SOC 2 Compliance: Who Needs It and Why
Any business or organization that stores, processes, or transmits customer data or information should adhere to SOC 2 standards. This compliance lays the groundwork for security policies and assists businesses in establishing secure internal controls to grow effectively. Achieving SOC compliance will help your business maintain best-in-class security practices while uncovering new growth opportunities.
SOC compliance builds trust with your customers or clients. Providing a report and proof that the compliance standards are met helps your clients trust that all your security controls have been thoroughly reviewed, and they can trust you with their data. Additionally, SOC compliance helps your business stand out from competitors, demonstrating that you’ve elevated your security measures and have SOC compliance to prove it.
Keep reading to discover what an SOC report includes, the different types of SOC compliance, and why your business should focus on obtaining an SOC report.
Download our SOC Report Selector
Not sure what type of SOC report your business requires? Download our SOC report selector to ensure you find the right compliance for your specific goals.
What is an SOC Report?
A Service Organization Control (SOC) report is a way for businesses to verify that a vendor or outsourcing company adheres to certain standards or best practices before forming a partnership. Some of the key areas of concern for businesses may include finances, security, and processing integrity, among others. These reports are prepared to provide third-party audits, helping potential customers or partners understand the potential risks involved in working with the tested company.
A comprehensive SOC report provides insight into a company’s checks and balances and verifies that they follow consistent practices to demonstrate strong cybersecurity risk management for their clients or partners. These reports are valuable when considering working with an outsourced company because they give an unbiased view of the various stages of the vendor lifecycle.
SOC 2 Risk Assessment
SOC 2 compliance is regarded as the gold standard for businesses looking to outsource cloud-based services. This type of compliance demonstrates that a company has thoroughly examined its data loss prevention, cybersecurity strategies, accounting discrepancies, and more. It examines the systems in place to help teams identify any gaps in their infrastructure and understand exactly how their system should function.
Gaining SOC 2 compliance requires effort from everyone involved in the organization. With an extensive risk analysis of data integrity, availability, and security issues, the SOC 2 report demonstrates how the company manages its processes and risks. With this information, any business considering partnering with an outsourced vendor can gain peace of mind knowing that they are SOC 2 compliant.
Types of SOC Models
Knowing the difference between the types of SOC models is critical for businesses that work with sensitive financial or customer data. These in-depth audits offer varying levels of assurance for stakeholders to learn more about the company’s internal controls. Below is an overview of SOC 1, SOC 2, and SOC 3 reports, including distinctions between type 1 and type 2 evaluations.
SOC 1
SOC 1 is an assessment of controls that have an immediate impact or a domino effect on a user entity’s financial statements. There are two types of SOC 1 models:
- SOC 1 Type 1: The testing for type 1 is performed only once and does not evaluate the operational capability of the control set. This model demonstrates how effectively the internal controls are designed to prevent errors in financial transactions or statement data.
- SOC 1 Type 2: Unlike type 1, SOC 1 type 2 tests the operating effectiveness of the internal controls that are designed to reduce the risk of financial errors over a period of time. This testing uses a sampling method to gather an accurate view of the overall process.
SOC 2
An SOC 2 will report on controls in terms of security, availability, processing integrity, confidentiality, and privacy. The testing of security controls is mandatory in order to become SOC 2 compliant.
- SOC 2 Type 1: A Type 1 assessment evaluates the design of the controls listed above at a specific point in time, but it does not assess the operational effectiveness of the control set.
- SOC 2 Type 2: This test evaluates the operational effectiveness of security controls designed to reduce the risk of mishandling sensitive data. The assessment is conducted over a specified period using sampling methods to accurately reflect the system’s efficiency.
SOC 3
This is a public-facing document that does not contain any confidential information. A SOC 3 report offers a general summary for customers of the vendor to view without revealing any data or sensitive information about internal controls. This is typically used by businesses that have conducted numerous SOC reports and maintain an extensive control environment.
Each SOC report serves a specific purpose, whether it ensures financial accuracy or verifies data protection. SOC reports provide clarity for both internal and external needs. If your business needs to demonstrate financial control or overall security compliance, choosing the appropriate SOC report type is crucial.
Download our SOC Report Selector
Not sure what type of SOC report your business requires? Download our SOC report selector to ensure you find the right compliance for your specific goals.
SOC Review: Protect Your Clients’ Data
Now that you have an understanding of the structure and different models of SOC reports, it’s clear why SOC 2 compliance is an essential part of protecting your clients’ data and strengthening your business’s security. Pursuing SOC 2 compliance encourages your internal team to check and improve all security measures, reduce gaps in your infrastructure, and ensure all sensitive data is handled with best practices in mind. Beyond compliance, the benefits of achieving SOC 2 extend to enhancing your operations and credibility.
With SOC 2 compliance, your business will:
- Enhance internal security by finding vulnerabilities, integrating risk assessments and mitigation strategies, and improving data handling protocols.
- Demonstrate your security viability to potential customers or clients by offering confirmed SOC 2 compliance and proving your commitment to data protection.
- Quickly find anomalies by establishing clear baselines for normal operations and better tracking of system and access changes.
- Stand out from competitors as a reliable partner with top-tier compliance to manage data in high-risk industries like healthcare, finance, or retail.
Applied Tech takes pride in being SOC 2 compliant to ensure our clients’ data stays secure. If you’re considering partnering with a data security company but feel uncertain about safeguarding your information, contact us today. We can guide you through our processes and provide our updated security standards, reports, or certifications to give you peace of mind.
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.
Protect your business with Applied Tech’s fully managed IT services, co-managed support, and security assistance. With IT services focused on your business goals, keep your team productive and your data secure.
This post was originally published in October 2024 and has been updated for accuracy and comprehensiveness
