A System and Organization Controls for Service Organizations 2 (SOC 2) audit assesses how well a service provider’s internal controls and practices safeguard customer data’s privacy and security. Service providers include those providing Software-as-a-Service (SaaS) or cloud computing services, as well as other professional services such as consulting that are routinely provided by third-party vendors.
A SOC 2 auditor measures the vendor’s internal controls and practices against applicable Trust Services Criteria, which were developed by the American Institute of Certified Public Accounting (AICPA). The resulting report, or attestation, states whether the vendor’s controls are sufficient to assure data security – or, if not, where the vendor needs to improve.
The five Trust Services Criteria are as follows:
- Security. The system is protected against unauthorized access (both physical and logical).
- Availability. The system is available for operation and use as committed or agreed.
- Processing integrity. System processing is complete, valid, accurate, timely, and authorized to meet the organization’s objectives.
- Confidentiality. Information designated as “confidential” is protected according to policy or agreement.
- Privacy. Personal information is collected, used, retained, disclosed, and disposed of in conformity with the commitments in the entity’s privacy notice and with criteria outlined in Generally Accepted Privacy Principles issued by the (AICPA).
Differences Between SOC 1 and SOC 2
SOC audits can come in several forms: SOC 1, SOC 2, and SOC 3.
A SOC 1 audit focuses on a vendor’s internal controls over financial reporting. For example, if a vendor provides financial processing services to corporate clients, those clients might want a SOC 1 audit to assure that the vendor will handle the client’s financial transactions according to Generally Accepted Accounting Principles.
A SOC 2 audit assesses a vendor’s data security practices, to assure that clients can trust the vendor with their sensitive data. A SOC 2 audit is based on the Trust Services Criteria mentioned above, but a SOC 2 audit does not need to address all five TSCs. The security TSC is required; the other four are optional, depending on exactly what security risks are involved in the vendor-customer relationship.
A SOC 3 audit is similar to a SOC 2 audit, in that it reviews cybersecurity controls; but it is less exhaustive than a SOC 2 and can be shared publicly (say, on a vendor’s website or in marketing materials) to demonstrate the vendor’s commitment to security.
What Types of SOC 2 Audits Exist?
SOC 2 audits can be one of two types.
A Type 1 report only assesses whether the vendor’s controls are adequately designed to achieve certain control objectives (usually the objectives defined by the TSCs used to guide the audit), as of a specific date. In other words, a Type 1 report is a snapshot of the vendor’s security controls at a single point in time.
A Type 2 report goes further, to test whether those controls then work as intended over a period of time (say, six months or one year).
SOC 2 reports, of either type, usually aren’t meant for widespread circulation. The company requesting the audit, the vendor undergoing it, and the audit firms performing it can all see the report; but since each SOC 2 audit has a specially tailored scope defined by the TSCs used in the audit, the final SOC 2 report isn’t intended to be shared with others. (In contrast to a SOC 3 report, which is.)
What Is a SOC Report in an Audit?
SOC 2 reports are different from other information security standards and frameworks because there is no exhaustive list of specific criteria the vendor must meet. Instead, the AICPA gives generic criteria (the Trust Service Criteria) that a vendor can use to demonstrate that it has controls in place to manage risks associated with their service.
Typically a vendor will obtain a SOC 2 Type 1 report first, to confirm the design of its security controls. Then at some point in the future the vendor proceeds to a Type 2 report, to confirm how well those controls work over time.
The Assessment Process
The independent certified public accountant or accounting firm you select to conduct your SOC 2 audit will generally follow several steps.
- Determine the scope of the audit. This includes selecting which of the Trust Services Criteria and their 61 requirements apply to your organization.
- Decide whether to proceed with a Type 1 or Type 2 audit.
- Examine your controls for each applicable Trust Services Criteria, a process that includes evidence collection. Documents the auditor may examine:
- Organizational charts
- Asset inventories
- Onboarding and off-boarding processes
- Change management processes
There is no need to worry if the auditor finds problems or gaps in your controls; you’ll have an opportunity to remediate those weaknesses. That said, finding numerous weaknesses can drive up your audit costs. Your best bet for efficiency and lower costs throughout the SOC 2 audit is to use a SOC 2 audit checklist that helps you to prepare for the audit before it even begins.
Why Are SOC Audits Important?
SOC audits give prospective clients confidence in your services. They demonstrate to clients that you take security seriously, and that you have controls in place to guarantee that their information is protected and processed correctly.
More broadly, SOC 2 audits help your business to manage risk. These audits uncover weaknesses in security that you can then fix, and improving cybersecurity is its own reward. You face less risk of disruptions (say, a ransomware attack that paralyzes your business), as well as less risk of costly investigations and enforcement actions from regulators. Those are benefits well worth achieving, regardless of the extra confidence that SOC 2 audits will instill in your customer base.
How to Prepare for a SOC 2 Audit
The key to a successful SOC 2 audit is preparation. Before the auditor walks in your door, you should have checked off all the boxes on your SOC 2 compliance checklist and have your supporting evidence on hand. Here’s how to prepare.
- Establish your goals. What is the scope of your audit? Begin by establishing which of the SOC 2 Trust Service Criteria and their 61 requirements apply to your organization.
- Organize your materials. Gather the documents and correspondence proving the effectiveness of your controls. Confirm that they are in line with the Trust Services Criteria and principles you’ve deemed applicable.
- Conduct a self-audit. This step can save untold grief and cost down the road. If you can show the auditor conducting your SOC 2 audit that you have remediated compliance issues, your organization will be well on its way to achieving that coveted SOC 2 attestation and demonstrating to your customers that you take cybersecurity seriously.
Automate SOC 2 Compliance with Reciprocity ZenComply
If SOC 2 certification were easy, everyone would have done it already. Unfortunately, SOC 2 is a complex information security and privacy framework that changes frequently and can be confusing – especially for organizations trying to manage compliance using Excel or other spreadsheets. You can simplify the task and save time by using a digital solution.
Reciprocity ZenComply, a compliance and audit management system, provides a faster, smoother road to compliance by reducing time-consuming manual procedures, expediting onboarding and keeping you informed about the status and efficacy of your programs.
You gain a unified, real-time view of risk and compliance with seamless integrations with Reciprocity ZenRisk and the Reciprocity ROAR platform, providing the context-specific perspective necessary to make savvy, strategic choices that keep your company secure and earn the trust of your customers, partners, and employees.
An automated and integrated database of references will keep you ahead of the constantly changing regulatory landscape. Reciprocity allows you to:
- Get audit-ready in under 30 minutes
- Alleviate staff burdens with collaboration and automated workflows
- Learn about the impact of compliance initiatives on your cyber risk posture to prioritize resources
ZenComply provides you with the visibility you need to analyze the progress and success of your compliance activities and their influence on risk reduction. An audit overview report summarizes the frameworks, requirements, and controls in scope, the activities to be done, and the present audit status.
Schedule a demo today to learn how ZenComply can streamline your audit process.
