System and Organizational Controls 2 (SOC 2) is a voluntary compliance standard for service organizations, developed by the American Institute of CPAs (AICPA) which specifies how organizations should manage customer data. This standard for auditing and reporting is based on the following Trust Services Criteria (TSC):
- Processing Integrity
SOC 2 compliance audit is the process a company undergoes to see if it meets the SOC compliance guidelines.
Why is SOC 2 important for some businesses?
Due to increased digitization and globalization of data, many customers are concerned about the security of their personal information in the event of a data breach. Achieving SOC 2 compliance is a competitive advantage to reassure customers that their data is safe. SOC 2 certification can improve the market position of service providers’ products and reputations.
SOC 2 certification may also be a contractual obligation for some companies involved in business to business transactions and may be critical to making a sale.
SOC 2 auditing and reporting is an important business practice for service providers who store or process third-party data and applies to nearly every Software as a Service company. Using SOC 2 reports can be used as a marketing tool and can build trust with clients.
What are the five sections of a SPC 2 report?
There are two types of SOC 2 audit reports. Type 1 is accomplished quickly as it looks at the information system at a single point in time. Type 2 reports monitor the system over a period of time, typically three to twelve months. These reports contain five sections:
- Independent Service Auditors Report which is a summary opinion of the CPA performing the audit.
- Management’s Assertion which confirms why, to the beset of their knowledge, management believes that the controls in place are suitable to meet a business’s service commitments and system requirements.
- Description of the system under audit which gives details of the system, including scope, boundaries, controls and related contractual commitments. System elements include infrastructure, software, people, procedures, data, and system incidents.
- Auditor’s Tests of Controls (type 2 only), details the control criteria for assessing and reporting on controls for information and systems.
- Unaudited information is used for management to add any relevant information such as responses to exceptions.
What is the Certification process?
Since the AICPA created the SOC 2 guidelines, any CPA firm can perform he audit.
- Chose a CPA firm that specializes in information systems.
- Determine your SOC 2 audit scope and objectives. SOC 2 audits can look at infrastructure, data, people, risk management policies, and software. Determine who and what within each category will be subject to the audit.
- Select your trust services criteria. The only principal that is mandatory for an SOC 2 audit is security.
- Complete the audit readiness assessment.
- An independent auditor will conduct a formal audit to examine the SOC 2 compliant systems and processes managing those systems.
- The SOC 2 audit report will include an opinion letter, management assertion, description of the system, and other additional information.
- An independent auditor will issue the certification. To maintain this certification, organizations need to undergo regular annual audits to ensure compliance with security measures and documentation.
Once we set a Policy Compliance Program, how can we ensure our employees Align with it?
Once an auditor issues the SOC 2 certification. the enterprise has met the requirements to protect data, to recognize threats, and to take appropriate actions to remediate those threats.
Continuing education of employees on the importance of cyber security is an important element in obtaining and retaining SOC 2 certification. Training through micro-learning will keep employees alert and responsive to cyber security threats and ensure that the objectives of SOC 2 certification are met.