Is your organization ready for a SOC 2 audit? Learn how to get ready for your audit by conducting a SOC 2 readiness assessment.
What is a SOC 2 audit?
The Service Organization Controls (SOC) audit is a standard issued by the American Institute of Certified Public Accountants (AICPA). The report provides an auditor’s attestation about the design and effectiveness of an organization’s controls.
Several categories of SOC audits exist. A SOC 1 audit covers the internal controls that govern an organization’s financial reporting. A SOC 2 audit reviews the internal controls that address various elements of an organization’s data security.
SOC 2 audits also come in two types. A SOC 2 Type I audit only assesses whether data security controls are designed properly at a certain point in time. A SOC 2 Type II audit goes further, and assesses whether those controls are also effective over a period of time (say, six months or a full year).
Ultimately, a SOC 2 audit aims to assure your customers and other stakeholders that your business is in compliance with data security standards, and that they can entrust their confidential data to you.
Depending on the needs of your organization, your SOC 2 report will encompass one to five trust services principles (TSP):
- Processing integrity
Your organization isn’t required to address all five TSPs; only the security principle is mandatory for SOC 2 compliance. The other principles included in your SOC 2 audit should only be those relevant to your operations. For example, if you never collect personally identifiable information, you have no privacy risk and no need to include that principle in your SOC 2 audit.
Obtaining a SOC 2 report is not a one-time event. It requires an ongoing commitment from management to implement and test controls consistently. It also requires a financial commitment to hire a service auditor from an accounting firm to perform testing over several months and issue an annual report.
Oftentimes, SOC 2 compliance requires shifting your organization toward a more formal framework of controls and testing. Executing your controls consistently is crucial, and you may need to perform significant remediation before your organization is ready to submit to a service auditor’s testing.
SOC 2 audits are expensive, so make sure your organization should prepare in advance. To avoid lost time and money, it’s best to conduct your own SOC 2 readiness assessment before you submit your organization to a formal SOC 2 audit.
What is a SOC 2 readiness assessment?
A SOC 2 readiness assessment is, essentially, a dress rehearsal for your formal SOC 2 audit. Preparing your organization for an audit is critical, to anticipate potential problems before an official SOC 2 audit that will cost you valuable resources.
The first step of a readiness assessment is determining the scope: the areas of your organization that may be included in the audit.
In most cases, scoping your SOC 2 audit will yield surprising results. You may find that you need to include more of your firm’s systems and controls than you had envisioned. For this reason, it is best to prepare for your audit by including all five TSPs.
During the scoping phase, you should also pay attention to the two types of SOC 2 reports we mentioned earlier. Many times, the Type I audit is the stepping stone to prepare for the more complicated Type II audit.
SOC 2 Type II is a standard auditing procedure for U.S. service providers. Any company that processes or stores customer and consumer information will benefit from conducting a SOC 2 Type II audit.
After you determine the scope of your SOC 2 report, you’ll evaluate your control environment using the SOC 2 criteria for TSPs most relevant to your organization’s operations.
A SOC 2 readiness self-assessment includes establishing the audit’s scope and examining whether the necessary controls have been designed and are operating effectively.
A readiness assessment may be conducted by your organization’s internal resources, a CPA firm, or a consulting company.
The assessment process should include the following steps:
- Mapping existing controls to the framework. This process should start with a review of control documentation that already exists and that’s relevant to the scope and control objectives identified in the SOC 2 standard.
- Documenting gaps and “future state” controls. Examining your existing processes will allow you to identify where gaps exist, and avoid gaps in future controls.
- Identifying remediation plans. For every gap in the control environment, you should create a remediation plan that includes detailed steps and deliverables to satisfy the control standard, timelines that are feasible and aggressive in meeting goals, and a remediation team to track and motivate progress.
While some gaps are easy to remediate, others will require more time and money.
You should hold regular meetings for everyone involved in SOC 2 remediation activities. Gathering all relevant parties to get their input on remediation efforts will not only help you to perform a better gap analysis; it will also help foster an overall culture of SOC 2 compliance throughout your organization.
Even after completing remediation, you should continue to conduct readiness testing to assure the functionality of your organization’s controls.
No matter how ready for SOC 2 your organization appears, you should always conduct readiness testing before an official audit. Readiness testing will uncover any human errors and also identify any controls that weren’t flagged as gaps during the assessment phase.
Why conduct a SOC 2 readiness assessment?
Conducting a SOC 2 assessment before your organization has identified and remediated control failures puts you at risk for distributing a report that could raise compliance red flags with customers.
Done correctly, a readiness assessment will help your organization identify the procedures and processes that you should have in place.
A readiness assessment will also help prepare your organization to master the five TSPs, and create an overall culture of SOC 2 compliance.
Devoting resources towards a readiness assessment will ensure that your SOC 2 audit starts on the right track. It also reduces the risk of wasting valuable resources on a SOC 2 audit before control gaps have been remediated, costing you additional time and money.
Tools to help manage you SOC 2 readiness assessment
Choosing the right SOC 2 compliance software for your organization will take the worry out of SOC 2 audit readiness.
A digital governance, risk, and compliance (GRC) tool like ZenGRC from Reciprocity can help your organization prepare for SOC 2 by generating sample reports in advance of the official audit. And when it’s time to hire an auditor, ZenGRC can provide audit information in an easy-to-use format.
ZenGRC has a number of unique features that will make SOC 2 readiness easier for your organization, including:
- Quick, easy deployment
- User-friendly design
- Easy internal audit capabilities
- Vendor management tools
- Continuous controls monitoring
- Integration with your software and services stack
- At-a-glance compliance dashboards that include your other frameworks
Start your journey to SOC 2 compliance the worry-free way with ZenGRC and sign up for a demo today to see how we can help you with your readiness assessment.