By Michael Joe, Security Consultant at QoS Consulting Solutions
What is SOC?
The American Institute of Certified Public Accountants (AICPA) developed the System and Organization Controls (SOC) framework, SOC for Service Organizations involves three major types of SOC examinations, SOC 1®, SOC 2®, and SOC 3®.
SOC 1 reports are internal controls that cover financial statements and reporting. SOC 2 focuses on security, confidentiality, processing integrity, privacy, and availability of customer data. SOC 3 is more of a generalized version of a SOC 2 report, which is much more in-depth. We will focus on SOC 2 reports since it is the most common type of SOC report requested from our customers.
What is SOC 2?
It is no secret that businesses are increasing the amount of data and information they move over the internet. To put this into perspective, consider this statistic from Cloudwards, “By 2025, there will be over 100 zettabytes of data stored in the cloud. A zettabyte is a billion terabytes (or a trillion gigabytes). In the same year, the total global data storage will exceed two hundred zettabytes of data, meaning that around half of it will be stored in the cloud. By comparison, only 25 percent of all the computing data was stored this way in 2015.” Data breaches continue to be a growing threat to organizations, therefore implementing comprehensive controls to protect your business is paramount.
Information security within a provided service and/or product is a top concern for organizations around the world and demonstrating assurances to customers is often why companies seek a SOC 2 report. It is common for clients to request SOC 2 reports from their third-party service providers. SOC 2 reports can attest to a vendor’s ability to securely manage data as it travels vertically and horizontally through varying channels.
The SOC 2 framework is customizable. When an organization begins a SOC 2 audit, it can choose from five Trust Services Criteria (TSC) formerly known as Trust Services Principles:
Each company applies its own defined set of controls to comply with the selected TSCs. In order to achieve a SOC 2 attestation, an independent auditor will need to verify whether the company’s controls meet the defined SOC 2 criteria. You may commonly hear SOC 2 reports referred to as a certification, but in fact, they are not. SOC 2 reports are attestation reports meaning management upholds that the controls are in place to meet the applicable SOC 2 requirements. A certified auditor then provides their assessment to determine whether the controls are designed and operating appropriately.
There are two options for SOC 2 reports, type 1 or type 2.
What is SOC 2 Type 1?
SOC 2 Type 1 reports on management’s description of a service organization’s system and the suitability of the design of controls. One core difference between the SOC 2 Type 1 and Type 2 audits is the depth of the evaluation. SOC 2 Type 1 evaluates an organization’s cybersecurity controls at a single point in time. The objective is to verify whether the internal controls in place are sufficient and designed to protect customer data. Those controls must fulfill the TSC requirements that your organization chose to be compliant with.
Imagine SOC 2 Type 1 has a single frame of a movie, where details are examined for that one point in time. From beginning to end, type 1 audits can be completed in a matter of weeks.
What is SOC 2 Type 2?
SOC 2 Type 2 reports on management’s description of a service organization’s system and the suitability of the design and operating effectiveness of controls.
Continuing the analogy we started above, SOC 2 Type 2 audits are an observation of an entire movie, and if you thought the Titanic was long then grab a box of popcorn… or two. Type 2 reports look at not only if the controls are in place, but also how the controls perform over time, you could expect the assessment to review your control operating period typically for 6 or I2 months. With Type 2 it is crucial that you choose the correct TSCs that consider your business goals, costs, and timeline constraints. While a Type 1 report can be done in a much smaller time period, a Type 2 report is much more comprehensive and will give your customers and partners greater confidence in your ability to protect their data and to successfully deliver services and customer support. After completing a passing SOC 2 report, vendors often choose to highlight their accomplishments on their websites as a marketing tactic and to proactively provide prospective clients assurances surrounding their service organization’s controls.
SOC 2 Key Takeaways
If you are a service organization that stores, processes, or transmits customer information, we suggest your organization complete a SOC 2 report. Not only does a SOC 2 audit increase the overall security posture for your organization, but it also helps build trust with your customers. Another important key to note is that SOC 2 reports are not just for security purposes, but rather encompass a wide range of service organization controls. SOC 2 audits are regarded as the gold standard for providing certainty to your customers when it comes to protecting business-critical information.
For more information speak with a QoS consultant today, firstname.lastname@example.org, or reach out through our contact form on our website, www.qosconsultingsolutions.com.