Preparing for SOC 2 Audit: Where to Start?
SOC 2 is becoming a synonym for a reliable service provider. Learn how to prepare your organization for the SOC 2 audit and get a favorable audit opinion.
SOC 2 Overview
SOC stands for Services Organization Controls, a series of audit reporting standards issued by the American Institute of Certified Public Accountants (AICPA). These standards aim to constantly monitor and improve an organization’s security posture while preventing and responding to security incidents. SOC 2 is a type of SOC, which provides organizations with detailed information about the service organizations’ controls and contains an auditor’s opinion about the design and effectiveness of these controls.
Trust Service Principles
The SOC 2 report can encompass from one to five Trust Services Principles (TSP).
- Security: common controls to prevent data from unauthorized access, protect against malware, detect and respond to security incidents, and other general security controls.
- Availability: availability and accessibility of the organizations’ services to its users.
- Confidentiality: implementing necessary measures and controls to handle confidential information.
- Processing integrity: processing and providing data in a timely, accurate manner.
- Privacy: implementing necessary policies and practices to keep personal information protected.
SOC 2 Type I and SOC 2 Type II
There are two types of SOC 2 reports:
- SOC Type I reports explore the organization’s controls at a single point of time and only test the controls’ designs.
- SOC Type II reports test the performance of the organization’s controls over three to 12 months and, in addition to the controls design, also check the controls’ effectiveness.
Why Become SOC 2 Compliant?
Not all organizations should become SOC 2 compliant. Commonly, SOC 2 was developed for service organizations whose services may directly affect the critical business processes of their customers. Thus, if you are a cloud provider, SaaS, or engaged in other digital services, you are more likely to benefit from the SOC 2 audit. Below are several reasons why.
First, a SOC 2 audit report gives valuable information about the organization. Hence, it helps businesses to better understand the performance of their service security controls and allows them to identify potential issues.
Second, a SOC 2 compliance program helps prevent potential security breaches and ensures that the service organization meets the necessary objectives. Furthermore, controls and processes implemented in the scope of SOC 2 enable organizations to detect and prevent cybersecurity issues.
Last but not least, SOC 2 audit helps organizations build stronger relationships with their clients. SOC 2 commitment would mean that the organization cares about its security and takes necessary measures to maintain the essential security controls. Clients often request a SOC 2 report for their auditing processes. Thus, the unwillingness or unreadiness to be audited may adversely impact the organization’s reputation and relationships with clients.
Preparing for SOC 2 Audit
Deciding to get a SOC 2 report, organizations should be ready for a specific test period, which usually lasts twelve months. However, it can also be as little as three months. At any rate, thorough and scrutinous preparation is imperative for those wanting to obtain a favorable audit opinion.
SOC 2 audits are conducted by Certified Public Accountants (CPA), members of AICPA. However, before inviting the CPA for auditing, organizations are first recommended to perform an audit readiness assessment to check if they are ready for a SOC 2 audit.
The specificity of the SOC 2 report is that there are no common demands or criteria for auditing. SOC 2 auditing scope varies depending on the organization’s size, complexity, and several other factors. Organizations are recommended to examine some recommendations and best practices to make their SOC 2 audit smoother. SOC 2 audit readiness assessment helps better understand the current state of the organization’s controls and better prepare for the actual audit.
Deciding What Type of SOC 2 Report to Choose
The difference between the SOC 2 Type I and Type II is obvious at a first glance, but many organizations may experience difficulties while deciding which one to choose. The Type I report is usually just a stepping stone for preparing for a Type II audit. So, the helpful questions that organizations should ask themselves when choosing the appropriate SOC 2 type may include:
- Has the organization gone through a SOC 2 audit before?
- Are there designated employees in place to implement the necessary processes and controls?
- Are there mature security and compliance functions available?
Your organization should probably start with SOC 2 Type I report if the answer to most of these questions is a clear “NO.” SOC 2 Type I will help determine the current performance of the organization’s controls and prepare for the more complex audits.
If the answer to these questions is “yes,” then you may want to go straight to the SOC 2 Type II audit. It is more complex and requires more time for conducting and preparation.
Defining the Scope of the Future Audit
Defining the scope of the SOC 2 audit aims to determine the necessary TSPs for assurance. Scoping also helps point out what systems and components must be assessed. Organizations are free to decide what number and combination of the TSPs are necessary to address in their SOC 2 report. The only principle required by the AICPA as obligatory is Security. The orienting point for determining the other principles are set in services a vendor provides, customers’ needs, and relevant contractual requirements.
Organizations usually deem two or more TSPs to be relevant to their customers’ needs. Attempts to address multiple TSPs, especially at the first SOC 2 audit, may be unbearable for organizations. Such an initiative may result in missed deadlines and even disrupted operations. To avoid such inconveniences, organizations have to follow a staged approach to addressing TSPs. Meaning, it is more effective to focus on the most critical principles first and then increase the report’s scope in the future.
To determine the most relevant principles to users, organizations should first analyze their services and then decide which principles are more relevant. For instance, the primary principles to consider for cloud service providers are security and availability; however, the payment processing systems are more likely to include principles like processing integrity and privacy.
Describing Necessary Security Controls
After defining the scope of the SOC 2 report, it’s time to establish if all necessary controls have been designed and are operating effectively according to their business environments. It is also essential to identify why they matter from the user’s perspective. At this stage, organizations must first describe all the security controls they will test during the SOC 2 audit.
Conducting Gaps Remediation
This step involves addressing the gaps identified in the readiness assessment. Note that the CPA firm performing the audit cannot be engaged in gaps remediation. It is necessary to avoid any conflict of interest. The remediation phase should rely on a remediation plan that serves as a readiness roadmap for the SOC 2 audit. A remediation plan should cover all gaps in the organization’s control environment and articulate detailed deliverables, timelines, and remediation owners. These elements are critical for meeting the objectives and monitoring the SOC 2 audit readiness progress.
All in all
The audit readiness assessment is essential for getting a successful SOC 2 report. Scrupulous implementation of the assessment’s benchmarks would contribute to the organization’s confidence regarding the security of services and the availability of all necessary controls. However, the SOC 2 audit itself also requires significant resources and commitment from the auditee (the company) as the company will have to provide a lot of documentation and perform evidence testing.
The work does not stop even after a report is issued. The organization has to continuously maintain, improve, and monitor the audited controls to ensure a successful audit report the following year.
If you have any questions regarding the SOC 2 audit readiness assessment or need help with performing all the preparation steps, contact our Planet9 team. We’ll be happy to assist.
Website: https://planet9security.com
Email: info@planet9security.com
Phone: 888-437-3646