Are you a service organization seeking an audit to gain customers’ trust? Or maybe you are looking to attract prospective clients by proving how serious you are with customers’ data. If that is the case, you have come to the right place.

Introducing the SOC 2 audit – think of it as a thorough check-up for your company’s data protection and information security practices. This audit has become the go-to method for proving a company’s dedication to safeguarding sensitive information. Through this blog post – I shall take you through all things SOC 2 audits, giving you a comprehensive understanding by the end. Whether you’re a startup gearing up for your first SOC 2 audit or a seasoned company looking to enhance your compliance approach, we’ve got everything you need to know.

What is SOC 2 Compliance?

System and Organization Controls 2, or SOC 2, is a framework by the American Institute of Certified Public Accountants (AICPA). It is used to check the effectiveness of organisations’ internal controls. This framework assesses service organisations based on five criteria known as trust service criteria or TSC. They are:

• Security

• Availability

• Processing integrity

• Confidentiality

• Privacy

SOC 2 reports reflect the controls in place within a service organization that are relevant to these critical aspects.

SOC 2 is an essential framework for businesses, especially SaaS (Software as a Service) companies, as it ensures robust security controls and operational effectiveness.

SOC 2 Trust Services Criteria (TSC)

Security

The security category is the foundation of the SOC 2 framework. It involves implementing measures to protect systems against unauthorised access (both physical and logical), ensure data security, and prevent security breaches. These measures include firewalls, intrusion detection systems, and multi-factor authentication. An effective information security program is crucial for meeting the security criterion.

This is the only criterion in the TSC that is mandatory to be implemented before conducting the SOC 2 audit. The other four criteria are optional, and the organisation can select which ones to implement based on its business needs and goals.

Availability

Availability means that systems should be operational and accessible as outlined in Service Level Agreements (SLAs). This criterion focusses on maintaining system uptime, performance monitoring, and disaster recovery plans to ensure business continuity.

Organisations working in industries where system uptime is of the utmost importance would most likely add this criterion to their audit. Such organisations include internet service providers (ISPs), stock markets, and aviation.

The Crowdstrike outage on 19th July 2024 impacted many industries, including the aviation industry. Several flights were cancelled or delayed, leading to financial losses for the airlines.

Processing Integrity

Processing integrity ensures that system processing is complete, valid, accurate, and timely, safeguarding against unauthorized or accidental changes. For instance, if a company uses GitHub for version control and coding, it must ensure that only authorized personnel can modify the code.

Confidentiality

Confidentiality is all about keeping sensitive data safe from unauthorized access, using tools like encryption, access controls, and data masking. Essentially, it involves protecting any data that clients, customers, or businesses want to remain private, following the principle of least privilege.

Privacy

Privacy focuses on how personal information is collected, used, retained, disclosed, and disposed of, ensuring it is safeguarded throughout its lifecycle. It specifically targets protecting information that can personally identify an individual. This includes PII (personally identifiable information) and PHI (protected health information). Since it includes protecting PHI, this framework has some overlap with another essential framework, that is, HIPAA.

💡Compromise cloud storage

On 12th July 2024, AT&T posted on its website that customer data was illegally downloaded from their workspace on a third-party cloud platform. Based on various reports, the source appears to be compromised cloud storage. The downloaded data included phone call and text message records of nearly all of AT&T’s cellular customers.

What is a SOC 2 Audit?

A SOC 2 audit is an examination conducted by an AICPA-certified auditor known as a Certified Public Auditor (CPA). This external auditor evaluates the organisation’s security controls based on the controls described in TSC.

There are two types of SOC 2 audits:

• Type 1 audit: This audit is a snapshot in time. It is conducted over a short period, such as a week or a month, but its operational effectiveness needs to be evaluated over time.

• Type 2 audit: This audit evaluates the organisational controls over a period of time, which can be three months or even 12 months. The report provides detailed information, such as evidence of how controls were implemented and operated over time. Type 2 audits assess both the design and operating effectiveness of these controls, providing assurance to customers about the reliability of security measures in place. Type 2 audits are more thorough and resource-intensive. Small organisations can start with a type 1 audit, and once they have enough resources, they can then conduct a type 2 audit.

These audits assure prospective clients and business partners about the organisation’s ability to protect customer data.

“Passing a SOC 2 audit is a significant accomplishment that demonstrates to customers that we are serious about protecting their data and maintaining a strong security posture.” – Alex Tushinsky, CTO at TCM Security.

SOC 2 Audit Requirements

Organisations must document all their implemented controls to satisfy the five trust services criteria requirements. These requirements include:

• Establish a robust information security management system.

• Protect sensitive data by defining and enforcing access controls.

• Risk assessments and penetration testing should be conducted regularly to identify vulnerabilities and mitigate potential threats.

• Ensuring data processing activities are accurate, complete, and timely.

• Confidentiality and privacy of customer information must be protected.

Service organization controls are crucial in meeting SOC 2 audit requirements, as they demonstrate compliance with cybersecurity standards and help manage risks associated with third-party service providers.

Once all the requirements are in place, organisations conduct a readiness assessment to identify and remediate gaps before the actual audit process starts.

“The biggest misstep is typically not narrowing the focus to the people, processes, and technologies that directly impact the services being provided.” – Vicky Pham, Auditor at Laika.

Benefits of SOC 2 Audit for Your Business

Obtaining a SOC 2 audit provides a wealth of benefits, including:

Enhanced Trust and Credibility: By complying with SOC 2 standards, an organization reassures clients and stakeholders of its unwavering commitment to data and information security.

Competitive Advantage: In the race to onboard clients, SOC 2 compliance can give your organization a leg up over competitors, showcasing your dedication to protecting customer data.

Regulatory Oversight: SOC 2 shares common ground with frameworks like HIPAA and ISO 27001, potentially aiding in achieving compliance with these standards and avoiding regulatory penalties.

Improved Risk Management: The audit process uncovers potential vulnerabilities, paving the way for effective risk mitigation strategies.

Operational Efficiency: Implementing SOC 2 controls not only ensures security but also streamlines processes, boosting operational effectiveness.

How Does the SOC 2 Audit Process Work?

Defining the Scope of the Audit

The starting point is figuring out what exactly needs to be checked. This involves identifying the systems, processes, and trust service criteria (TSC) that will be evaluated. The scope is tailored to the organization’s business goals and the industry it operates in, helping decide which of the four optional TSCs to include.

Identifying Relevant Systems and Processes

Next, organizations need to pinpoint all the systems and processes that affect the trust services criteria. This includes everything from software applications and wireless networks to cloud services and operational procedures.

Gap Analysis

In this phase, the organization reviews the controls already in place from the five trust services criteria, as well as any additional controls they plan to implement.

Remediation Planning

Following the gap analysis, a remediation plan is crafted. This plan focuses on putting additional security controls in place to address any identified gaps.

Evidence Collection

Organizations must thoroughly document all the steps taken to implement the remediation plan. This documentation serves as proof of the controls’ effectiveness and will be reviewed by the auditor during the SOC 2 audit.

Testing and Evaluation

The auditor will then test the controls to ensure they function as intended. This involves examining the evidence, interviewing staff, and conducting technical tests.

Audit Report Preparation

Once testing is complete and all documentation has been reviewed, the auditor will prepare a detailed final report. This report determines whether the organization is SOC 2 compliant.

How Much Does a SOC 2 Audit Cost?

The price of a SOC 2 audit varies depending on the audit’s scope and the organization’s size. For medium-sized projects, costs typically range from £7500 to £20,000. Additional expenses may include remediation efforts, evidence collection, and ongoing compliance monitoring.

How Long Does a SOC 2 Audit Take?

The time needed to complete a SOC 2 audit depends on the organization and the complexity of its systems and processes. It can take anywhere from a few weeks to several months, factoring in time for gap analysis, remediation, evidence collection, testing, and report preparation.

How frequently are SOC 2 Audits performed?

SOC 2 audits are typically conducted every year to ensure that companies remain compliant and can address any changes in their systems, processes, or business environment. These regular audits provide continuous assurance to clients and stakeholders about the security measures in place.

Maintaining SOC 2 Compliance

Once an organisation is SOC 2 certified, it is also vital to stay compliant. This can be a complicated process.

Here are some best practices to help service organisations continuously upload SOC 2 standards:

Establishing a Strong Security Culture

Creating a security-focused environment should start with the leadership team and then be communicated to all employees. Security priorities must be clearly defined and effectively shared with the workforce. Encouraging a proactive approach to security and promoting accountability in protecting organizational assets are essential.

Regular Risk Assessments and Monitoring

As cyber threats are constantly evolving, organizations must conduct regular risk assessments to identify and address vulnerabilities before they can be exploited. Continuous monitoring of systems and processes is crucial to promptly detect and mitigate risks. Implementing strong risk management practices helps maintain the integrity and confidentiality of both your data and your customers’ data.

Continuous Improvement and SOC 2 Audit Controls

SOC 2 compliance is an ongoing journey. Organizations should regularly review and update their controls to keep pace with technological advancements and the changing threat landscape. This involves performing periodic gap analyses, updating policies and procedures, and ensuring that controls effectively address current and future risks. Raising awareness about the trust services criteria and the organization’s policies fosters a security-focused environment.

Employee Training and Awareness

Employees play a vital role in maintaining SOC 2 compliance. Therefore, regular training and awareness programs should be conducted to educate them about their responsibilities and best practices for protecting sensitive information.

An Uber EXT contractor‘s account was compromised after the attacker purchased the contractor’s Uber corporate password on the dark web, likely exposed by malware on the contractor’s device. Despite repeated two-factor authentication requests initially blocking access, the attacker succeeded when the contractor approved one, highlighting critical vulnerabilities in handling 2FA security controls.

How Can Cyphere Help with SOC 2 Audit Requirements?

Cyphere offers comprehensive services to help organizations achieve and maintain SOC 2 compliance. Our team of experts provides:

Readiness Assessments: We carry out readiness audits to pinpoint gaps in your current controls and create a plan to bridge those gaps, ensuring you achieve SOC 2 compliance.

Risk Management: Our risk assessment services identify potential threats and vulnerabilities, allowing you to put effective risk mitigation strategies in place.

Policy Development: We assist you in crafting and updating your security policies to meet your requirements.

Employee Training: We offer training and awareness sessions to educate your staff about SOC 2 compliance. This helps foster a security-focused mindset among all employees, further strengthening your security posture.

Continuous Monitoring and Improvement: Our dedicated professionals provide ongoing support throughout the audit process, ensuring your controls remain effective and up-to-date.

Conclusion

Service organisations conduct SOC 2 audits to protect customer data and build trust with clients and stakeholders to demonstrate their seriousness in handling customer data. Understanding the structure of SOC 2 audit reports and implementing best practices for compliance can help ensure that your organisation meets and exceeds SOC 2 standards.

Fostering strong security control and training employees can help organisations effectively safeguard their data and maintain compliance in the long run.

FAQ

What is the difference between SOC 1 vs. SOC 2 vs. SOC 3 audit?

SOC 1 focusses on financial reporting controls, while SOC 2 addresses information security and IT controls. SOC 3 audit is intended for the general public, while SOC is designed for a limited audience.

Is SOC 2 the same as ISO 27001?

No, they are different standards. SOC 2 is specific to the US, while ISO 27001 is a global standard developed by the International Organisation for Standardisation (ISO) that helps organisations manage information security.

What is the SOC 2 compliance checklist?

A SOC 2 compliance checklist typically includes establishing security controls, documenting processes, conducting risk assessments, and implementing continuous monitoring.

Who needs a SOC 2 audit?

Organisations that handle customer data, particularly in cloud services, SaaS, and technology sectors, often require SOC 2 compliance.

Is SOC 2 only for SaaS?

No, SOC 2 is not limited to SaaS. It applies to all service organisations.