This is the kind of guarantee that an SOC 2 audit provides, and many organizations seek to be SOC 2 compliant to possess more robust internal controls and improve their trustworthiness. To have an in-depth look at what is SOC 2 and the relevance of SOC 2 audits, read on.

What is SOC 2?

Framed by the American Institute of CPAs (AICPA),Service Organization Control 2 or SOC 2 lays down a framework for strong information security for cloud service companies. SOC 2 applies to SaaS companies and businesses that upload customer data to the cloud and aims to safeguard this data through 5 Trust Services Criteria.

The 5 Trust Services criteria are:

●       Security

●       Availability

●       Processing integrity

●       Confidentiality

●       Privacy

Following this, SOC 2 compliance is about an organization being able to assure the security of customer data, based on these 5 principles, using adequate controls and systems. Beyond criteria, SOC 2 also provides an auditing procedure and a SOC 2 audit report aims to assure users, clients, stakeholders, and third parties that the organization is complying with the criteria in place for handling sensitive information.

That said, SOC 2 reports are unique to your organization and you have the power to design controls and systems to comply with the trust service criteria that are relevant to you. SOC 2 audits are performed by accountancy organizations or an independent CPA (Certified Public Accountant).

Do you need to be SOC 2 compliant?

Companies and clients you liaison with may not  require you to furnish SOC 2 reports. SOC 2compliance is not a strict necessity in that sense. However, being SOC 2 compliant has its share of benefits. Here’s a look at what they are.

●       When auditors attest to your organization’s system sand controls for data security, you possess a competitive advantage in the market. All things equal, clients are sure to prefer an organization that assures them of information security and integrity.

●       SOC 2 compliance can help boost your other compliance efforts, such as preparing to be compliant with ISO 27001.

●       Data breaches can cause grave financial losses and have legal ramifications too. Being SOC 2 compliant is an ideal way to safeguard yourself against such aspects.

So, while SOC 2 compliance is not mandatory, objectively speaking, it may be required for your organization on a practical level.

What are the SOC 2 Trust Categories?

The 5 Trust Services Categories outlined by AICPA are:

Security: Refers to information and systems being protected against unauthorized access, unauthorized disclosure, and damage that could affect the entity’s ability to meet its objectives.

        a. Information protection in this case covers the points of collection, creation, transmission, storage, processing, and use

        b. Systems under protection are those that employ electronic information to act on the information gained

The criteria of security seeks to safeguard customer data against aspects like theft and unauthorized disclosure. Consequently, tools like 2-factorauthentication can be used to secure data.

Availability: Refers to systems and information being available for operation and use to meet the entity’s objectives.

So, your systems need to be available and accessible as per the terms of your service agreement. Availability is vital, for instance, if you run a datacenter or a web hosting service, which requires data to be accessible 24/7.Likewise, if you sell a SaaS product, you need to ensure that it is available for use, as per the agreement.

Processing Integrity: Pertains to services provided or goods manufactured, distributed, or produced. It ensures that the audited system’s processing is valid, complete, timely, accurate, and authorized in such a way that the entity’s objectives can be met.

If you provide e-commerce services or transact on behalf of clients, processing integrity should make its way into your SOC 2 report. This ensures clients that data modification is authorized, processing errors are able to be detected, system output is accurate, and so on.

‍Confidentiality: Stipulates that information that is held as confidential is aptly protected to meet the entity’s objectives. This applies from the point of collection right till removal. While privacy pertains to personal information, confidentiality refers to other information as well, such as proprietary information, trade secrets, and intellectual property.

An example of data that needs to be protected is personal health information. If your organization collects and stores such information, an audit of confidentiality ought to be carried out as per the SOC 2 guidelines.

Privacy: Refers to the collection, usage, retainment, disclosure, and disposal of personal information to meet the entity’s objectives. Privacy has parameters such as:

       a. Notice and communication of objectives

        b. Choice and consent

        c. Collection

        d. Use, retention, and disposal

        e. Access

        f. Disclosure and notification

        g. Quality

        h. Monitoring and enforcement

The criteria of privacy verifies that your organization is handling customer data in accordance with the privacy terms agreed upon.

What is Type 1 and Type 2 of SOC 2?

SOC 2 has two types of reports. Type 1 reports attest to the design of controls and security systems at your organization at a specific point in time. Type 2 audit reports are broader in scope. They contain everything that is included in Type 1 reports and attest to the effectiveness of the controls in place evaluated for a period of 6 months or more. Thus, a SOC 2 type 2 report is more valuable.

What is the difference between SOC 1, SOC 2, and SOC 3?

An SOC1 report attests to financial controls only. It is mainly for other auditors. An SOC2 report attests to controls that come under the 5 Trust Service Criteria. An SOC 2 report is mainly for the company itself and while SOC 1 focuses on internal controls over financial reporting (IFCR), SOC 2 focusses on data handling as per the Trust Criteria. SOC 3 report is a general use report that is designed for public sharing. It is a high-level summary of the SOC 2 report but does not go into details of the information in it.

Can GRC software help you become SOC 2 compliant?

A GRC platform like VComply can help you design internal controls that keep your organization compliant with the criteria requirements of SOC 2. VComply provides an uncomplicated way for you to manage compliance and risk, allowing you to assign controls and track them through an intuitive interface. For instance, you can assign responsibilities for data security so as to comply with SOC 2’s primary criteria.

Being SOC 2 compliant is sure to throw open doors to business opportunities and improve customer confidence in your services. Go about it the smart way with a GRC solution by your side!