framework will help to protect your business from the risks that can compromise your information technology.

Along with assessing your security controls, several steps will help your business prepare and carry out its SOC 2 audit.

First, assemble a team within your company to prepare for the audit. The team should include your organization’s chief technology officer (CTO), chief information officer (CIO), and chief security officer (CSO), or whomever else has similar responsibility for IT and cybersecurity.

Consider which of the trust service principles apply to your organization, and determine whether there are any gaps within your current system. Then, organize and collect evidence to support the five trust categories.

Before bringing in the auditor:

1. Self-assess your documentation and assure your organization is ready. It’s far better to delay your audit than to rush into it and fail.
2. Monitor your company’s compliance by setting up security alerts.
3. When ready, schedule an audit with a certified public accountant; the AICPA stipulates that only CPAs are qualified to perform a SOC 2 audit.

Is SOC 2 Required for Startups?

SOC 2 audits are not required by law. Rather, vendors that want to win business from large enterprise customers have a strong incentive to comply with SOC 2 standards because otherwise, those potential customers won’t trust that you can handle their confidential data.

Justifications for obtaining SOC 2 compliance include:

• Market competition. Concerns over security and privacy breaches are growing among consumers of cloud-based solutions. Whether you’re a tiny startup or a major corporation, a SOC 2 compliance report boosts the competitiveness and appeal of your product. It demonstrates your dedication to information security and might assist you in moving your company upmarket.
• Uniform compliance procedures. Getting SOC 2 compliance early on will help you stay compliant with defined security, privacy, and quality assurance standards without having to make more significant modifications after your procedures are established. This might offer you confidence that you’re scaling your startup correctly and avoiding substantial errors.

Best Practices for Startups Conducting a SOC 2 Audit

Before the audit formally begins, a business needs to be well prepared. Compiling and supplying the necessary SOC 2 evidence may speed up the auditing procedure, which ultimately lowers your costs. Follow the these SOC 2 audit tips:

Maintain Current Administrative Security Policies

Policies are a crucial part of any security program. Company workforce organization, technology, and daily operations should all be reflected in your policies. Assure that your policies cover all necessary topics and are written clearly.

Establish technical security measures

Technical controls include practices such as encrypting sensitive data or using multi-factor authentication to log into corporate networks from off-site locations. Assure that all necessary technical controls are in place to satisfy whichever Trust Service Criteria are being tested as part of your audit.

Collect SOC 2 control evidence and security information

Teams should gather all relevant evidence to prepare for the SOC 2 audit. Your team will be able to respond quickly to auditor questions if this supporting documentation is available.

Formally conduct the SOC 2 audit

An organization is prepared to schedule a SOC 2 security audit once all required SOC 2 security measures have been established and verified to satisfy the Trust Services Criteria (TSC). Teams must respond to pertinent security questions throughout the auditing process and present policies and supporting documentation for their security measures.

Auditors may request specific infrastructure and system-related evidence to evaluate security controls. For example, an auditor can request proof that servers use encrypted volumes or that backups are enabled and made for your production services.

What Kinds of Companies Need a SOC 2?

Achieving compliance with SOC 2 standards is voluntary. That said, certain vendors will feel more pressure to undertake a SOC 2 audit than others. The service companies most likely to need a SOC 2 audit include:

• Service-based software (SaaS) businesses that offer software, applications, and websites
• Businesses that offer management, analytics, and business intelligence services
• Organizations that manage, support, or offer advice on accounting or financial procedures
• Organizations that offer client-facing services like customer service management
• Providers of managed IT and security services, including those that support SOC 2

You might feel compelled to comply with SOC 2 if your business fits into any of these categories or roughly corresponds to one of these service organizations.

How Can Small Businesses Save Money on SOC 2 Audits?

Small businesses looking to save money on SOC 2 audits can seek guidance from the Small Business Administration. The Small Business Administration (SBA) partners with AICPA and can offer compliance tips and cyber-hygiene guidance for companies preparing to undergo an audit.

While not all that advice might be SOC 2-specific, the tips may help your company identify existing gaps in data security, so you’re not caught off guard when your auditor comes.

Although not mandated, becoming SOC 2 compliant is highly recommended by industry professionals. It’s also a stamp of approval that your cybersecurity system is intact, and shows that your business will protect its customers’ private information and safeguard against costly data breaches that could be devastating for a company.

Conduct Your SOC 2 Journey With the Reciprocity ROAR Platform.

Need help preparing for your SOC 2 audit? Reciprocity ROAR Platform can help.
ROAR delivers a faster, easier, more efficient path to compliance. It automates tedious manual processes, accelerates onboarding and keeps you up-to-date on the progress and effectiveness of your programs.

You can gain a unified, real-time view of risk and compliance, providing the contextual insight needed to make intelligent, strategic decisions that keep your organization secure and earn the trust of your customers, partners and employees.

Schedule a demo to learn more!