Data security, privacy, and proper information handling are modern organizations’ top priorities, and defining the steps needed to implement successful audits is essential. Cloud service vendors store data online, neglecting cybersecurity as part of their security standards. Companies that work with B2B clients and SaaS services find it critical to ensure the appropriate management of sensitive information for future success.
SOC 2 Compliance lays down an organization’s requirements and lets enterprises choose how to protect their assets using internal controls and managed cloud security services. This guide will teach you more about SOC 2 compliance and how to strengthen your company’s cloud security posture.
Table of Contents:
- What is SOC 2?
- What is SOC 2 Compliance?
- Who Needs SOC 2 Compliance?
- Why is SOC 2 Compliance Important?
- Checklist of SOC 2 Compliance
- How to get SOC 2 Compliance? [Steps]
- Types of reports under SOC 2 Compliance?
- SOC 1 vs. SOC 2 Compliance
What is SOC 2?
SOC 2 is a voluntary compliance standard for data security in the technology industry based on an organization’s requirement to store customer data on the cloud safely. SOC 2 measures the overall effectiveness and safety of a company’s data management practices.
It defines how data is handled, stored, processed, and transmitted in fully audited and secure cloud environments. SOC 2 was developed by the American Institute of CPAs (AICPA) that specified how organizations should handle customer data based on the Trust Services Criteria (TSC) of Security, Availability, Confidentiality, Processing Integrity, and Privacy.
What is SOC 2 Compliance?
Protecting assets on the cloud begins with how cloud environments work and knowing who has access to managed cloud security services and authorized transactions. Security teams can spend less time evaluating data security processes and more time on other productive tasks by incorporating SOC 2 internal controls for security checks and audits.
Organizations want to gain visibility into their cloud workloads and know how to choose the correct security protocols for processing and transmitting data across cloud environments. SOC 2 compliance makes it easier to use automation and scale cloud security for organizations.
Who Needs SOC 2 Compliance?
SOC 2 compliance is essential for SaaS companies, manages cloud security services, and enforces proper security policies and systems to ensure continuous data availability – without compromising security, integrity, confidentiality, and customer data privacy. Organizations that follow SOC 2 compliance are less vulnerable to cyber threats and can eliminate cases of unauthorized data access, malware attacks, information theft, and extortion attempts.
Why is SOC 2 Compliance Important?
SOC 2 Compliance is essential because it helps organizations maintain high enterprise security. Strict compliance standards ensure that sensitive information is handled on-site responsibly, and SOC 2 guidelines help companies enjoy a competitive edge in today’s evolving business landscape. There is a high demand by customers to opt for services from companies that perform SOC 2 audits. Companies that follow SOC 2 compliance adhere to international security standards and become well-recognized.
Checklist of SOC 2 Compliance
Here is a complete checklist for achieving SOC 2 compliance for organizations:
1. Choose Your Objective
The first step in achieving SOC 2 compliance for organizations is establishing a blueprint or proper objectives. Knowing why an organization wants to achieve compliance and how to strengthen its security posture is essential. It’s always early enough to start, and defining objectives can help design and build a solid foundation.
2. Define Scope
Organizations can determine the scope of SOC 2 compliance by choosing the TSC (Terms, Services, Criteria) which applies to them. The criteria selection will be customized and help define the scope of these audits. Most SaaS businesses need only security, confidentiality, and availability principles as part of the TSC for their SOC 2 journey.
3. Change Management and System Operations
Change management involves methods and workflows that track and manage changes across IT systems. It prevents unauthorized edits and procedures and enables users to improve security. System operations consist of tools that monitor ongoing processes and resolve organizational anomalies. It eliminates deviations in security workflows and ensures that things work as intended.
4. Risk Mitigation
It is an essential action item in a SOC 2 checklist and enables organizations to identify various security risks and help mitigate them. Risk mitigation prioritizes potential threats and identifies critical systems that can be affected. It analyzes the severity of these threats, assigns risk levels, and identifies unknown or hidden security gaps within the risk mitigation framework of managed cloud security.
How to get SOC 2 Compliance? [Steps]
There are seven steps to achieving SOC 2 compliance which are as follows:
- Step 1 – Get in Touch with the SOC 2 Provider
- Step 2 – Set the Scope for SOC 2
- Step 3 – SOC 2 Service Audit
- Step 4 – SOC 2 Readiness Assessment
- Step 5 – Audit
- Step 6 – SOC 2 System Description
- Step 7 – Issuance of Report
Step 1 – Get in Touch with the SOC 2 Provider
Consulting the right SOC 2 provider can streamline SOC 2 compliance and help organizations save time and effort. A reputed SOC 2 provider will guide businesses in the right direction and assist with SOC 2 drafting and implementation.
Step 2 – Set the Scope for SOC 2
Many security standards can be applied with the SOC 2 strategy. Finding the scope of SOC 2 compliance and including all these standards as part of end-user requirements are relevant. Generally speaking, SOC 2 revolves around five trust services principles: security, availability, confidentiality, privacy, and processing integrity. ISO 27001 reports are another relevant addition, and if the organization is still determining what to add to its overall SOC 2 compliance strategy, it can consult SOC 2 service providers for the scope selection process.
Step 3 – SOC 2 Service Audit
It can be daunting to perform an initial SOC 2 service audit since there are a lot of unknown variables, but it’s imperative. Conducting a SOC 2 service audit will help businesses determine what’s to come and give them clarity in drafting an appropriate compliance and security strategy. Many organizations find themselves switching to a different SOC 2 service provider and challenge barriers associated with SOC 2 reports. It will be purely decided based on the audit’s results.
Step 4 – SOC 2 Readiness Assessment
The SOC 2 Readiness Assessment is like a pre-audit check that prepares organizations for further audits. It confirms how well-positioned they are in terms of security and compliance. The readiness assessment records observations, lists recommended control practices, and suggests improving testing procedures and policies. It also collects evidence and increases the transparency required for future audits.
Step 5 – Audit
The SOC 2 audit verifies internal control and tests its overall effectiveness. It creates relevant documentation and prescribes mandatory rules to improve the outcomes of these audits.
Step 6 – SOC 2 System Description
SOC 2 system description lists the intents and purposes of attestation reports and sets the scope and definition of relevant procedures and procedures. It lists controls and validation protocols and includes user entity and sub-service organizational management. Users better understand their roles and responsibilities and become aware of the limitations of services provided by vendors in the process.
Step 7 – Issuance of Report
The service organization formally issues the SOC 2 report, and companies are responsible for sharing it with their clients. It lists terms and conditions, the purpose and scope of audits, and auditors’ opinions. It’s also the final step of demonstrating SOC 2 compliance, covering consistency in operations and other points that organizations can review and address to improve their SOC 2 standing and compliance.
Types of reports under SOC 2 Compliance?
There are two types of SOC 2 reports. Type 1 is meant for designing internal controls, while SOC 2 Type 2 reports test the effectiveness of these controls over some time, usually 3 to 12 months.
For organizations just starting their managed cloud security service compliance journey, Type 1 is needed. Type 2 SOC 2 reports will provide deeper insights and will be required if customers specifically ask for it.
SOC 1 vs. SOC 2 Compliance
|Parameter||SOC 1||SOC 2|
|Purpose||SOC 1 audit is used to report on an organization’s internal controls and make sure it’s relevant to customers’ financial statements||SOC 2 audit reports on the efficacy of an organization’s internal controls and information on service performance relevant to the security, availability, processing integrity, confidentiality, and privacy of customer data|
|Control Objectives||Control objectives for SOC 1 audits revolve around using controls for securing and processing customer information across IT and business workflows.||SOC 2 audit control objectives combine any of the five criteria for security assessments or all of them. The nature of choosing the audit criteria and control objectives will depend on the business’s operational and regulatory needs.|
|Example Applications||Involves audits of outsourced customer payroll services, processing, and data security controls associated with SOC 1 reports||Involves on-site inspections, validation of SOC 2 controls, and assessments of data centers that offer customers secure data storage and critical infrastructure protection|
|Readers and Users||Readers and users include the customer management team and external auditors. SOC 1 compliance is meant for user entities and CPAs that audit financial statements||Readers and users include the customer management team, external auditors, compliance regulators, business partners, and prospective clients. SOC 2 compliance reports address service organization oversights, vendor management programs, regulatory oversights, internal corporate governance, and effective risk management.|
SOC 2 audits for organizations are essential for enhancing security requirements and understanding where companies stand when facing cyber threats. It can take time to decide whether SOC 1 or SOC 2 fits organizations’ needs, and prospective customers want assurance that their data is in the right hands and managed correctly. Managed cloud security services by SOC 2 vendors can give organizations various options to improve security measures and better understand their compliance requirements.
- Who issues SOC 2 Compliance?
SOC 2 Compliance is issued by the American Institute of Certified Public Accountants (AICPA) and granted by external auditors from licensed CPA firms.
- How much time does it take to get SOC 2 Compliance?
SOC 2 compliance reports take around 6 to 12 months to generate. Sometimes it may take longer than a year, depending on the audit scope and number of controls involved.