SOC 2 Certification

Many organizations are obligated to incorporate a robust cybersecurity risk management system to improve their reputation and attract more clients. 

One method of ensuring that an organization has a sound cybersecurity risk management system is by acquiring a SOC 2 certification from a Certified Public Accountant (CPA). The SOC 2 was developed by the American Institute of Certified Public Accountants (AICPA).

SOC stands for System and Organization Controls, which is a suite of service offerings that a CPA may provide in connection with system or entity-level controls of organizations. SOC 2 specifically deals with trust service criteria that an organization must follow. 

SOC 2 provides for five criteria: Security, Availability, Processing integrity of systems used to process users data, Confidentiality and Privacy of information processed.

SOC 2 reports provide organizational oversight, vendor management programs, internal corporate governance with risk management processes, and regulatory oversight.

How does SOC 2 Affect my Business?

Due to increased digitization and globalization, many customers are concerned about their data protection as there is a risk of data breaches. A small mistake or negligence in compliance can damage the reputation of a company, and so many leading business hubs around the world such as Singapore have formulated strict data protection laws

In 2019, data breaches, arising from 1,473 recorded incidents, exposed more than 164 million records of sensitive data in the USA.  Data breaches will also attract punitive lawsuits, and it may even lead to the winding up of the company. Any organization can avoid these issues by strict compliance with laws and regulations. 

Having SOC 2 certifications may not be a mandatory requirement as per the laws of the Country. However, many times, it may become a contractual obligation for some companies involved in B2B transactions. SOC 2 also plays an essential role in case an organization wants to expand its market in the North American region. 

SOC 2 audit reports show a detailed analysis of how a company handles its customer data’s privacy, confidentiality, and integrity. This analysis indicates that they are ahead of their competitors regarding information security and may point to the customers that vendors are taking reasonable precautions to keep their data secure.  

For the reasons mentioned above, SOC 2 certification will attract more customers for companies as it is a form of information security assurance. SOC 2 compliance is not very tedious. It is an achievable standard. and

How does SOC 2 Relate to Cybersecurity?

Cybersecurity compliance is a priority for most organizations. Therefore, organizations must invest more in deploying third-party solutions and employee cyber-awareness training. 

SOC 2 helps an organization recognize its cybersecurity compliance requirements. It relates to cybersecurity as the CPA audits in an organization’s IT security system. SOC 2 engagement provides users with an insight into an organization’s cybersecurity controls. In a SOC 2 examination, an organization’s management develops a description of the system they use to process transactions for their customers and assert that description and the effectiveness of controls within that system. 

In 2017, AICPA developed another standard known as SOC for cybersecurity formulated to help organizations meet the growing challenge of communicating to interested parties the design and effectiveness of their cybersecurity risk management programs.

Here are some of the features of SOC 2:

  1. Purpose – The purpose of SOC 2 is to provide specific users with information about controls related to security, availability, processing integrity, confidentiality, or privacy. 
  2. Level – The reporting level under SOC 2 is limited to the systems and trust service criteria. 
  3. Users – The cybersecurity SOC report users include entity management, directors, investors, business partners, and other stakeholders. 
  4. Content – On a SOC 2 report, the content will relate to an organization’s system and the effectiveness of controls of the Trust Services Criteria.
  5. Test and results of controls – In SOC 2, result details go on the Type II report.

 

Hence, a SOC 2 report is an in-depth analysis of an organization’s IT security system when compared to SOC for a cybersecurity report. Companies must note that Third parties can receive the report for general use. Whereas the SOC 2 reports are confidential and authorized personnel must receive it. We recommend companies to analyse the standards before making a choice between SOC 2 or SOC for cybersecurity.

What are the Critical Policies my Business Should Implement to be Compliant with SOC 2?

A CPA member issues SOC 2 certification after assessing the extent to which the organization complies with the trust service principles based on the systems and processes in place. Organizations must follow the below-given policies in order to ensure compliance with the trust service principles (Please refer to AICPA guide for more information):

As discussed above, policies should cover:

  1. Competencies and responsibilities across the organization to support the objectives, from control to actions.
  2. Support for the deployment of high-level directives.
  3. Satisfaction of the security component in the trust service criteria by implementing various measures to identify anomalies in the usual operations of systems. .
  4. Policies and procedures related to response to security incidents and environmental threat incidents, formulated on a periodic basis.
  5. Policies on risk mitigation in reducing cybersecurity incidents. 
  6. Policies on application of sanctions for any security breach.
  7. Policies on system inputs, including controls over completeness and accuracy, to result in products, services, and reporting to meet the entity’s objectives.
  8. Policies to make available or deliver output in accordance with specifications to meet the entity’s objectives.
  9. Policies to protect personal information from erasure or destruction during the specified retention period of the information.
  10. Privacy policies for handling personal information, communicated to third parties to whom personal information is disclosed.

How to ensure compliance with SOC 2? What is the Certification process?

SOC 2  ensures compliance with the trust service criteria, but it also plays an important role in the oversight of the organization and regulatory compliance. It also ensures internal corporate governance and risk management processes. 

SOC 2 reporting requirement consists of two reports: type 1 report on management’s description of a service organization’s system and the suitability of the design of controls; and type 2 report on management’s description of a service organization’s system and the suitability of the design and operating effectiveness of controls.

Companies must follow the AICPA guides for more information on SOC 2 certification and compliance. In short, the following steps must be followed in order to ensure compliance with SOC 2:

  1. Appoint an independent auditor to examine security standards. 
  2. Set the scope by selecting the security criteria that must be audited.
  3. Gather all the compliance documentation related to trust service principles and Implement policies to ensure compliance.
  4. Complete the audit readiness assessment.
  5. Independent auditor will conduct a formal audit to examine the SOC 2 compliant systems and processes managing those systems.
  6. The SOC 2 audit report will include an opinion letter, management assertion, description of the system, and other additional information.
  7. An Independent auditor will issue the certification. To maintain certification, organizations need to undergo regular annual audits to ensure compliance with security measures and documentation.

Who in my Company is Responsible for Ensuring SOC 2 Compliance?

A business entity as a whole must comply with SOC 2 reporting requirements, especially after receiving the certification. However, the onus of SOC 2 compliance mainly lies on the top management level of the company.

The management is responsible for identifying, evaluating, and addressing additional risks as part of their risk assessment. Although management can delegate responsibility for specific tasks to a service organization, managers will still be accountable for those tasks to boards of directors, shareholders, and other stakeholders. Therefore, management is responsible for establishing effective internal control over interactions between the service organizations and their systems.

It is pertinent to note that SOC 2 report is intended for use by those who have sufficient knowledge and understanding of the service organization and the system used to provide those services. Without such knowledge, there may be confusion among the users. Hence, management and the service auditor must make a list of specified parties who would be the intended users of the report.

Therefore, a company must ensure that its management coordinates with an auditor to fulfill its obligations under SOC 2 compliance reporting requirements.

Once we Set a Policy Compliance Program, how can we Ensure our Employees Align With it?

A third party generally determines SOC 2 compliance. SOC 2 compliance generally means that you have the requirements to recognize threats and alert the relevant parties to evaluate threats and take appropriate actions to protect data. You will also have the correct information regarding any security incidents, which would allow you to understand the scope of the problem, fix the problems as necessary and restore normal operations. 

Employees can be asked to undergo compliance training as with other policies to adequately grasp the concept and be able to work under the conditions. Compliance training through micro-learning and repeated assessments will help in making them compliant.

How to make sure employees are understanding policy compliances? We have a solution.