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 third-party vendors routinely offer.

The common criteria for SOC 2 audits are the Trust Services Principles established by the American Institute of CPAs (AICPA). These core principles include security, availability, processing integrity, confidentiality, and privacy. SOC 2 audits evaluate an organization’s controls against these criteria to assure customers their sensitive data is appropriately managed and protected.

SOC 2 audits are becoming increasingly important for cloud services, healthcare organizations, companies handling personal data, and any entity responsible for sensitive customer information. Regular SOC 2 assessments can help reduce risks from data breaches while demonstrating compliance with regulations like the General Data Protection Regulation (GDPR).

What is a SOC 2 Audit?

A SOC 2 auditor measures the vendor’s internal controls and practices against applicable Trust Services Criteria developed by the American Institute of Certified Public Accounting (AICPA). The resulting audit 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 data 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).

Type 1 vs. Type 2

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 specific control objectives (usually those 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 simultaneously.

A Type 2 report goes further to test whether those controls then work as intended over some time (say, six months or one year).

SOC 2 reports of either type are usually meant for something other than widespread circulation. The company requesting the audit, the vendor undergoing it, and the audit firms performing it can all see the report. Still, since each SOC 2 audit has a specially tailored scope defined by the TSCs used in the audit, the final SOC 2 report is intended to be private from others. (In contrast to a SOC 3 report, which is.)

Benefits of SOC 2 Type 2 compliance

SOC audits highlight operational effectiveness and integrity. Key benefits include:

     1. Trust and Assurance:

  • Provides stakeholders assurance of robust controls and data protection.
  • Shows adherence to standards, building confidence.

     2. Regulatory Compliance:

  • SOC reports independently evaluate controls to meet regulations.
  • Assurance helps satisfy regulators and avoid penalties.

     3. Risk Management:

  • SOC audits identify data management, security, and processing risks.
  • Assessing controls addresses vulnerabilities.

     4. Competitive Advantage:

  • Shows commitment to quality and security.
  • Vendors with SOC audits may be preferred.

     5. Vendor and Third-Party Management:

  • Companies require SOC audits to validate vendor controls.
  • SOC reports facilitate vendor oversight.

     6. Operational Efficiency:

  • Preparing for an audit can optimize processes.
  • Feedback enhances effectiveness.

     7. Financial Integrity:

  • SOC 1 focuses on financial reporting controls.

     8. Market Confidence:

  • Adhering to standards and SOC audits builds confidence.

     9. Legal Protection:

  • Shows proactive security after incidents.

     10. Transparency:

  • Provides insights on controls and operations.

In essence, SOC audits are a critical mechanism for demonstrating accountability, enhancing operational efficiency, and fulfilling regulatory requirements, which collectively contribute to the overall credibility and success of an organization. All audits are conducted against the trust services categories to test information security and operating effectiveness.

What are SOC 2 Type 2 requirements?

To obtain SOC 2 Type 2 certification, companies must meet several key requirements:

  • Have controls and safeguards that align with Trust Services Criteria from the American Institute of Certified Public Accountants (AICPA). These emphasize security, availability, processing integrity, confidentiality, and privacy.
  • Prove effective operation of controls over a minimum 6-month period. This demonstrates ongoing compliance versus just a point-in-time audit.
  • Hire an accredited CPA firm to perform the audit. They must follow AICPA attestation standards.
  • Implement remediation for any issues uncovered during the audit. Auditors will verify fixes.
  • Adhere to regulations like HIPAA and PCI DSS if applicable. SOC 2 also helps satisfy frameworks like ISO 27001.
  • Establish proper control operation for all relevant systems and service components.
  • Provide infrastructure documentation like policies, processes, and procedures.
  • Maintain documentation related to change management and risk assessments.
  • Give auditors access to facilities, systems, and staff involved in services.
  • Develop a roadmap for how to prepare using readiness assessments and SOC 2 Type 1 audits.
  • Allocate resources for audit preparation using templates and automation where possible.

SOC 2 Type 2 certification requires an ongoing commitment to internal control monitoring, transparency, compliance, and continuous security improvement. The extensive evaluation provides customers assurance their data is properly safeguarded.

What does a SOC 2 audit include?

A SOC 2 audit is an extensive evaluation of the policies, procedures, systems, facilities, and personnel involved in handling customer data. Auditors use multiple methods to validate that an organization’s security and privacy controls are functioning effectively.

The documentation review examines information security policies, privacy policies, data classification procedures, vendor management programs, incident response plans, and other policies and procedures related to the control environment. Gaps or issues in written policies are identified.

Interviews are conducted with personnel in management, operations, security, compliance, and IT to understand how controls are implemented in actual practice. Differences between documented policies and real-world procedures may emerge.

Inspections of facilities, including data centers, call centers, and offices, evaluate physical access controls like badge access systems, cameras, locks, and environmental monitoring.

Change management analysis reviews records of modifications to systems, policies, and personnel to ensure proper vetting and risk analysis are performed.

When Should You Conduct a SOC 2 Type 2 Audit?

There are several strategic times when organizations should undertake a SOC 2 Type 2 audit:

  • Before Renewing a Major Contract: Get certified before renegotiating terms with a large customer to build trust.
  • After a Merger or Acquisition: Evaluate controls after integrating entities to identify and address any gaps.
  • When Expanding Operations: Assess controls when adding new services, technologies, or data centers to maintain compliance.
  • When Upgrading Systems: Audit how changes to infrastructure like cloud migrations affect security and availability.
  • After a Cybersecurity Incident: Demonstrate controls are strengthened after a breach or attack.
  • To Maintain Certification: Conduct annually or biannually to keep status current.
  • When Regulations Change: Ensure controls satisfy new rules and requirements.
  • To Compare Against Competitors: Gain an advantage by undergoing audits more frequently than peers.
  • To Assure Customers: Provide regular assurance that controls effectively protect sensitive data.
  • To Support Vendors: Require third parties to furnish SOC 2 Type 2 reports for risk management.

Proper planning is key as SOC 2 audits evaluate the entire control environment. Frequent assessments demonstrate an ongoing commitment to customers, regulators, and partners.

How do you conduct a SOC 2 Type 2 audit?

Successfully undergoing a SOC 2 Type II audit involves careful preparation and execution across multiple phases:

  1. Planning: Determine the scope and American Institute of CPAs (AICPA) Trust Services Criteria for the audit. Assemble a team to own the process. Develop a timeline aligned with business needs.
  2. Gap Analysis: Compare existing controls against SOC 2 requirements. Identify deficiencies and create plans to remediate them.
  3. Policy Update: Revise documentation like security policies, procedures, and contracts to fulfill SOC 2 criteria.
  4. Control Implementation: Make necessary improvements to security controls, access restrictions, monitoring, encryption, etc., per the gap analysis.
  5. Readiness Assessment: Conduct an informal “mock audit” to validate preparedness for the accurate audit.
  6. Auditor Selection: Vet and select a licensed CPA firm to perform the independent SOC 2 assessment.
  7. Audit Engagement: Work collaboratively with the auditor during system and facility inspections, staff interviews, and policy reviews.
  8. Remediation: Address any remaining issues or weaknesses based on audit findings to strengthen security practices and controls.
  9. Certification: The auditor provides the official SOC 2 Type 2 audit report and certificate once satisfied with remediation efforts.
  10. Monitoring: Implement ongoing monitoring of controls to maintain compliance until the next audit.

Rigorous controls, updated documentation, remediating gaps, and transparency with auditors during the process led to successful SOC 2 Type II certification.

SOC 2 Compliance is Made Easy with ZenGRC

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.

ZenGRC, 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 tools within the 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. RiskOptics 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

ZenGRC provides 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 ZenGRC can streamline your audit process.