What Is SOC 2 Compliance?  

Within the world of data security, compliance with the latest federal, national, and global regulations is a core issue of which all organizations must be aware. However, not all compliance standards are equal, and while some may apply to your organization and industry, others may not. In addition, there are both mandatory and voluntary compliance standards to consider, and adherence to the regulations set out by the relevant bodies can impact your organization in a variety of ways. 

SOC 2 is one example of a voluntary compliance standard that specifically supports service organizations and provides guidance on managing customer data. Developed by the American Institute of CPAs (AICPA), SOC 2 aims to measure and rank a range of Trust Services Criteria, including security, availability, processing integrity, confidentiality, and privacy to ensure cloud-based data handling follows best practice protocols to maximize trust for both customers and clients. 

But what is SOC 2 and how does it work? Here, we explore how to get SOC 2 certification and whether your organization should be looking to take advantage of the SOC 2 compliance framework. Read on to discover everything you need to know about SOC 2 and what your organization needs to gain certification. 

What Does SOC 2 Stand For?

SOC 2 stands for Systems and Organization Controls 2, a framework developed by the American Institute of CPAs (AICPA) to evaluate how service organizations manage and protect customer data. SOC 2 reports focus on an organization’s internal controls related to security, privacy, and data handling, using five Trust Service Principles as the foundation for compliance.

These principles include:

• Security: Evaluates network and application security controls, including intrusion detection systems, firewalls, and authentication measures that protect sensitive information.
• Availability: Reviews how an organization maintains system uptime and performance, including incident response plans and disaster recovery readiness.
• Processing Integrity: Assesses the accuracy, timeliness, and reliability of data processing through quality assurance and monitoring controls.
• Confidentiality: Examines encryption protocols and access controls to protect data classified as confidential.
• Privacy: Covers how personal information is collected, stored, and accessed, with emphasis on encryption and multi-factor authentication.

Unlike prescriptive standards that dictate exactly how security must be implemented, SOC 2 allows each business to design its own controls aligned with one or more of these principles.

This flexibility means SOC 2 compliance is unique to each organization but still provides a high level of assurance to customers, regulators, and business partners. Meeting these criteria demonstrates that your company is committed to safeguarding data and following industry best practices for cloud-based and service-provider environments.

Why is SOC 2 Compliance Important?

While gaining SOC 2 certification is not a mandatory requirement for businesses, compliance is a useful tool in building trust and confidence in your operations. As the amount of data processed by organizations increases exponentially, the strict SOC 2 compliance requirements adhered to act as a recognized assurance to all.

Who Needs a SOC 2 Report?

SOC 2 reports are valuable for any organization that stores, processes, or transmits sensitive information or personal data on behalf of customers. This includes:

• Cloud service providers that host data or applications.
• Software-as-a-Service (SaaS) platforms that manage user accounts and private data.
• Managed service providers (MSPs) that monitor and maintain client systems.
• Healthcare, finance, and e-commerce companies seeking to align with frameworks like the HIPAA Security Rule or PCI DSS.

Having a SOC 2 report demonstrates that your company has implemented robust internal controls to safeguard data, which is increasingly a requirement in vendor contracts and procurement processes.

Types of SOC 2 Reports

SOC 2 audits generate two types of reports. These are:

• Type I: SOC 2 Type I reports detail a business’s ability to meet the associated Trust Principals through systems and network design analysis. This type of audit is done at a single point in time.
• Type II: SOC Type II reports detail how a company safeguards data through analysis of internal operations and controls in line with the Trust Principals. This type of audit is done over a period of time.

Both types of reports share similarities, and there is demand for meeting the requirements of either or both, depending on the specific operations of any given company. However, SOC 2 Type II generally offers higher levels of assurance, providing organizations with proof that they adhere to best practices on data security and control systems.

SOC 1 vs SOC 2

In addition to the two types of SOC 2 reports, those organizations researching how to get SOC 2 certification may also be aware of SOC 1 compliance standards. SOC 1 and 2 share some similarities; however, it is important to note that SOC 2 does not represent an update or upgrade to SOC 1. Instead, they cover different areas of an organization's operations. 

SOC1 evaluates internal controls over financial reporting to ensure compliance with laws and regulations, whereas SOC 2 covers a broader range of operations in line with the 5 Trust Principles. Additionally, where SOC 2 reports are never shared outside of the organization due to the highly sensitive data they contain, SOC 1 reports are made available for other auditors to review.

What Is a SOC 2 Audit?

A SOC 2 audit is an independent assessment of how well your organization’s controls and processes meet the SOC 2 criteria. The SOC 2 audit process involves:

• Planning and Scoping: Identifying which systems, data, and Trust Service Principles will be in scope.
• Documentation and Testing: Reviewing policies, procedures, and technologies that protect customer data.
• Evaluation: Assessing whether controls are suitably designed (Type I) and operating effectively over time (Type II).
• Reporting: Producing a formal SOC 2 report that details the auditor’s findings.

Because the audit examines information security, internal control, and operational consistency, it gives partners, clients, and regulators confidence that your business handles personal information responsibly.

SOC 2 Audit Requirements

The auditing requirements for SOC 2 compliance are rigorous, helping maintain the highest security standards. Any organization wishing to achieve compliance must first begin with comprehensive preparation for a SOC 2 audit, writing and sharing security policies and procedures that should be adhered to by everyone within the organization.

The policies and procedures should reflect the requirements for processing customer data in line with the 5 Trust Principles. In addition to this, there is a SOC 2 baseline that consists of broader criteria common across all Trust Service categories. The baseline focuses on data protection and assists against unauthorized use such as unauthorized removal of data, misuse of company software, unsanctioned alterations, or disclosure of company information.

Again, it is essential to mention that each SOC 2 audit looks at the unique ways an organization meets the relevant criteria. For instance, while some SOC 2 criteria are broad and policy-driven, others look more deeply into your organization’s technologies and tools to ensure data security and network integrity. 

Generally speaking, organizations should look to implement the following controls to meet SOC 2 compliance:

• Logical and physical access controls: SOC 2 audits look at how you restrict and manage access to your networks and data. This can include elements such as two-factor authentication and the use of firewalls.
• System operations: The way you manage systems operations to detect and mitigate deviations from set procedures is also part of SOC 2 compliance. This may involve both automated and manual mentoring of networks and users.
• Change management: Controlled change management processes to prevent unauthorized changes is a key element of SOC 2. Monitoring and quality assurance are key elements here.
• Risk mitigation: SOC 2 audits explore how your organization identifies and builds risk mitigation. These focus on how you may deal with business disruption and use third-party vendors.

Addressing these key areas allows you to meet the minimum requirements for SOC 2 compliance. However, you should consult with an expert in the field to identify and address you company’s specific requirements. Only by doing this will you be assured of meeting the requisite compliance factors.

Who Performs a SOC 2 Audit?

Certified CPAs (Certified Public Accountants) perform SOC 2 audits. In turn, any audits made by the CPA are fully peer-reviewed by the AICPA so that the highest standards are maintained. Having said this, if your organization wishes to employ an expert in SOC 2 compliance who is not a certified CPA, this can be a good idea if you are trying to implement policies and controls that will stand up to the rigorous auditing procedures.

The Bottom Line

SOC 2 compliance is important for organizations because it helps protect their customers' data. The types of reports that are issued under SOC 2 compliance can help organizations understand where they stand with their security and privacy practices. If you're looking to get a SOC 2 audit, make sure you know the requirements—and explore how Mimecast’s Governance & Compliance solutions can help you meet them with confidence.

**This blog was originally published on November 1, 2022.