What is SOC 2 Compliance: SOC 2 Type 2, SOC 2 Audit and More

Ayush Parti
August 24, 2022

If you handle consumer data, work for a SaaS business or provide cloud hosting services chances are you will need to ensure either SOC 2 or ISO 27001 compliance for your business. In this blog, we will be taking a comprehensive look at SOC 2 compliance to help you understand everything about this regulatory framework.

SOC 2 is a voluntary compliance standard designed for service organizations, developed by the American Institute of CPAs (AICPA), which specifies how organizations should manage customer data. It may not be "mandatory" but think about it this way– high-value clients are likely to be aware of this compliance standard and they are the ones who will place a high emphasis on a company that takes extra regulatory steps.

According to AICPA, “The trust services principles on which the report is based, the controls a service organization would include in its description, and the tests of controls a service auditor would perform for a specific type 2 SOC 2 engagement will vary based on the specific facts and circumstances of the engagement. Accordingly, it is expected that actual type 2 SOC 2 reports will address different principles and include different controls and tests of controls that are tailored to the service organization that is the subject of the engagement.”

The standard is based on the following Trust Services Criteria, which we will discuss in more detail later:

  • Integrity
  • Security
  • Availability
  • Confidentiality
  • Privacy.

Since there is a huge difference in the nature of the business that is carried out across industries, SOC 2 report is tailored to the unique needs of each organization. A SOC 2 report provides an overview of how a company manages customer data which is important for stakeholders and customers. There are two types of SOC 2 reports:

  • Type I is an overview of the company's systems and whether the business complies with the relevant trust principles.
  • Type II is more specific as it analyses the efficiency of the trust service principles.

What are the benefits of SOC 2?

SOC 2 compliance provides organizations with a way to demonstrate to their customers and partners that they take security and data privacy seriously. By adhering to the SOC 2 standards, organizations can provide assurance that their systems and processes are designed and operated in a way that meets the security and privacy requirements of their customers.

There are many benefits of SOC 2 compliance, including:

  • Enhanced security: SOC 2 compliance can help organizations to strengthen their security posture and better protect their systems and data.
  • Improved customer confidence: SOC 2 compliance can give organizations a competitive edge by increasing customer confidence and trust.
  • Reduced risk: SOC 2 compliance can help organizations to reduce the risk of data breaches and other security incidents.
  • Increased efficiency: SOC 2 compliance can help organizations to streamline their security and privacy processes, saving time and money.

What are the requirements for SOC 2 Certification?

When your organization is planning to undergo a SOC 2 assessment, there are specific requirements that need to be met in order for the certification to be valid. The Service Organization Control (SOC) 2 is an internationally recognized standard that sets forth specific controls and measures organizations must take in order to protect customer data. Below we will outline the different requirements for SOC 2 compliance.

  1. Organizations must have a written information security program that outlines their security policies and procedures. The program should address security risks and controls related to the confidentiality, integrity, and availability of customer data.
  2. The organization must also have a security management team in place that is responsible for overseeing the security program. This team should have the authority to make decisions and take action to mitigate security risks.
  3. Measures such as penetration testing are necessary to ensure that controls are in place to detect and prevent unauthorized access to systems, applications, and data.
  4. The organization must have a process in place for identifying and managing security risks. This process should include risk assessments, threat modelling, and security testing.
  5. The organization must have procedures in place for managing incidents and responding to security events. This should include an incident response plan that is tested on a regular basis.
  6. There must be a process in place for monitoring and managing access to customer data. This should include identity and access management controls, such as authentication and authorization.
  7. The organization must have a process in place for monitoring and managing changes to customer data. This should include change management controls, such as versioning and auditing.
  8. The organization must have a process in place for managing third-party service providers. This should include vendor management controls, such as due diligence and contract review.
  9. The organization must have a process in place for managing Business Continuity and Disaster Recovery. This should include controls such as data backup and replication, power and cooling, and site selection.

What is the Difference Between SOC 2 and ISO 27001?

The two most common types of compliance audits are ISO 27001 and SOC 2. Both audits are designed to assess the security of an organization, but they differ in scope and focus. ISO 27001 is a broad standard that covers all aspects of security, while SOC 2 focuses specifically on security in relation to data protection.

Organizations that are looking to get certified to ISO 27001 will need to undergo a comprehensive audit of their security system. This includes everything from physical security to information security. On the other hand, organizations undergoing a SOC 2 audit will need to provide evidence that their data security practices meet the standards set forth by the AICPA.

So, which type of audit is right for your organization? It depends on your specific security needs. If you're looking for a comprehensive assessment of your security system, ISO 27001 is the way to go. However, if you are a SaaS business or looking for authenticating your data security, SOC 2 compliance is a preferred option.

That being said, both are equally respected and credible certifications with a similar emphasis on security. Our honest advice? Get certified in whatever your customer is asking for!

Who Performs a SOC Audit?

An SOC 2 audit is performed by an independent auditing firm to assess a company's compliance with the security standards set by the American Institute of Certified Public Accountants (AICPA). The audit includes a review of a company's policies and procedures, as well as its physical and electronic security systems. The goal of the audit is to ensure that a company is adequately protecting the confidentiality, integrity, and availability of its data.

Once an SOC audit conducted by the CPA is successful, the service organization can add the AICPA logo to their website which boosts credibility.

Compliance Checklist for SOC 2 Report

Security is the basis of SOC 2 compliance and is a broad standard common to all five Trust Service Criteria. 

SOC 2 security principles focus on preventing the unauthorized use of assets and data handled by the organization. This principle requires organizations to implement access controls to prevent malicious attacks, unauthorized deletion of data, misuse, unauthorized alteration or disclosure of company information.

Here is a basic SOC 2 compliance checklist, which includes controls covering safety standards:

  1. 1. Identify which Internal Controls will be audited
  2. 2. Designate a SOC 2 Compliance Officer
  3. 3. Train all employees on SOC 2 Compliance
  4. 4. Create policies and procedures related to SOC 2 Compliance
  5. 5. Regularly review and update SOC 2 compliance policies
  6. 6. Perform annual SOC 2 compliance audits

Remember: SOC 2 criteria do not prescribe exactly what an organization should do—they are open to interpretation. Companies are responsible for selecting and implementing control measures that cover each principle.

SOC 2 Compliance Requirements For Special Businesses

Security covers the basics. However, if your organization operates in the financial or banking industry, or in an industry where privacy and confidentiality are paramount, you may need to meet higher compliance standards.

Customers prefer service providers that are fully compliant with all five SOC 2 principles. This shows that your organization is strongly committed to information security practices.

In addition to the basic security principles, here is how to comply with other SOC 2 principles:

  • Availability—can the customer access the system according to the agreed terms of use and service levels?
  • Processing integrity—if the company offers financial or eCommerce transactions, the audit report should include administrative details designed to protect the transaction. For example, is the transmission encrypted? If the company provides IT services, such as hosting and data storage, how is data integrity maintained within those services?
  • Confidentiality—are there any restrictions on how data is shared? For example, if your company has specific instructions for processing personally identifiable information (PII) or protected health information (PHI), it should be included in the audit document. The document should specify data storage, transfer, and access methods and procedures to comply with privacy policies such as employee procedures.
  • Privacy—how does the organization collect and use customer information? The privacy policy of the company must be consistent with the actual operating procedures. For example, if a company claims to warn customers every time it collects data, the audit document must accurately describe how warnings are provided on the company website or other channel. Personal data management must, at a minimum, follow the AICPA’s Privacy Management Framework (PMF).

Facilitate SOC 2 and ISO 27001 Compliance with Heyhack

Penetration testing is an invaluable tool to help speed up the SOC 2 compliance process. An SOC 2-compliant penetration test is required if you want to pass your SOC 2 or ISO 27001 audit.

Heyhack automatically generates evidence compliant with the requirements in SOC 2 and ISO 27001. In addition, we offer integrations with third party compliance tools in order to easily collect and store required evidence alongside your policies and audit reports.

There are multiple penetration testing services in the market, but it is important to ensure that you take the correct form of test in order to seamlessly get this certification. Heyhack is proud to enable businesses to comply with SOC 2 7.1 and ISO 27001 A.12.6.1 certifications. If you would like to know more, contact us and we'd be happy to guide you through the process!

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