The need for robust information security systems is growing by the day, meaning that SOC 2 reports are more important than ever. In brief, a SOC 2 report (system and organizational control 2 reports) tests your business’s controls in relation to data and financial reporting. While SOC 2 reports may seem like something new, they have been around for a while. Here are five things every small business should know about SOC reports.
They Were Developed By the American Institute of Certified Public Accountants
SOC 2 reports were developed by the American Institute of Certified Public Accountants (AICPA). The AICPA has also adopted five categories of criteria that any business can choose from to address the risk of the service provided to clients. This ensures that SOC reports are flexible enough and can be used by service organizations from different fields. Each service organization must choose its own applicable criteria and strive to meet the selected criteria in order to receive an unqualified SOC 2 attestation report. The general criteria developed by AICPA can also be adjusted slightly to better address the selected criteria for a particular service organization.
They Are the Gold Standard For Evaluating IT Security Controls
Organizations are increasingly concerned with security, and there’s a need for a security standard or framework that can be used to provide the assurance needed. The SOC 2 report demonstrates to clients that a third party auditor reviewed the applicable criteria and confirmed controls were designed appropriately (Type I Report) or were designed and operated effectively (Type II Report) . Therefore, many US based companies prefer to use SOC 2 reports as their gold standard for determining if the services they are using are secure. With a SOC 2 audit, you select the criteria that are most suited to your organization’s needs and then provide risk-related information that proves you have secure and effective controls in place.
They Focus On Five Trust Services Criteria
During a SOC 2 audit, your business chooses the Trust Services Criteria (TSCs) that address the risks to your services. There are five TSCs, and these are security, availability, confidentiality, processing integrity, and privacy. The security principle looks at whether your system is protected against unauthorized access.
The availability principle checks whether your services and systems are accessible and if you have a sound data recovery plan in case of network outages and security breaches. The point is to provide assurance that you can ensure continuity of services as agreed. The third TSC is processing integrity, and it assesses your system’s ability to process data timely, completely, and accurately.
Then there’s confidentiality which requires you to protect private data against unauthorized access. Finally, there’s privacy which requires that your business has a privacy notice to inform data subjects about when data collection is being performed, how it’s shared, stored, and disposed of.
They Help Your Cybersecurity
As mentioned, a SOC 2 audit evaluates the security of your system and whether you have enough controls in place to safeguard against unauthorized access. To be SOC 2 compliant in this area, you must have strict access controls that minimize data breaches and hacking and maintain data integrity. A SOC 2 audit, therefore, exposes any weak areas that put you at risk of data breaches and enables you to boost your cybersecurity.
A Type II SOC 2 audit involves assessment over an examination period between six and twelve months (typically) and gives you the opportunity to fine-tune your security policies and procedures, so they can be effective. This results in a higher level of assurance to prospective customers and stakeholders.
They Give You a Competitive Advantage
Over the past decade, there’s been a proliferation of data breaches worth millions of dollars per incident. The potential financial loss has led to a trend where clients need more assurance from vendors. As such, most businesses have had to prove that they have stringent information security controls in place, and there’s no better proof than having a SOC 2 report in place. Therefore, having a clean SOC 2 report gives you a competitive advantage over other businesses. Even if your services are secure, your clients will want solid evidence, and a SOC 2 report differentiates you from the rest of your competitors.
These are the top five facts about SOC 2 reports that will help you gain the right perspective on their importance. For additional information about SOC 2 reports, you also need to know they are typically performed by licensed CPA firms with highly experienced IT and financial auditors. To become SOC 2 compliant, you must include the relevant TSCs in your SOC 2 to demonstrate that you have robust controls in place to secure the services you provide.
