SOC 2, or Service Organization Control 2, is a framework that establishes criteria for protecting customer data based on five “trust service principles.” A SOC 2 report produced by an external auditor shows whether non-financial reporting controls of service organizations are designed and operating to comply with standards set by the American Institute of Certified Public Accountants (AICPA).
In this article, we will take a deep dive into the world of SOC 2 and cover the following:
- Why is SOC 2 important?
- Who needs a SOC 2 report?
- What is included in a SOC 2 report?
- How can you get a SOC 2 report?
- How are SOC 2 and Penetration Testing interlinked?
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Importance of SOC 2
An independent third-party auditor’s SOC 2 report provides an objective evaluation of these controls, providing greater confidence to stakeholders. Organizations that have received one of these reports possess a competitive edge as they demonstrate more trustworthiness with their stakeholders.
Establishing trust between stakeholders is a crucial element of SOC 2 certification. Customers, business partners, and investors all want assurances that an organization is managing their data responsibly with appropriate controls in place to safeguard it.
Who Needs a SOC 2 Report?
Any organization offering services to other businesses that access, process, or store sensitive data, such as cloud service providers, payment processors, or hosting companies needing assurance their client data will be handled properly requires a SOC 2 report. Examples include cloud providers such as Azure/AWS; payment processors/processors as well as data hosting companies/hosters that often access confidential client files requiring assurance their client data will not be misused by these service providers.
Companies Dealing in Sensitive Data:
Companies handling sensitive information, such as personal or financial records or health records, need a SOC 2 report. This applies to any company collecting, processing, or storing such sensitive data either for themselves or their clients (i.e., banks, healthcare providers, and e-commerce businesses).
Businesses Partnering With Other Enterprises:
Businesses engaging in partnerships or business relationships with other enterprises typically must present them with a SOC 2 report as proof of having adequate controls in place to secure sensitive data, prior to beginning negotiations.
Companies Required by Regulations:
Certain industries are more heavily regulated than others, and organizations operating within those fields may be required by law or industry standards to secure a SOC 2 report. Healthcare organizations in the US must abide by HIPAA, which mandates specific controls for protecting health information.
Tech companies like software developers, IT service providers, and online platforms often require a SOC 2 report as these entities typically manage substantial volumes of client data that must be managed securely and responsibly for client safety.
Components of a SOC 2 Report
Five Trust Service Criteria
The SOC 2 report is organized around five Trust Service Criteria (TSCs), which form the core principles for any organization aiming to safeguard its systems and the information processed through them: Security, Availability, Processing Integrity, Confidentiality, and Privacy.
Security involves protecting system resources against unwarranted access; availability refers to access to products or services as per contract/service level agreement; processing integrity is defined as completeness, validity, and accuracy in system processing while confidentiality protects information designated as confidential; finally, privacy refers to safeguarding of personal information collected, retained disclosed by an entity and eventually discarded from them.
Document Requirements for SOC 2 Audit Prep
Prepping for a SOC 2 audit entails gathering and organizing numerous pieces of paperwork that demonstrate the design and effectiveness of controls currently in place. This documentation must include policies, procedures, and supporting evidence such as system configuration files, access logs, or incident response plans demonstrating control implementation.
Document requirements will depend upon an organization’s operations and the trust services criteria being assessed. For instance, documents related to data encryption, firewalls, and access controls might be needed when considering security criteria, while backup plans and system monitoring might need to be documented for availability criteria.
This section of a SOC 2 report serves as the independent auditor’s statement regarding the fairness of the presentation of the system, suitability of the design of controls, and operating effectiveness if applicable (Tier II reports only).
An auditor may express one or more opinions during an audit: Unqualified Opinion (clean opinion), Qualified Opinion, Adverse Opinion, or Disclaimer of Opinion. An Unqualified Opinion indicates that controls were designed, implemented, and operating effectively, while any other opinion indicates there may have been issues identified during the audit that warrant inclusion in its report.
Description of Tests of Controls and Results
This section includes an in-depth explanation of all of the tests carried out by an auditor to test and measure the design and operating effectiveness of controls in place, along with the results of these assessments. A SOC 2 Type II report requires this section because it serves as evidence that these controls remain operating effectively over time.
Each control tested will be described and its criteria evaluated; procedures performed by the auditor to test it; results from tests; as well as any recommended corrections that might need to be implemented to maintain the effective operation of those controls in place. This provides a thorough picture of those in place and their effectiveness of operation.
Process of Obtaining a SOC 2 Report
Before initiating their SOC 2 audits, organizations often undergo a pre-assessment phase – performed either internally or by third-party consultants – designed to detect any weaknesses in the organization’s controls that must be addressed prior to its official audits.
This requires reviewing policies, procedures, and controls against SOC 2 Trust Service Criteria in order to pinpoint any areas in which the organization does not satisfy a threshold.
This phase involves conducting an actual audit by an independent third-party auditor who will assess your organization and controls against SOC 2 Trust Service Criteria, such as reviewing policies and procedures while interviewing relevant personnel to asses whether these controls meet SOC 2 requirements.
An auditor will then prepare a draft SOC 2 report, including an in-depth description of your organization’s system, expert opinions from the audit team, and results of tests of controls. Before the final report is released to the organization for finalization review by the auditor, any further clarification or additional information must be submitted prior to signing off on it as the final document.
Following the assessment phase, organizations receive their final SOC 2 report from an auditor, including their opinion and results of testing of controls.
Post-assessment phase activities focus on responding to any recommendations or areas for improvement identified by an auditor, even when an organization receives an unqualified opinion.
Generating a SOC 2 report is not a once-off event for organizations, as organizations need to regularly evaluate and update their controls in order to meet SOC 2 Trust Service Criteria. This may involve reviewing policies and procedures regularly, as well as performing internal audits and responding to any new risks or threats that arise.
Organizations should also consider periodically obtaining a SOC 2 report – at minimum once annually – in order to demonstrate assurance to stakeholders of the effectiveness of their controls and demonstrate commitment towards maintaining an efficient control environment.
Linking SOC 2 to Penetration Testing
SOC 2 and penetration testing are two complementary processes essential to an organization’s cybersecurity. While SOC 2 primarily examines an organization’s controls against Trust Service Criteria, penetration testing simulates cyberattacks against systems to discover vulnerabilities that attackers might exploit.
But, while SOC 2 reassures organizations they have implemented suitable controls for managing customer data, penetration testing provides further assurances that these safeguards effectively block unauthorized entry to systems owned by their organization.
Role of Penetration Testing in SOC 2 Compliance
Penetration testing plays a vital part in SOC 2 compliance. By identifying vulnerabilities, penetration testing provides one of the best means for measuring how effective security controls implemented are at protecting system resources against unwanted access.
It can also play a vital role in other Trust Service Criteria, such as Availability and Processing Integrity. For example, a pen test can identify vulnerabilities that could allow an attacker to conduct denial-of-service attacks against a system, impacting availability.
Astra Security offers comprehensive SOC 2 penetration testing services designed to help you comply with the industry standards. With a dedicated team of experienced professionals, a proven track record, and a combination of manual and automated pentesting along with round-the-clock support, we help you ace your compliance requirements.
Data breaches and cyberattacks have become all too frequent, making it even more imperative that organizations demonstrate their dedication to cybersecurity. A SOC 2 report provides assurances to stakeholders that an organization has implemented appropriate controls for managing customer data, while penetration testing provides assurances that these controls effectively prevent unauthorized access – both essential components of a holistic cybersecurity approach.
Simply stated, any organization handling sensitive data that wishes to simply demonstrate commitment to data security should consider obtaining a SOC 2 report and regularly conducting penetration testing as it will both safeguard their own information as well as build trust among their stakeholders.
What are SOC 1 and SOC 2 reports?
SOC 1 and SOC 2 reports are assessments of an organization’s controls over financial reporting and data security, respectively. SOC 1 focuses on internal controls relevant to financial statements, often for outsourced services. SOC 2 evaluates controls related to security, availability, processing integrity, confidentiality, and privacy for technology services.