There are a variety of compliance standards businesses and organizations have to meet. SOC 2 is one example of compliance regulations requiring controls be put in place for data protection.
The following is a guide to what SOC 2 is and what to know about compliance and security implications.
An overview of SOC 2
Systems and Organizations Controls 2 or SOC 2 is an audit procedure and set of criteria. SOC 2 is for technology-based companies and third-party service providers storing customer data in the cloud. Both SOC 1 and 2 are part of the SOC framework of the American Institute of CPAs.
Originally, companies had to comply with SOC 1, but cloud-based storage and digital transformation led to SOC 2.
With the cloud becoming the primary way to store data, compliance with SOC 2 is a must-have. Along with certification and meeting the five trust principles, compliance has other benefits. For example, it can help you make a safe, secure system overall. You’re also demonstrating to your customers that you take their data handling seriously.
When you follow SOC 2 guidelines, you’re generally better prepared to protect against cyber-attacks. You have a competitive advantage too.
The core concept underlying SOC 2 is the five trust principles detailed below.
What are the five trust principles?
The criteria of the five trust principles or services include:
- Security: This refers to the protection of systems and information from access that isn’t authorized. This might include using an IT security infrastructure with SSO, multi-factor authentication, and firewalls. Access controls are broadly intended to prevent system abuse, or the removal of data, misuse of software, or improper change or disclosure of information.
- Availability: In this context, the availability principle refers to how accessible the system, products, or services are as stipulated by a service level agreement or contract. There’s a minimum performance level set by both involved parties. The availability principle doesn’t directly address usability and functionality, but it does include criteria related to security that could affect availability.
- Processing integrity: Under this principle, what’s being addressed is whether or not a system achieves its purpose. Data processing under this principle has to be accurate, authorized, timely, and complete.
- Confidentiality: Data is confidential if the access or disclosure is restricted to certain organizations or individuals. Encryption is one way to protect data and create confidentiality when data is transmitted.
- Privacy: This references the system’s collection, use, disclosure, and retention of personal information. It has to be in line with the organizational privacy notice. The use and retention of personal information also have to be outlined by the AICPA’s generally accepted privacy principles or GAPP. Personally identifiable information can include anything related to name, address, or social security number. Also falling under the umbrella of personally identifiable information are health, race, sexuality, or religion-related information.
Who does SOC 2 apply to?
SOC 2 can apply to most service organizations. Specific examples of organizations where SOC 2 would apply include:
- Companies providing analytics, business intelligence, and management services
- Businesses that oversee or consult with finances or accounting practices
- Client-facing services that offer customer management or similar things
- Managed IT
- Security service providers
- Software-as-a-Service companies providing websites, apps, and programs
SOC 1 vs. SOC 2
A SOC 1 Audit is primarily focused on financial reporting internal controls. On the other hand, an SOC 2 Audit concentrates mainly on information and IT security identified by the 5 Trust Service Categories named above.
SOC 1 is to help service organizations report on internal controls that relate to financial statements by customers.
A SOC 1 Audit can cover the processing and protection of customer information across all of your IT processes and the entirety of your business. A SOC 2 Audit, on the other hand, covers again the five principles.
How to get SOC 2 certified
The following are some general steps an organization might follow to get its SOC 2 certification:
- Bring in an outside auditor. You want to have someone experienced and credible to go over your security standards objectively. Bringing in an external auditor will help make sure you’re compliant. You can learn, with the help of the auditor how far off you are from compliance based on your current processes of operation.
- During the next step, you can start to audit your specific security criteria based on the five principles.
- Once you meet with your auditor, you should start formulating a more concrete plan and strategy to get your systems and processes compliant. You should also have written documents for security policies and procedures that everyone in the company is trained on and implements at all times.
- After you have a plan and a roadmap, you can get ready for your formal audit. Your audit will see if you’ve created SOC 2 compliant systems, and they will audit your processes to manage those systems. During a formal audit, you’ll also have to answer any questions about security and confidentiality. Only a third-party, certified audit can do this.
- Once you’re certified, you’ll have to go through annual audits to keep it up and ensure your security, processes, and documentation are keeping pace with your organization as it scales.
When you’re preparing for SOC 2 compliance, while the approach can be specific to your organization, there are some best practices to keep in mind.
First, have a system that will alert the relevant stakeholders of a cybersecurity incident. You should also have a baseline that helps prevent false alarms as part of your continuous monitoring.
Then, it would help if you had a rapid response plan that allows you to quickly and effectively take corrective action. You’ll want audit trails showing the details of your investigation and incident response.
You aren’t guaranteed that you’re protected against cybersecurity threats when you have a SOC 2 certification, but it is one thing you can do to safeguard yourself.