Understanding the SOC 2 Compliance Meaning
B2B SaaS companies must ensure their customers’ data are always secure. Read the following information to learn what you need to become compliant with the SOC 2 audit requirements.
What Is SOC 2?
SOC (System and Organizational Controls) 2 is a compliance standard that AICPA recommends to its members and businesses that need this report. This report is recommended if you need auditing of your data security controls and management. The SOC 2 standard defines how customer data should be based on specific criteria, such as availability, confidentiality, security, privacy, and processing integrity.
What Is a SOC 2 Compliance Report?
This report is prepared after conducting a SOC 2 audit. It determines if the organization has control over the defined Trust Services Criteria. An external auditor conducts the auditing job. The report assures the customers of the audited company that it meets the latest data security control and management requirements.
Who Needs SOC 2 Compliance?
This compliance is needed by companies that keep their customers’ data in the cloud. This is the reason it relates mainly to cloud vendors and SaaS companies.
Why Do You Need SOC Type 2 Compliance?
There are many reasons why SaaS businesses should be SOC 2 compliant.
SOC 1 and SOC 2 Compliance
Both compliance requirements refer to the controls an organization has over its data security. However, the framework for each report is different. The SOC 1 report focuses on internal controls over the financial information that can affect the financial reporting of your client. A SOC 2 report focuses on an ongoing process for protecting customer data according to the five trust criteria.
SOC 2 Type 1 and SOC 2 Type 2
You need a SOC 2 compliance report if you do not handle your customers’ financial data. You must next decide whether you need Type 1 or Type 2 compliance reports under this category. The decision is based on what the report your customers demand. A Type 1 report confirms controls are working at a fixed point in time. Type 2 gives assurance of control over a longer period.
Steps to Get Your SOC 2 Compliance
Step 1: Understand the SOC 2 Trust Service Criteria
A SOC 2 audit evaluates the business based on the five trust services criteria. A company may base its report only on one principle, more than one principle, or all five principles.
Security – This should be included in all SOC 2 audit reports. It requires the business to have access control, firewalls, authorized controls, and operational controls over data applications.
Availability – This principle assesses an organization’s preparedness for complying with the performance and operational uptime standards. It ensures the company has effective controls for handling security incidents and can recover data after a disaster. Its network performance monitoring setup is evaluated during this audit.
Confidentiality – A company must demonstrate that it has excellent safeguards to secure its customers’ data.
Processing Integrity – This principle assesses the organization’s capability to process its cloud-based data reliably, accurately, and on time. It also covers quality assurance procedures. This principle should be included for auditing if your company handles critical financial operations, such as payroll services, financial processing, and tax assessment.
Privacy – If you store personally identifiable information of your users, you are responsible for ensuring sufficient safeguards for protecting this data. The auditor will check your data encryption, access control, and multistep ID authentication compliance.
Step 2: Which Trust Service Criteria Apply to You?
Before going for the SOC 2 compliance auditing, you should determine your organization’s criteria for reporting your customer demands. SaaS firms that store the personal data of their users should be evaluated on Privacy and Availability principles. Due to the selection of specific principles from the trust services criteria, each report is unique to the audited company.
Step 3: Internal Risk Assessment
Assess the risk related to the location, growth, and information security practices. You will also need to assess the risk facing your vendors and business partners.
Step 4: Gap Analysis and Remediation
Conduct a gap analysis to understand the controls and policies you already have. Any data merging should be done only after at least one review.
Step 5: Mapping & Coverage of Internal Controls
Internal control is needed to manage the criterion of the selected TSC. Establish policies and procedures for this purpose. Next, you must conduct a mapping exercise to show you have the controls in place to meet the selected criterion.
Step 6: Continuous Monitoring
It is a critical step of your SOC 2 compliance journey. This should be an ongoing activity where you test your controls, fill the gaps, test the improved setup again, and gather evidence continuously for compliance. This monitoring system should not only give you proof of compliance but also alert you when the required steps are done incorrectly or not taken at all.
Step 7: Audit SOC 2
Get this report only from a certified auditor who knows the SOC 2 requirements and auditing process.