SOC 2 Compliance — A Short Guide For Beginners

SOC 2 Compliance — A Short Guide For Beginners

If you are a technology-based service provider selling your cloud-hosted services, you must be SOC 2 compliant. As companies deal with an evolving data threat landscape daily, IT infrastructure security is critical. A single data breach can cost millions of dollars, not to mention the damage to your brand and loss of customer trust.

This is where the SOC 2 compliance framework can help you. SaaS organizations can earn a range of standards and certifications to demonstrate their commitment to information security. However, SOC 2 has become an industry standard that customers require before they buy your services as it helps them assess your security posture and gain assurance that they are protected against data breaches. 

However, if your organization is starting on your SOC 2 journey, it can be an overwhelming and challenging process. Chances are that you are overwhelmed by questions like whether your business qualifies for a SOC 2 certification, and if so, which controls you should enforce, how much time it would take to attain certification, and how much the entire process would cost your company.

This blog will serve as a quick guide to SOC 2 compliance for beginners.

What is SOC 2?

In a nutshell, SOC 2 is a security framework that describes how businesses should safeguard customers’ data against unauthorized access, security incidents, and other risks. SOC 2 was designed by the American Institute of Certified Public Accountants (AICPA) and released in 2010 to address five Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.

SOC 2 is Service Organization Control 2, which applies to companies storing customers’ data in the cloud.

What is SOC 2 Compliance?

SOC 2 compliance includes both the security framework and the audit that verifies whether your company complies with the required controls under the SOC 2 Trust Services Criteria.

An independent auditor will analyze a company’s security posture in relation to one or more of these Trust Services Criteria during a SOC 2 audit. Each TSC has unique requirements, and a corporation implements internal controls to satisfy those requirements.

A SOC 2 audit always includes the Security TSC, while the other four are optional. Because many of the security criteria are shared by all of the Trust Services Criteria, security is also known as the Common Criteria.

What is a SOC 2 Audit?

SOC 2 audit is a report that provides thorough information and assurance about a service organization’s security, availability, processing integrity, confidentiality, and privacy controls, based on AICPA’s TSC and SSAE 18 auditing standards used to make SOC reports more useful for service organizations.

It includes the following:

  • Letter of opinion
  • Management claim
  • Concise description of the system or service
  • Specifics about the required trust service controls
  • Tests of controls and the outcomes of testing
  • Technical information or plans for new systems
  • Specifics regarding business continuity planning or clarification of contextual issues

It also specifies whether or not the service provider conforms with the TSC. As mentioned in the previous section, an independent third-party auditor is brought in to assess whether the organization is SOC 2 compliant. They are responsible for writing the audit report. Every organization receives an audit report, whether they passed the assessment or otherwise.

Auditors use the following terms to describe audit outcomes:

  • Unqualified: The company’s audit was unqualified.
  • Qualified: The company passed, although certain areas need to be improved.
  • Failure: The company’s audit was a failure.
  • Disclaimer of Opinion: The auditor lacks sufficient information to reach a reasonable conclusion.

Types of SOC 2 Reports

Knowing what type of SOC 2 reports your organization needs is essential based on your business operations. There are two kinds:

SOC 2 Type 1

These evaluate a company’s controls at a single point in time. This is most useful when your company needs to attest if its security protocols are designed correctly.

SOC 2 Type 2

These evaluate how your organization’s controls function over a stipulated time between 3-12 months. This is more frequently required since it assesses the continuity of your security protocols and whether you can maintain compliance over the designated period. 

In addition, SOC 1 and SOC 3 are other compliance frameworks under the SOC umbrella.

SOC 1 vs. SOC 2 vs. SOC 3

Below is a comparison between the different SOC frameworks depending on what they cover and who they are best suited for.

Types of SOCWhat does it cover?Who is it for?
SOC 1Internal controls for financial reporting and statementsCompanies providing services that can impact their customer’s financial reporting statementsExamples: Payment providers, Payment processors, Payment merchants, etc.
SOC 2Internal controls for security, availability, processing integrity, confidentiality, and privacy of customer dataOrganizations that store, process, or exchange client data over the cloudExamples: SaaS companies, Data hosting providers, Cloud processors, or storage services
SOC 3Internal controls for security, availability, processing integrity, confidentiality, and privacy of customer data for a general audienceOrganizations that require a SOC 2 to market themselves to the general public

Why do Customers  ask for a SOC 2 Report?

Unlike many other frameworks, such as HIPAA and GDPR, SOC 2 is not motivated by legal compliance. Instead, it assists organizations in demonstrating that their internal procedures secure customer data. That’s why most organizations only seek a SOC 2 report to satisfy and reassure their customers about the integrity of their IT infrastructure.

What are the Benefits of a SOC 2 Report?

There are five key benefits of a SOC 2 report:

  1. Shows how sensitive information is stored and protected in the cloud.
  2. Exhibits commitment to corporate governance.
  3. Satisfies requirements for organizational and regulatory oversight.
  1. Serve as a competitive advantage by winning customer trust and driving revenue.
  1. It saves you from answering hundreds of questions as part of security questionnaires.

What are the Five Trust Service Criteria (TSC) of SOC 2?

Here are the five trust service criteria of the SOC 2 compliance framework:

  1. Security

The Security Criteria demonstrate that a service organization’s systems and control environment are secure from unauthorized access and other threats. It is also referred to as the Common Criteria.

  1. Availability 

The Availability criteria establish whether or not your staff and customers can rely on your systems to do their tasks. Data backups, disaster recovery, and business continuity planning are a few examples. Each of these reduces downtime in the event of a power outage. It should be added if:

  • You provide a service for continuous delivery or deployment.
  • Your customers cannot construct or deploy modifications to their services if there is an outage, such as cloud computing or cloud data storage providers. 
  1. Processing Integrity

The Processing Integrity 

criteria establish if a system is operationally sound in the face of a security incident that results in delay, error, omission, or unintentional manipulation. It should be added if:

  • You offer financial reporting services or run an e-commerce business.
  • To combat fraud, you must verify that your transaction processing is accurate.
  1. Confidentiality

The Confidentiality criteria assess how organizations safeguard sensitive information. That is, by restricting its access, storage, and use. It can assist organizations in determining who has access to what data and how it can be shared. This guarantees that only authorized individuals can access sensitive information such as legal documents or intellectual property. It should be added if:

  • Your company handles sensitive information like financial reports, passwords, corporate plans, and intellectual property.
  1. Privacy

The Privacy criteria investigate how an organization’s control activities safeguard its customers’ personally identifiable information (PII). It also assures that a system that uses personally recognizable information complies with the AICPA’s Generally Accepted Privacy Principles.

This information includes a person’s name, physical address, email address, and social security number. Data such as health, race, and sexuality may also be relevant to privacy for some businesses and service providers. It should be added if:

  • Personal information is collected, stored, used, preserved, disclosed, or disposed of by your organization.

How Long Does a SOC 2 Audit Take?

SOC 2 audits and reports can take between 2 to 4 weeks after the readiness of each SOC 2 type and can vary on organization and other variables, such as the scope of your audit and the number of controls engaged.

How Much Does Getting SOC 2 Certified Cost?

The SOC 2 readiness and audits cost can vary depending upon the organization’s size, type of audit, which TSCs, and any additional help, if any, required. 

Get SOC 2 Compliance Readiness Done With Akitra!

Establishing trust is a crucial competitive differentiator when courting new SaaS businesses in today’s era of data breaches and compromised privacy. Customers and partners want assurances that their organizations are doing everything possible to prevent disclosing sensitive data and putting them at risk, and compliance certification fills that 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 prepare readiness for SOC 2 compliance standard, along with other frameworks like SOC 1, ISO 27001, ISO 27701, ISO 27017, ISO 27018, HIPAA, GDPR, PCI DSS, CMMC, NIST 800-53, NIST 800-171, FedRAMP, and more such as CIS AWS Foundations Benchmark, etc. Our compliance and security experts will also provide customized guidance to navigate the end-to-end compliance process confidently. 

The benefits of our solution include enormous savings in time, human resources, and cost savings, including discounted audit fees with our audit firm partners. Customers achieve compliance certification fast and cost-effectively, stay continuously compliant as they grow, and can become certified under additional frameworks using a single compliance automation platform.

Build customer trust. Choose Akitra TODAY!‍

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