In the world of SOC compliance, SOC 2 is much better known than SOC 1. SOC 2 is a critical player in every successful B2B software-as-a-service or SaaS firm’s story: once they got audited & certified, they were able to gain the trust of their customers and win business much more quickly. SOC 1 is the underrated sidekick that plays a narrower but no less vital role than SOC 2.
In this blog post, we’ll put SOC 1 in the limelight so that you can learn about the key aspects of this framework, such as:
- What is SOC 1?
- Why do some organizations require a SOC 1 report?
- What are the benefits and advantages of being SOC 1 compliant?
- What are the challenges one can face while getting audited?
- How do I become SOC 1 compliant?
What is a SOC 1 Report?
Created and defined by the American Institute of Certified Public Accountants (AICPA), SOC 1 reports are for firms (known as service organizations) that manage financial information for their clients. Having a SOC 1 compliance report confirms that the service organization has taken the necessary security measures to keep their customers’ financial data safe, particularly financial data as it relates to financial reporting.
The goal of SOC 1 is to assess the quality of service controls’ design and operational implementation. A service organization determines the important control objectives for the services it provides to clients. Business processes (controls relating to the processing of client information) and IT processes (controls concerning the security of client information) are examples of controls designed to achieve those objectives.
There are two categories of SOC 1 reports:
- A SOC 1 Type 1 report describes an organization’s systems and generates a control evaluation at a specified point in time, whereas
- A SOC 1 Type 2 report examines the controls’ operational efficacy over a given period, usually 6 to 12 months.
These compliance reports reassure clients and stakeholders that the service organization has taken the appropriate precautions to safeguard company and client data.
As a service provider, you must hire an independent, licensed CPA firm to perform a SOC 1 audit to assess your system-level and entity-level controls. The auditors will look at your organizational structure and how it is defined. They’ll also look to see if your organization has conducted formal risk assessments and implemented policies and processes to address all of the controls.
Which Industries Need a SOC 1 Report?
The focus of SOC 1’s applicability concerns service organizations that typically provide SaaS for outsourced tasks involving financial data such as accounting, payroll processing, medical claim processing, and other similar services where internal controls over financial reporting is important.
Here are some examples of industries that rely on a SOC 1 compliance:
- Payroll administrators
- Loan processors
- Collection agencies
- Fulfillment companies
- Medical claim processors
- Accounting and financial service providers
Benefits of Having a SOC 1 Compliance Report
SOC 1 compliance demonstrates that your company can securely communicate with, transmit, and store financial data and financial statements from users.
A SOC 1 report demonstrates to management, investors, auditors, and clients that your financial reporting internal controls comply with AICPA requirements. Of all these audiences, it is typically clients and prospective clients who are the most important – if you’re not SOC 1 compliant, they won’t trust you and they won’t buy from you.
To pass their own audits, many large companies demand that their providers in turn also provide a SOC 1 report. As a result, being SOC 1 compliant can help you expand your business.
Here are some benefits to a service organization of being SOC 1 certified:
- For attracting new clients and retaining existing clients:
- Build client trust by providing them assurance that their information is safe
- Demonstrate to your clients that you are committed to information security
- Build client confidence that your organization’s policies and business processes can support their operations
- Have the necessary internal controls in place to provide high-quality service to clients
2. For optimizing your company’s internal operations:
- Develop security awareness and a compliance culture throughout your company
- Boost your cybersecurity defenses and reduce the chance of data leaks
- Overcome blind spots and find flaws that aren’t being noticed by inside staff.
- Optimize risk management and the strategic allocation of cybersecurity resources based on the SOC 1 framework
Challenges You May Face in Getting SOC 1 Certified
It’s not easy to comply with the comprehensive standards of SOC 1, especially if you are doing this manually without the benefit of a compliance automation partner. You’ll need to develop procedures for gathering evidence to show you have successfully implemented controls and that you have mapped that evidence assets to specific controls.
You’ll also need the capacity to regularly upload, categorize, and retrieve evidence throughout the year as you prepare for the audit for the SOC 1 Type 2 report.
It can be difficult to communicate and coordinate all of the players involved in the compliance project both inside and outside your organization. Duplicate work and missing evidence may plague your workflow if you don’t have a well-organized collaboration and tracking system.
As firms adopt more cloud services to conduct business and as the number of devices used by employees grows, the attack surface that you must protect grows exponentially.
Most businesses must also comply with a slew of other regulatory requirements (e.g., HIPAA, the Sarbanes–Oxley Act, regional and national legislation, and industry standards), further complicating matters by straining existing resources and increasing administrative overhead.
SOC 1 Compliance Made Easier with Akitra!
Establishing trust is a crucial competitive differentiator when courting new business in today’s era of data breaches and compromised privacy. Customers and partners want assurance that the organizations with whom they do business are doing everything possible to prevent disclosure of sensitive data. Compliance certification fills this crucial need.
Akitra offers an industry-leading, AI-powered Compliance Automation platform for SaaS companies. Using automated evidence collection and continuous monitoring, together with a full suite of customizable policies and controls as a compliance foundation, our service helps customers become certified for SOC 1 (along with other frameworks like SOC 2, ISO 27001, HIPAA, GDPR, PCI DSS and NIST 800-53). Our compliance and security experts will also provide you with the customized guidance you need to confidently navigate the end-to-end compliance process.
The benefits of our solution include enormous savings of time, human resources, and money — including discounted audit fees with our audit firm partners. Customers achieve compliance certification fast and in a cost-effective manner, stay continuously compliant as they grow, and can become certified under additional frameworks using a single, streamlined compliance automation platform.
Build customer trust. Choose Akitra TODAY!
To book your FREE DEMO, contact us here.
