SOC 2 Compliance: What You Should Know
Are you providing SaaS offerings or cloud-based solutions? Do you store customer information in the cloud? Then you’ll need to attain SOC 2 compliance to grow your business. Here’s what you need to get started.
What is SOC 2?
“SOC 2” is shorthand for Report 2 of the System and Organization Controls developed and overseen by the American Institute of Certified Public Accountants (AICPA). The SOC framework and requirements for compliance are focused on the protection of customer data, including but not limited to what is known as personally identifiable information (PII).
There are multiple “flavors” of SOC, each with its own requirements and reporting structure.
- SOC 1 audits and reports focus on evaluating an organization’s internal financial controls.
- SOC 2 Type 1 audits and reports focus on the state of an organization’s internal controls focused on information security and computing at a specific point in time.
- SOC 2 Type 2 audits and reports evaluate those controls over a period of time, typically 12 months.
- SOC 2+ initiatives combine auditing and reporting of compliance with SOC 2 and other industry standards.
For most organizations, compliance is a primary focus, as it directly affects the ability of an organization to protect its information systems and critical business and customer data.
What companies need to comply with SOC 2?
Any company that delivers cloud services or stores customer information in the cloud should comply with SOC 2. Examples include but are not limited to providers of SaaS, Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS) offerings, or managed customer management, cybersecurity, financial, or IT services. In addition, if your organization is a link in a supply chain, you will likely need to be SOC 2 compliant to meet stakeholder and partner expectations and requirements.
What is a SOC 2 audit?
At a high level, a successful SOC 2 audit and the resulting report are intended to serve as a strong signal of trust to your customers. Essentially, it’s an assessment of whether your company has consistently enforced policies in place to secure customer data and ensure that the services your company delivers are up and running when customers need them. A SOC 2 audit also examines whether your company is executing the right policies, as defined by what is called the Trust Services Criteria. These are the foundational elements of the SOC framework. They include Security, Availability, Processing Integrity, Confidentiality, and Privacy.
Why do accountants get involved in SOC 2?
SaaS companies all want to provide reliable service. Each needs a way to verify that other firms they do business with are holding up their side of the bargain. CPAs have strong independence requirements and a duty to serve the public trust, making them effective third parties to verify that a particular business is worthy of trust from others. This combination of factors led the AICPA to create the SOC framework. In addition to their traditional role of financial auditors, accounting firms have teams of people who focus on technical audits related to cybersecurity and disaster recovery, which are directly related to SOC 2. CPAs must also be certified to perform SOC 2 audits and create audit reports in partnership with client company leadership.
What are the key things you need to understand about SOC 2 compliance?
Compliance takes more than a tool. In addition to active participation by your company’s leadership, you need a trusted, credible auditor to conduct your audit and generate your compliance report. A single audit and report can cost anywhere from several thousand to hundreds of thousands of dollars. And the quality and depth of the report you get can vary widely from auditor to auditor. Trying to save money may result in inadequate reports for doing business with other companies with more stringent compliance standards. Caveat emptor – let the buyer beware.
Compliance takes commitment. SOC 2 compliance is not a “one and done” effort. You need to conduct an audit annually, and each SOC 2 audit can take months to complete, especially if it’s your company’s first audit. Each audit also requires participation from company leadership and can disrupt day-to-day operations, divert resources from your mainstream operations, or both. Good planning can help to minimize these challenges, but such planning itself requires time, commitment, and expertise. Compliance is more of a marathon than a sprint. Your ultimate goal should be continuous compliance, verifiable on demand. It’s not just about generating a report. It’s also about implementing and living effective processes and controls.
Compliance is a floor, not a ceiling. Moreover, SOC 2 is only one of many regulations, industry standards, and recommendations your company must or should comply with. Examples range from the Health Insurance Portability and Accountability Act (HIPAA) and Europe’s General Data Protection Regulation (GDPR) to the California Consumer Privacy Act (CCPA) and the ISO/IEC 27001 international information security management standard.
Getting SOC 2 compliance right can provide valuable experience and a firm technological and operational foundation for your future compliance initiatives. Successful, sustained SOC 2 compliance can also help ensure that the internal controls that drive your business are consistently effective and secure, even as business needs change and cybersecurity threats evolve.
How can Trustero help?
SOC 2 compliance is a critical foundation for the robust, consistent, transparent processes that enable verifiable trust for your company. Trustero Compliance as a Service works with you and your trusted auditor to achieve and sustain compliance year after year, effectively, efficiently, and economically – and without expensive investments in hardware, software, or services. To learn more or arrange a demo, visit https://trustero.com, email firstname.lastname@example.org, or call Trustero at (US) 408-502-6948.