Understanding SOC 2 Reports: What They Are & Why You Need Them
SOC 2 reports are a great way to identify how well an organization safeguards their clients’ data. But creating a report may not be as easy as you think.
Who needs a SOC 2 report? Organizations that need a SOC 2 report include cloud service providers, SaaS providers, and organizations that store client information in the cloud. A SOC 2 report proves a client’s data is protected and kept private from unauthorized users.
What is a Service Organization Controls (SOC) report?
SOC reports verify an audit of security controls for key attack surfaces. No particular industry requires these reports, but they are more often than not required by businesses in financial services, including banking, investment, insurance and security. So, if you are a technical service provider (or hiring such a provider) then there is a good chance that either a client or business partner will require a SOC audit.
Within the Service Organization Control framework, there are three different types of reports:
- A SOC 1 report outlines the security controls implemented by an organization related to financial reporting. These reports, also known as the Statement on Standards for Attestation Engagements (SSAE) 18, demonstrates the organization has the business processes and technical infrastructure to properly report financials. Within SOC 1 attestation, there are 2 types of reports:
- SOC 1 Type I – describes reporting and auditing controls in place and how they help achieve required reporting objectives.
- SOC 1 Type II – describes reporting and auditing controls in place but also includes an audit of the organization’s operational effectiveness or ability to meet reporting and control objectives.
- A SOC 2 report demonstrates an organization’s controls comply with the American Institute of Certified Public Accountants (AICPA) and their Trust Service criteria (see below).
- A SOC 3 report summarizes a SOC 2 report, but focuses on a more general audience (like company stakeholders) rather than a technical one.
A SOC 2 report is by far the most common report when it comes to security and data confidentiality, and the one you will most likely see referenced in terms of compliance with generally accepted data privacy controls. A SOC 2 certification provides an additional layer of security and trust with your clients or partners. Many service providers in industries like financial services, healthcare and government contracting therefore pursue SOC 2 audits,even if they aren’t required.
SOC 2 Report: A Closer Look
SOC 2 reports demonstrate the extensive security and reporting controls that an IT vendor or provider has in place to protect confidential data. SOC requirements are rooted in the five Trust Service criteria:
- Privacy: How data is collected, used, retained and disclosed as part of its use by an organization.
- Confidentiality: Data designated as confidential remains confidential during use by an organization.
- Security: Data is protected against unauthorized access, theft, breach, or disclosure;also called the “common criteria.”
- Processing Integrity: All data processing systems are complete, valid, accurate, and timely based on an organization’s needs.
- Availability: Data is visible and ready to use as part of a business’s processes.
These criteria address different forms of security controls, and an attestation is a demonstration that the organization implements those controls.
Not every SOC 2 report addresses or attests to all of these criteria. Each criterion, however, speaks to the completeness and rigor of an organization’s IT system (as it relates to that specific criteria). The Security criteria are by far the most frequently audited, particularly for first-time attestation.
Additionally, SOC 2 reports come in two different Types:
- Type I provides a “snapshot” of an organization’s system in relation to specific, essentially an “as of” date that attests to compliance.
- Type II offers a more in-depth report that involves a thorough examination of security controls, internal policies and procedures over a period of time. Type II reports are often seen as a more complete form of attestation.
Which audit is right for your organization? It depends on who’s asking for it and for what purpose.
Best Practices for SOC 2 Compliance
It’s important to determine the scope of the audit beforehand. Not every business or business contract calls for adherence to every single Trust Criteria (although Security is most often used). If you don’t understand the scope or needs of an audit, your organization can waste valuable time and resources chasing attestations that aren’t needed.
It is imperative, obviously, that you understand your technical infrastructure prior to embarking upon an audit. If, for example, you aren’t utilizing compliant software, then naturally you’ll need to upgrade . If you are using a third-party platform or SaaS product, those solutions must be compliant.
You may, however, never need a SOC 2 attestation. An IT company working in healthcare, for example, must meet HIPAA requirements and these may be sufficient. Covered Entities (CEs) like hospitals or insurance companies may nevertheless require a SOC audit to ensure an additional level of scrutiny on your security systems. The same could be said for a financial services company that handles payment information. While they may meet PCI DSS requirements, they may also opt to undergo SOC 2 audits for additional credibility.
The Accellion Difference
Organizations that wish to demonstrate SOC 2 compliance while working with third-party IT vendors must ensure that those vendors are also compliant. Accellion, as a provider of secure email, managed file transfer and secure content access solutions does just that. The Kiteworks content firewall provides companies secure ways to email, share and store data while protecting user confidentiality with full SOC 2 Type II compliance.
The Kiteworks platform meets all five Trust Service criteria requirements and makes attestation easy by providing:
- Compliance: As a SOC compliant business partner with SOC 2 Level 1 attestation, we enable SOC 2 certification., along with all Trust Service criteria and auditing standards, to keep your data protected and private.
- Continuous Monitoring and Visibility: Our detailed audit logging and reporting, powered by our CISO dashboard, makes documenting compliance and meeting reporting standards straightforward.
- Security and Validation: Our hosted data centers are SSAE-16/SOC 2 compliant, and we undergo regular external assessment according to SAS70 Type II requirements.
Learn how Accellion can support your organization with SOC 2 compliant systems with our SOC 2 compliance capabilities.