What is SOC 2?
SOC 2 is a set of standards and audit requirements for technology companies and service providers, such as business SaaS providers, which use the cloud to store customers’ data. SOC 2 is an acronym that stands for “Systems and Organizations Controls 2.” The American Institute of CPAs (AICPA) developed the entire SOC framework, with SOC 2 as one part of SOC.
Before 2014, companies used to comply with SOC 1 requirements only. Today, companies are working towards SOC 2 compliance to manage cloud-based data in a better way. What is the difference between SOC 1 and SOC 2?
- SOC 1 reports on controls at a service provider relevant to user entities’ internal control over financial reporting. User entity refers to organizations that use service providers. Auditors can share SOC 1 compliance reports with one another.
- SOC 2 reports on controls at a service provider relevant to five trust services criteria: Security, Availability, Processing Integrity, Confidentiality or Privacy. SOC 2 reports contain more sensitive information than SOC 1 reports. For this reason, SOC 2 reports are usually shared only within the company.
How does SOC 2 Compliance Work?
SOC 2 encompasses both a set of criteria and a technical audit. It covers not only the certification process but also the actual processes used by companies to manage cloud-stored customer data.
Write Down Policies and Procedures
Companies must pass an external audit to get the SOC 2 certification. But first, they must write down their policies and procedures. The written documents should cover SOC 2’s five trust principles: security, availability, processing integrity, confidentiality, and privacy. As companies have unique cases, they have the flexibility to choose which SOC 2 requirements apply to them.
Here are SOC 2’s five trust services criteria:
- Security: This principle covers any protection the system has against unauthorized access. Any system is prone to data theft and security breaches if proper access controls are missing. Some ways to prevent unauthorized access include the deployment of firewalls, two-factor authentication (2FA), and the use of intrusion-detecting tools.
- Availability: This principle tackles the availability of the system for customers’ use. There must be a minimum level of acceptable performance, usually stated in a contract or SLA (service level agreement). Apart from monitoring the system’s performance, there must also be processes for detecting incidents and recovering from disasters.
- Processing integrity: This principle deals with the timely delivery of accurate data. Quality assurance and process monitoring fall under this principle.
- Confidentiality: This principle deals with the handling of confidential data. When data is confidential, only specific persons or parties can access it. Some ways to secure such data include encryption and proper access controls. Personnel information, business plans, IP content, price lists, and financial data are a few examples of confidential data.
- Privacy: This principle deals with customer data privacy. For instance, personally identifiable information (PII) must be collected, used, retained, disclosed, and disposed of as per internal privacy policies and AICPA’s Generally Accepted Privacy Principles (GAPP). Encryption, two-factor authentication (2FA), and access controls are some means used to protect data privacy. Moreover, certain types of data (like health and religion) require additional protection.
How Can I Get the SOC 2 Certification?
Once your company has established its policies and procedures, you can now move on to the formal audit stage. Only certified external auditors can perform a SOC 2 audit. They are tasked with assessing the company’s compliance with one, some, or all of SOC 2’s trust principles and requirements.
Note that the certification audit is not just a one-time event. Companies aiming to maintain their SOC 2 certification are required to undergo yearly audits.
Best Practices for SOC 2 Compliance
Here are a few best practices for SOC 2 compliance:
- Alarms: There must be an alarm system to alert people whenever there’s a security incident. Not all alarms are valid, though, as some may be false positives. Alarms must be set up such that they would be triggered only when cloud activity deviates from the usual pattern.
- Monitoring: To trigger only the true alarms, companies must have established a baseline. For companies to get that baseline, they must have a continuous monitoring system. This practice also helps detect common and uncommon types of suspicious activities.
- Response: Companies should not only monitor activity and receive alerts. They should also demonstrate that they are capable of responding immediately and applying the necessary actions. Detailed audit trails are a must have here, as they provide all the information needed for root cause investigation and incident response.
The Importance of SOC 2 Compliance
As the cloud gains an increasing preference for data storage, SOC 2 compliance is now becoming a necessity for most technology companies. Beyond meeting the requirements or passing the certification, SOC 2 compliance is about ensuring there is a secure and competent system in place. In the end, companies should view SOC 2 as an opportunity to show that they can be trusted when it comes to managing customers’ data.