May 26, 2021

A Comprehensive Guide to SOC 2 Compliance

Nabeel Keblawi

A Comprehensive Guide to SOC 2 Compliance

In this article, we explain the importance of SOC 2 compliance, what it means, how to prepare for a SOC audit, and how to achieve certification.

soc 2 compliance

What Is SOC 2 Compliance?

SOC stands for System and Organization Controls for Service Organizations, and it is a framework developed by the American Institute of Certified Public Accountants (AICPA)

for determining whether a service organization’s controls are effective at protecting the privacy and security of its customer data according to a standardized trust service criteria. 

A company’s SOC report provides details about its internal information security management systems, personnel security policies, control environment, IT asset management practices, and perimeter defense mechanisms to assure business partners and customers about the safety of using their service. There are 2 types of SOC compliance reports, as we’ll discuss below.

SOC Reports: What’s the Difference Between Types 1 and 2?

SOC 2 Type 1 provides assurances that the company’s processing system meets security requirements by describing its design and how it meets relevant trust principles. SOC 2 Type 2, by contrast, goes little further than security requirements reports by detailing the operational effectiveness of that system.

Although these sound similar, types 1 and 2 are as different as night and day. Let’s explore this in practical terms.

Type 1 provides a snapshot of the organizational controls, including security, privacy, and data confidentiality, at a particular point in time, showing whether these controls are sufficiently designed to help the company meet its financial goals. 

Type 2 assesses these organizational controls over a fixed period of time, usually one year.

For this reason, obtaining type 2 is a longer and more thorough certification process. In this article, we discuss the principles of SOC compliance and what it takes to achieve SOC 2 certification. Getting a type 2 certification is a long and difficult process, however, and in most cases, a type 1 certification does clearly show that a service organization has all the privacy and security best practices in place ensuring protection of customer data.

5 Trust Services Categories of SOC 2 Compliance

There are five principles of SOC 2 compliance — or “trust services categories” as AIPCA, the certifying authority, defines the following:

  1. Security
  2. Availability
  3. Confidentiality
  4. Processing Integrity
  5. Privacy
soc2 trust service principles

We describe each in more detail below:

Security

Security principles and access controls are about protecting system resources against unauthorized access. These should prevent system abuse, theft, misuse of software, or unauthorized access, alteration, or disclosure of customer data.

Availability

To comply with the availability principle means to ensure the company’s systems, products or services are accessible beyond a minimum acceptable performance threshold as defined in a contract or service agreement. While this does not address functionality or usability, it is important to monitor network performance and to quickly handle security incidents. 

Confidentiality

Confidential information must be shielded from unauthorized access and only made available on a need-to-know basis to certain parties, such as company personnel. When transmitting information over a network, it must be encrypted as well. This information includes business plans, intellectual property, financial data, and other sensitive information.

Processing Integrity

System processing should be complete, accurate, and timely, helping an organization meet their objectives by delivering the right data to the right people at the right time. If there are any errors, processing integrity ensures that they are corrected in a timely manner. 

Privacy

The privacy principle ensures that personal information is handled in accordance with a company’s privacy policy that meets criteria set forth by the AICPA. This includes collection, use, retention, disclosure of any personally identifiable information including names, addresses, Social Security numbers, protected healthcare information, and other sensitive information.

How to Get SOC 2 Certification in 5 Steps

Before proceeding with your SOC 2 certification, your company should form a team who is experienced with the certification process. Then proceed with the following steps:

1. Define Your Goals

It’s important to proceed with a clear goal in mind, and to understand how SOC certification will help your business. Ask yourself the following questions:

  • Do you need SOC certification for a single product or service, or for the whole company?
  • Do you need a type 1 or type 2 report?
  • Do most of your clients require SOC 2 certification?

2. Define Your Scope 

At this point, you want to choose which of the five trust services categories you want to get audited for. Every SOC 2 audit reports on security, while the other 4 are optional, depending on your goals.

For example, some companies omit the privacy principle since they already focus on complying with GDPR compliance or similarly stringent regulations. 

Another example is if you are a financial institution or deal with a lot of transactions, one category you definitely want to include is process integrity. Otherwise, it may not be necessary for your audit.

3. Organize Your Materials 

For each principle in step 2, you need to take the following steps: 

  • Determine which controls apply
  • Evaluate their effectiveness
  • Resolve any gaps
  • Gather documents for proof

Once you have all the materials, it’s a good idea to perform a self-audit before going through the real thing.

4. Perform a Self-Audit

The point here is to find any gaps you might have missed during the first three steps above. If you rush into the full audit too soon, you may risk a denial of attestation, which may be more harmful than having not attempted certification in the first place. 

Instead, take the time to establish an audit trail, set up security monitoring, identify and fill any gaps you find. During this self-audit and monitoring, it’s also worthwhile setting up security alerts that protect you from falling out of compliance before the actual SOC 2 audit.

5. Get the SOC 2 Audit 

Once you’re clear on your objectives, you can now proceed with the audit. Although you can choose an auditor, the AICPA stipulates that only an independent CPA is qualified to perform a SOC 2 audit. If your auditor isn’t one, they can engage an independent, experienced SOC 2 specialist to assist with the audit.

Whomever you choose, make sure they have lots of auditing experience, preferably within your own industry. They will select the CPAs who will assess your processes and security measures, and if all goes well, approve the SOC 2 certification.

Who Needs to Comply With SOC 2? 

In a nutshell: 

If your company handles customer data, you should have a SOC 2 report.

Below is a short list of industries where SOC 2 certification is strongly recommended:

  • Cloud computing and/or SaaS
  • Financial processing, auditing, and accounting
  • Sales and customer support
  • Legal and insurance
  • Medical and pharmaceutical

If you are in one of these industries or you frequently handle customer data, it is likely that your competitors already are SOC 2 compliant.

Why You Need SOC 2 Compliance

While SOC 2 compliance isn’t actually a legal requirement for cloud computing or SaaS vendors, its role in data security cannot be overemphasized.

Not only does getting a SOC 2 certification and report, but also undergoing regular audits, goes a long way toward building trust and value with customers. Plus, one added benefit is that the audit process also provides insights into the risks within your own organization’s security systems and governance.

The following are pros of getting a SOC 2 certification:

  • Stronger security policy
  • Well-organized documentation
  • Improved risk management policies
  • Reliability
  • Regulatory compliance

One major con is that getting SOC 2 approved takes a long time — possibly a year or longer. It should not be seen as a quick fix or an instant value-add, but rather as a long-term commitment to your organization’s mission and your customers.

Start Your SOC 2 Compliance Journey Today

CometChat is excited to announce its recent SOC 2 Type I compliance certification for all of our CometChat Pro products, particularly for industries that deal with customer data. 

When using CometChat’s products, you can rest assured that your and your customers’ data is well protected and every measure is being taken to keep it that way!

If you want to learn more about how CometChat achieved SOC 2 compliance, feel free to get in touch with our team to learn more or request a copy of our certification report.

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