What is a SOC 2 Report?
In a world filled with data breaches and information leaks, establishing trust is not only critical to driving revenue, it can also be a competitive differentiator for new business. A SOC 2 report helps demonstrate to customers and business partners that you take information security seriously.
“I am at the finish line, about to close a significant sales opportunity with a new customer and they just informed me they can’t move forward until we show them our SOC 2 report. I don’t know much about these. Can A-LIGN help?”
We hear this often from new clients. In a world filled with data breaches and information leaks, establishing trust is not only critical to your revenue stream, but it can be a competitive differentiator when closing new business. Customers and partners seek assurances that the companies they engage with do not expose their organizations to additional risks. A SOC 2 report helps demonstrate you take their information security seriously.
Yet, compliance can seem daunting, especially if you haven’t gone through the process before. The good news is it doesn’t have to be. A smooth audit starts with an understanding of both the general process and your own compliance maturity. This post will describe the basics of a SOC 2 audit and explain how a SOC 2 report can be used to win trust and drive revenue for your business.
The SOC 2 Report: The “in-demand” cybersecurity attestation
SOC audits are governed by the American Institute of Public Accountants (AICPA). SOC stands for System and Organizational Controls, and the purpose of these audits are to provide regular, independent attestation of the controls that a company has implemented to mitigate information-related risk.
There are many types of SOC audits, but the most common are SOC 1, SOC 2, and SOC 3.
- SOC 1: Attests to the internal controls over financial reporting that could affect user entities’ financial statements.
- SOC 2: Attests to the internal controls as they relate to the Trust Services Criteria established by the AICPA. Since these reports contains sensitive information, there are considered restricted use, generally requiring a non-disclosure agreement before sharing with outside parties.
- SOC 3: Often done in conjunction with a SOC 2 attestation, a SOC 3 provides a summarized and shortened SOC 2 audit report that can be treated as a general use audit report, and therefore shared publicly.
The SOC 2 audit is a common audit for companies who store, process or transmit data on behalf of their clients – making it the one that most companies inquire about when it comes to cybersecurity. In particular, this report focuses on five categories of controls: Security, Availability, Processing Integrity, Confidentiality and Privacy. These are known as the five Trust Services Criteria.
Why Complete a SOC 2 Report? Trust and Revenue
As the scenario at the top of this post illustrates, customers and partners want to know that you will protect their data, and they seek assurance of that through an independent, reliable source. A SOC 2 report provides a sense of trust, without which you may miss out on new business or partnerships. In many ways, it is no longer a nice-to-have.
The SOC 2 report also provides these additional benefits:
- Demonstrates a commitment to corporate governance
- Exhibits organizational and regulatory oversight
- Plays a role in vendor management programs
- Differentiates your organization from competitors
Incidentally, if you’ve ever had to fill out a time-consuming 500-question security questionnaire, a SOC 2 audit is often an acceptable alternative – significantly reducing if not eliminating the need to complete security questionnaires in the future.
Readiness Assessments and Annual Audit Cycles
If an organization is approaching a SOC 2 audit for the first time, the best place to begin is with a readiness or a gap assessment. This process reviews the controls you have in place and points out those that need to be improved or implemented. Readiness assessments are a great way to start the compliance process because the pressure is off, so to speak – allowing you to address potential gaps prior to undergoing an audit that will be presented to your organization’s executive board and/or potential clients.
Once you obtain your SOC 2 report, it is generally considered valid in industry for 12 months, therefore, an audit should be conducted at least annually. Many of the SOC 2 criteria are focused on technical mitigations to relevant risks of the organization, while others are focused on organizational policies and procedures. As people and processes evolve continuously, regular audit cycles not only create an internal benchmark to assess against year-over-year, but also provide an opportunity to demonstrate the integrity and security of your system to your existing customer base.
Learn More About SOC 2
If you are interested in learning more about SOC 2 audits and the compliance process in general, please check out our SOC 2 resource library. There’s plenty of information there, whether you are conducting your first SOC 2 or you’ve been through it before.
Get Ahead of Your SOC 2 Report Before it’s an Emergency
As a licensed CPA firm with more than 10 years of experience, we know better than anyone how to help you through your SOC 2 efficiently and pain-free. We’ll give you the white-glove treatment and you’ll see how a little bit of planning and preparation goes a long way. The compliance process doesn’t have to be daunting, and if you get ahead of it, you – and your future customers – will all be better off.