SOC 2
Read more to learn about what SOC 2 is and why it’s important.
Understanding SOC 2 Compliance
SOC 2 is a widely recognized compliance framework that assesses an organization’s approach to data security. Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 is particularly relevant for SaaS companies and other service providers handling sensitive customer information. Achieving SOC 2 compliance demonstrates that an organization has implemented robust security measures to safeguard customer data, fostering trust with clients and business partners.
What Does SOC 2 Stand For?
SOC 2 stands for System and Organization Controls 2. It was created as a standard for evaluating data security practices and reducing the risk of security incidents. This framework focuses on how companies manage and protect information across their infrastructure, operations, and internal controls.
What is SOC 2 Compliance?
SOC 2 compliance means an organization has established and maintained security controls that meet industry standards, verified through an independent audit. A third-party auditor evaluates these controls based on the five Trust Services Criteria (TSC):
• Security: Protection against unauthorized access and data breaches.
• Availability: Ensuring systems and data are accessible as intended.
• Confidentiality: Safeguarding sensitive business and customer information.
• Processing Integrity: Ensuring data processing is accurate, complete, and timely.
• Privacy: Protecting personal data and ensuring transparency in its collection, use, and retention.
The Security criterion is mandatory for all SOC 2 reports, while the other four are included based on the organization’s specific operations and needs.
Why is SOC 2 Compliance Important?
Although not legally required, SOC 2 compliance is often a prerequisite for doing business with enterprise clients and investors. A SOC 2 report helps demonstrate a company’s commitment to data security, reducing the risks associated with vendor relationships. Benefits of SOC 2 compliance include:
- Strengthening data security and reducing vulnerability to breaches.
- Meeting the security expectations of high-value clients and partners.
- Enhancing credibility and trust with customers.
- Gaining a competitive edge in industries where compliance is a key differentiator.
SOC 2 Audits: What to Expect
A SOC 2 audit is an external assessment of an organization’s security practices conducted by an accredited Certified Public Accountant (CPA) firm. The audit verifies whether the company’s security controls align with SOC 2 standards.
Types of SOC 2 Audits
There are two types of SOC 2 reports:
SOC 2 Type 1
- Evaluates security controls at a single point in time.
- Faster and more cost-effective.
- Often used as a first step before a Type 2 audit.
SOC 2 Type 2
- Assesses controls over a period (e.g., 3-12 months) to test effectiveness.
- Provides deeper insights into long-term security posture.
- More valuable to enterprise clients and security-conscious organizations.
SOC 1 vs. SOC 2 vs. SOC 3: Key Differences
SOC 1
- Evaluates security controls at a single point in time.
- Faster and more cost-effective.
- Often used as a first step before a Type 2 audit.
SOC 2
- Assesses controls over a period (e.g., 3-12 months) to test effectiveness.
- Provides deeper insights into long-term security posture.
- More valuable to enterprise clients and security-conscious organizations.
SOC 3
- Assesses controls over a period (e.g., 3-12 months) to test effectiveness.
- Provides deeper insights into long-term security posture.
- More valuable to enterprise clients and security-conscious organizations.
How Long Does It Take to Get SOC 2 Compliance?
The SOC 2 compliance process typically takes between six months to a year. This timeline includes preparing security controls, testing them, gathering necessary documentation, and completing the audit. The audit itself generally lasts between four to six weeks once an accredited CPA firm is engaged.
Organizations looking to streamline the process can leverage compliance automation tools to speed up documentation, evidence collection, and monitoring.
FAQs About SOC 2 Compliance
Is SOC 2 mandatory?
No, SOC 2 compliance is not legally required, but many businesses require vendors to provide a SOC 2 report before entering into a partnership.
Is SOC 2 a certification?
No, SOC 2 is not a certification—it is an attestation. Rather than issuing a pass/fail grade, auditors provide an objective evaluation of an organization’s security posture.
Can an organization fail a SOC 2 audit?
Technically, there is no “pass” or “fail” in a SOC 2 audit. However, a report may include a qualified opinion if security gaps are identified, signaling areas that need improvement.
Who needs SOC 2 compliance?
SOC 2 compliance is commonly pursued by SaaS companies, managed IT providers, and any business handling sensitive customer data. It is especially relevant for companies seeking enterprise clients, as many require SOC 2 reports before engaging in business.
For organizations handling sensitive customer data, SOC 2 compliance is a critical step toward establishing trust and security best practices. Interested in learning more about SOC 2 compliance? Contact us today to see how we can support your compliance journey.