SOC 2 security compliance is an investigation into an organization’s security controls used to verify its information security practices. It also investigates the policies and processes organizations have in place, such as organization charts, clear job descriptions, annual reviews, and more. Pertinent in the SaaS industry, your organization must have an auditor review your security controls to ensure that your policies protect client data. SOC 2 helps organizations avoid data breaches and cyber threats and builds trust with their stakeholders to show that their data is secure.
When you become SOC 2 compliant, it means that you have successfully implemented the necessary security controls verified by a third-party auditor. SOC 2 compliance has a specific set of criteria that organizations must follow, which we will cover below.
Continue reading to learn everything you need to know about SOC 2 compliance.
SOC 2 requirements and security criteria
Organizations obtaining SOC 2 compliance must meet the Security standard set by the Trust Service Criteria (TSC). This standard is designed to help organizations prevent unauthorized use of assets and data by implementing access controls. With access controls in place, organizations can avoid malicious cyber attacks, unapproved deletion, data misuse, or disclosure of sensitive information.
Companies are responsible for deciding which control measures will help them achieve the criteria. Each control should address access restrictions, change management, system operations, and risk mitigation to ensure the most basic level of compliance.
Once you have the required Security TSC controls set in place, consider adding these optional TSC requirements to further show your commitment to data security and privacy:
- Availability (A) – The customer is given access to information and access to your system based on predetermined agreements.
- Confidentiality (C) – Determine what restrictions are needed to keep sensitive data confidential.
- Processing Integrity (PI) – Select system controls that require data processing to be complete, valid, accurate, and timely.
- Privacy (P) – Ensure that customer data is protected and consumers are informed about the collection, retention, and disposal of their data.
Who needs SOC 2 compliance?
Although SOC 2 compliance is not mandatory for any organization, it may be an expected measure from prospects, clients, board members, and leadership team members as it shows that the organization is operating based on its documented standards and policies. Typically, in SaaS organizations, managed IT providers, or business and data analytics providers, compliance with SOC 2 is expected.
The process requires a third-party auditor to examine your organization’s information security and generate a report. Before this is possible, your organization must take steps to prepare for the audit, such as identifying relevant criteria, implementing and testing controls, collecting evidence, hiring an accredited auditor, and finally, undergoing the investigation and receiving a report.
Overall the process takes at least a year, including preparation, investigation, and receiving the report.
What is a SOC 2 report?
A SOC 2 report specifies details about your security posture and the controls your organization currently has implemented to protect both the organization and its customer’s data. When your organization obtains new customers, this will be the report you share with them to show you are SOC 2 compliant.
You may have heard of type 1 reports and type 2 reports in SOC 2 compliance. Each has its distinctions and purposes and may benefit an organization differently. First, there is a type 1 report. This is a point-in-time evaluation of the same set of security and organizational controls that we listed above. However, it does not prove that the company has been operating with those controls consistently over time.
A Type 2 report typically covers 4-12 months, and a random sampling of events is taken during that period of time. This ensures consistent evidence of compliance. This is why a SOC 2 Type 2 report is usually seen as more valuable by outside organizations looking to determine how well a company functions.
The report will include five components:
- The independent service auditors’ report verifies that the audit has been completed, including details about the audit’s scope, the company, and the auditor’s obligations.
- Management assertion refers to verifying that the information in the report, including the controls and description, is correct.
- The system description explains the scope of the report and contains information about employees, processes, technology, and controls that assist with the organization’s products and services.
- The description of the criteria lists the controls that the auditor assessed, how they were tested, and the results of each test.
- Appendixes include additional information that may be useful for your organization’s customers, including “Management’s Response,” which details any exceptions listed in the criteria description.
SOC 1 vs. SOC 2
Many organizations may think of SOC 2 as an “upgrade” of SOC 1 compliance; however, they are two completely different standards. While they are both governed by the Association of International Certified Professional Accountants (AICPA), they have separate goals.
| SOC 1 | SOC 2 | |
|---|---|---|
| Purpose | Assists service organizations in reporting internal controls that relate to their customers’ financial records. | Supports service organizations in reporting internal controls that safeguard customer data. |
| Control goals | Focuses on business and IT processes, protecting customer information. | Audits the organization’s combination of the five principles depending on their operations and processes. |
| Audit designed for | Intended for the CPA of the organization that is being audited, external auditors, customers of the organization, and CPAs to be responsible for reviewing their financial statements. | Executives, organizations and business partners, prospective clients, compliance supervisors, and external auditors. |
| Audit use | Allows user entities to see the effect of an organization’s controls on their financial statements. | Supervising organizations, management plans, risk management and mitigation, and regulatory processes. |
Depending on your organization’s processes and industry, one type of compliance may resonate more than the other. Typically, SaaS organizations, IT service providers, or business and data analytics providers will benefit more from SOC 2 compliance rather than SOC 1.
The importance of client data protection with SOC 2 compliance
Organizations will benefit from achieving SOC 2 compliance for numerous reasons, from boosting security postures to building trust with clients and prospects. Though it requires some dedication to gather the information you need for an audit, clients will see that your organization is committed to keeping their data safe.
Beyond building trust, some larger organizations require their vendors to have SOC 2 compliance. Without it, your prospect may be forced to choose another vendor, costing you a business deal. A SOC 2 compliance report will give your organization a competitive edge, allowing you to leverage the compliance status when persuading a prospect to choose your company.
Most importantly, SOC 2 compliance ensures strengthened security, keeping your customers’ data safe, avoiding cyber attacks, and preventing data breaches. At Applied Tech, we pride ourselves on being SOC 2 compliant and giving our clients peace of mind knowing their data is secure. If you’re looking for a SOC 2 compliant data security partner, reach out today to learn how we can work together to keep your data safe.
About Applied Tech
Applied Tech is a leading IT and cybersecurity services provider dedicated to helping businesses protect their digital assets. Our proactive and strategic services include cloud management, security, productivity, and IT growth strategy. With a team of experienced professionals, we provide unique solutions tailored to your IT needs.
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