With digitization of services progressing at a relentless pace, businesses are storing large volume of customer data . But with sensitive information being routinely handled by service providers and third-party associates, there is a pressing need for increased information security. Data breaches and cybercrime too are a threat to security. In such a scenario, it is not uncommon for clients to want an independent review of your internal controls for data security prior to partnering with you, especially if you are a SaaS organization.
This is the kind of guarantee that a 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.
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:
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).
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.
So, while SOC 2 compliance is not mandatory, objectively speaking, it may be required for your organization on a practical level.
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.
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:
The criteria of privacy verifies that your organization is handling customer data in accordance with the privacy terms agreed upon.
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.
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.
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. Discover what makes VComply a top G2 high performer in the GRC platform category. Book your demo now and explore its robust capabilities.
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