The average cost of cybercrime to a US Company was 27.4 million in 2018, according to the Accenture 2019 Cost of Cybercrime report. The staggering costs associated with data breaches have made companies more aware and alert about the auditing process and compliance standards like SOC 2.
SOC stands for Service Organization Control. SOC 2 is an auditing process based on the Auditing Standards Board of the American Institute of Certified Public Accountants’ (AICPA) existing Trust Services Criteria (TSC). A SOC 2 report evaluates an organization’s information systems to check if all of its principles are followed. Organizations that are SOC 2 compliant adhere to a strict set of principles to securely manage customer data. Read on for all the details!
What are the principles of SOC 2 compliance?
To be compliant, organizations must have well-documented and clear strategies that revolve around these principles:
Security deals with how system resources are protected against unauthorized access, information theft, system abuse, data removal, software misuse, and unauthorized changes to information. Full-fledged security controls like application and network firewalls, intrusion detection, and two-factor authentication can ensure security.
Privacy deals with how personal information is collected, used, retained, stored, disclosed, and disposed of. This data can include personally identifiable information (PII) such as client names, addresses, and Social Security numbers. Treating personal information according to client information privacy notices and AICPA’s Generally Accepted Privacy Principles (GAPP) can ensure privacy.
Availability deals with how accessible the organization’s services, products, and systems are based on the service level agreement (SLA). This principle governs network availability/performance, performance monitoring, security incident handling, and disaster recovery.
Processing integrity deals with how well the system achieves its goals. Data processing hence should be accurate, timely, and exactly as requested. This principle deals with the processing of data rather than with the integrity or accuracy of the data. Process monitoring and quality assurance can ensure processing integrity.
Confidentiality deals with how confidential the internal company information, business information, intellectual property, price lists, and client data are. Encrypting data during transmission, deploying firewalls, and maintaining internal and external access controls can ensure confidentiality.
The SOC 2 compliance audit report
SOC 2 compliance audit report provides detailed information and assurance about an organization’s security, privacy, availability, processing integrity, and confidentiality. SOC 2 is flexible in regards to how organizations want to meet the requirements. There are two types of SOC reports:
- Type I describes the organizations’ systems and if their system design meets the principles. The audit and report are carried out on a specified date.
- Type II describes the operational effectiveness of those systems. The audit and report are carried out over a specified period, usually a minimum of six months.
Who does SOC 2 apply to?
SOC 2 is targeted for organizations and service providers who store client information on cloud-based servers. Hence, SOC 2 is for companies which offer:
Software as a Service (SaaS)
Small and medium-sized companies are increasingly looking towards reducing costs and overhead by leveraging SaaS providers. SaaS providers host applications and make them available to customers over the internet. They can store crucial customer data that cannot be compromised. Therefore, SaaS organizations are often asked to implement and maintain a compliance program like SOC 2 that demonstrates their commitment to a strong system of internal controls.
Managed service providers manage information systems, applications, databases, information security, network, backup and recovery, and system of other companies. SOC 2 compliance ensures that they can securely handle the system of other companies.
Banking and Financial Services
Credit unions, banks, credit companies, customer finance companies, insurance companies, and stock brokerages must maintain confidentiality, privacy, completeness, timeliness, and accuracy of transactions. Hence, SOC 2 compliance is applicable to them.
Data Center Services
Data centers house large amounts of sensitive data of several customers, making data breaches an exponentially damaging deal. Hence, customers often scrutinize the controls of a data center before trusting them with their data. SOC 2 compliance can provide those customers with the required assurance.
Why pursue SOC 2 Compliance?
Since the pursuit of SOC 2 compliance automatically means following best security practices, the benefits associated with being SOC 2 compliant cannot be stressed enough.
Pursuing SOC 2 compliance means that organizational vision is aligned with following improved security practices. Improved security mitigates potential data breaches and also creates a culture of security within the organization.
Provision of documentation
SOC 2 compliance ensures that your policies, procedures, and internal standards documentation are in order. Well documented processes improve internal communication and consistency, meaning more sales and prior preparation for financial changes.
When preparing for SOC 2 compliance, organizations maintain a framework for mitigating risks. Hence, approaching compliance in such a systematic manner ensures that risks are mitigated timely.
According to the Cisco 2018 Annual Cybersecurity Report, 55 % of respondents had to manage public scrutiny owing to data breaches. SOC 2 compliance reduces data breaches, hence protecting intellectual property, brand reputation, revenue, customers, and future business prospects.
Customer appeal and competitive advantage
Security-conscious customers are more likely to be attracted to organizations that can provide SOC 2 reports. Big companies are concerned about security and want third-parties to follow the Trust Services Criteria established by AICPA. Compliance generally means more customer appeal and competitive advantage.
When organizations become secure and efficient by following the SOC 2 framework, they offer better services to customers. In the long run, better services improve the ability to obtain more customers.
Who can perform a SOC 2 audit?
Only CPA (Certified Public Accountant) of accountancy organizations can perform audits. SOC auditors must adhere to professional standards established by the AICPA. Auditors are required to follow guidelines for planning, executing, and supervising audits, and should also undergo peer reviews to ensure that their audits are in accordance with auditing standards.
CPA organizations may also employ non-CPA professionals with relevant security and information technology skills to prepare SOC 2 audits.
How can Blissfully help with compliance?
Blissfully’s powerful workflows and automations record all of your processes and make compliance audits a breeze. Learn how Blissfully can help your organization with compliance or request a demo to see Blissfully in action!