What is SOC 2 compliance?

SOC 2, also called SOC for "Service Organizations: Trust Services Criteria” compliance is a set of standards developed by the American Institute of Certified Public Accountants (AICPA) to measure and certify a service organization’s ability to securely manage and protect its customers’ data. SOC 2 compliance is based on the Trust Services Criteria, which outlines the security, availability, processing integrity, confidentiality, and privacy principles that a service organization must follow.

Why is SOC 2 compliance important?

SOC 2 compliance is essential for service organizations that handle sensitive customer data, including financial information, healthcare records, and personally identifiable information (PII). SOC 2 compliance helps organizations ensure that they have adequate controls in place to protect their customers’ data from unauthorized access, misuse, and theft.

SOC 2 compliance is also important for organizations that provide services to regulated industries, such as healthcare, finance, and government agencies. Compliance with the SOC 2 standards can help organizations demonstrate their commitment to data security and compliance with relevant regulations.

Who needs SOC 2 compliance?

Any organization that provides services to other organizations or individuals that involve the processing, storage, or transmission of sensitive data should consider SOC 2 compliance. This includes:

SOC 2 compliance criteria

SOC 2 compliance criteria consists of five key principles based on the Trust Services Criteria:

Security

The organization has adequate controls in place to protect against unauthorized access, unauthorized use, unauthorized disclosure of information, and damage to systems that could compromise availability, integrity, and privacy of information or systems.

Availability

The organization has adequate controls in place to ensure that its services are available to customers when needed.

Processing integrity

The organization has adequate controls in place to minimize flaws in all cybersecurity architecture, and ensure that its processing is complete, accurate, timely, and authorized.

Confidentiality

The organization has adequate controls in place to limit access, storage, and usage of protected confidential information.

Privacy

The organization has adequate controls in place to protect personally identifiable information (PII) and that PII is collected, used, retained, disclosed, and disposed appropriately.

Types of SOC 2 reports

There are two types of SOC 2 reports:

SOC 2 Type 1

Evaluates the organization’s controls at a specific point in time. It is an assessment of whether the controls are designed and implemented effectively.

SOC 2 Type 2

Evaluates the effectiveness of the organization’s controls over a specified period, usually six months to one year. It includes an assessment of whether the controls were operating effectively during the specified period.

SOC 2 compliance process

The SOC 2 compliance process involves the following steps:

  1. Selecting the appropriate Trust Services Criteria
  2. Assessing the organization’s controls against the selected criteria
  3. Identifying any gaps in the controls and developing a remediation plan
  4. Implementing the remediation plan
  5. Conducting a readiness assessment to ensure that the organization is prepared for the SOC 2 audit
  6. Engaging a third-party auditor to conduct the SOC 2 audit
  7. Obtaining the SOC 2 report and distributing it to customers and other stakeholders

Benefits of SOC 2 compliance

The benefits of SOC 2 compliance include:

  1. Demonstrating a commitment to data security and compliance with relevant regulation
  2. Enhancing customer confidence and trust in the organization’s ability to protect their sensitive data
  3. Meeting contractual requirements with customers or partners who require SOC 2 compliance
  4. Reducing the risk of data breaches, which can result in reputational damage and financial losses
  5. Improving overall security and risk management practices within the organization

SOC 2 compliance checklist

Here is a checklist of key steps and considerations for organizations seeking SOC 2 compliance:

  1. Identify the Trust Services Criteria that apply to your organization
  2. Conduct a risk assessment to identify potential threats and vulnerabilities to your systems and data
  3. Develop and implement a set of controls to address the identified risks
  4. Conduct ongoing monitoring and testing of your controls to ensure their effectiveness
  5. Document your policies and procedures related to data security and compliance
  6. Conduct a readiness assessment prior to engaging a third-party auditor for the SOC 2 audit
  7. Engage a qualified and independent auditor to conduct the SOC 2 audit
  8. Review the SOC 2 report for accuracy and completeness
  9. Distribute the SOC 2 report to customers and other stakeholders as appropriate
  10. Continuously monitor and improve your security and compliance practices to avoid exposing sensitive information and creating risk

Conclusion

SOC 2 compliance is an essential requirement for service organizations that handle sensitive customer data. Compliance with the SOC 2 standards helps organizations establish trust with partners and customers, an important differentiator when it comes to expanding your business and your bottom line. By demonstrating compliance with SOC 2, an organization can assure the companies they work with that they are committed to data security and compliance, and protecting sensitive information from being exposed. By following the SOC 2 compliance process and implementing effective controls, organizations can enhance customer confidence and trust, reduce the risk of data breaches, and improve overall security and risk management practices.

*Lacework, Inc. is not associated with AICPA.