All about the SOC 2 framework and compliance requirements

1. What is SOC 2?

SOC 2 stands for System and Organization Controls 2. It was created by the American Institute of Certified Public Accountants (AICPA) as a way to help organizations verify their security and reduce the risk of a security breach.

As stated by AICPA, SOC2 reports provide “detailed information and assurance about the controls at a service organization relevant to security, availability, and processing integrity of the systems the service organization uses to process users data and the confidentiality and privacy of the information processed by these systems.”

SOC 2 is a compliance framework used to evaluate and validate an organization’s information security practices. To get a clear SOC 2 report, your organization's security controls will need to be audited (attested) against a set of common criteria to verify you have implemented the right policies and protocols to protect your own data and your customers information. A clear SOC 2 will help build trust with your stakeholders, partners, suppliers and let them know what measures you have in place to keep their data safe and secure!

2. Why is SOC 2 important?

SOC 2 is not required by law and therefore there are no penalties or fees for not having one, however customers often need to see your SOC 2 report before they agree to do business with you. Below you can find some of the reasons of having SOC 2 report and why it’s important for you and your customers:

I. Increase trust and reputation among your partners and competitors:

If you manage, process, or handle customer data, your customers need to know they can trust you before they give you access to that data. This is important because if you experience a data breach that compromises their data (or their customer’s data), their business will suffer too due to multiple different legislation established in European Union (EU) and European Economic Area (EEA), like NIS2, DORA, GDPR, AI Act, Digital Marketing Act and increased regulatory landscape. SOC 2 compliance shows your stakeholders that you have taken information security seriously and the necessary precautions to prevent a breach and keep their data safe. For this reason, a SOC 2 can help you build trust with prospects and positive impact your organization’s reputation!

II. Unlock new revenue opportunities that were previously closed before having SOC 2 attestation:

Not only does SOC 2 compliance help demonstrate your trustworthiness to prospects and partners, but it can also unlock deals that require a SOC 2 to begin with. Many large organizations, particularly in North America and Europe need to see a vendor’s SOC 2 before they’ll agree to do business with them. Without a SOC 2 report, your proposal may be forced to walk away from a nearly closed deal and even though your service may have been better from a cost, efficiency and effectiveness stand point of view.

However, even if your prospects don’t require you to have a SOC 2 on it, it can still provide you with a competitive advantage. Having a SOC 2 report shows prospects and customers that their data will be safer in your systems than with competitors without one. Having Information Security on your side is always the preferred option if you have to choose the right company to work with.

III. Strengthen and building a strong security infrastructure in your environment:

And finally, a SOC 2 can will help you implement a strong information security infrastructure. As you prepare for your audit, you will be implementing best practices and safeguards that will lower your risk of a data breach and the expensive consequences that come with a breach. The return on investment (ROI) in Security infrastructure always worth it, as this increase customer trust, your reputation on the market and may prevents you from bankruptcy!

According to statista, the average cost of a data breach in 2024 is $9.36 million. These expenses come in the form of paying employees additional compensation to mitigate the breach, fines or penalties, and loss of revenue as customers switch vendors. Additionally, a breach will negatively impact your brand’s reputation long term.

3. What does it mean to be SOC 2 Compliant?

It means you have implemented the appropriate security controls and have had those controls investigated by a third-party auditor. To get a SOC 2 report, you will need to hire an AICPA-accredited auditor to evaluate your data security and document the SOC 2 controls you’ve implemented. The auditor will then create a report of their findings and their attestation as to whether your organization meets SOC 2 criteria.

ISCS can help you prepare from an end-to-end perspective and guide you thru the whole journey from the very beginning into walk you thru the final step - inviting the AICPA-accredited auditor. The journey would be very bumpy and quite turbulent, if your organization is not ready. This is a long game, and it could take up to 2 years if your company is not security mature enough.

4. What is the SOC 2 Criteria?

The AICPA-accredited auditor will assess your information security against five categories, known as the five Trust Services Criteria (TSC) (formerly known as Trust Services Principles):

1. Security (Common Criteria (CC)): Your systems and data are protected against unauthorized access and disclosure.
2. Availability (A): Your information and systems are available for their intended use.
3. Confidentiality (C): Confidential information is kept confidential.
4. Processing integrity (PI): Data processing is complete, valid, accurate, and timely.
5. Privacy (P): Consumer data is protected and consumers are informed about the collection, use retention, and disposal of their data. The Trust Services Criteria represent the framework by which organizations are evaluated for SOC 2 compliance. Of the five criteria, the Security category is mandatory required to obtain a SOC 2 audit.

Within each of the TSC there are controls, practices, or processes that need to be met. The current version of the Trust Services Criteria – 2017 (With Revised Points of Focus – 2022), includes 33 core requirements under the security category and 28 additional controls across the other four criteria.

The controls within the security category, the common criteria, provide the foundation for the other four categories. Every organization seeking a SOC 2 must adhere to all of the controls in the security category. The other four categories — availability, processing integrity, confidentiality, and privacy — only need to be included in your SOC 2 audit if you want to create controls for the ones applicable to the way your business uses or processes data. For example, you should add confidentiality to the scope of your report if that criteria is relevant to your business.

Many early-stage companies will focus on the common criteria during their first year and add the additional categories as their business matures.

5. What are the SOC 2 Types and what's the difference between them ? (SOC2 Type I (1) vs SOC 2 Type II (2))

There are two types of SOC 2 reports you can get:

SOC 2 Type 1 (also known as SOC 2 Type I ) - A SOC 2 Type 1 report will detail your security controls at a single point in time, the date of your audit. This type of report verifies that the necessary controls have been implemented but does not include information about how effective those controls are. SOC 2 Type 1 is often faster and more cost-effective than a SOC 2 Type 2, however SOC 2 Type 1 tends to be less valuable among larger firms.

SOC 2 Type 2 (also known as SOC 2 Type II ) - A SOC 2 Type 2 report assesses your security controls over a period of time and tests how effective they are. You choose the length of your audit window depending on how long your controls are in operation. This window can be between three and twelve months. This type of report provides additional reassurance to stakeholders as it demonstrates how effective your controls are over time.

Both reports will assess the same criteria, however they are having some key differences that impact the length, cost, and thoroughness of your audit. It’s important to know which one you need before you start your SOC 2 compliance journey.

Difference Between SOC 2 Type I and SOC 2 Type II

I. SOC 2 Type I:

1. Scope: Evaluates the design of controls only at a specific point in time.
2. Focus: Reviews whether controls are appropriately designed to meet the SOC 2 Trust Service Criteria.
3. Documentation: Examines documentation and evidence of control design.

II. SOC 2 Type II:

1. Scope: in addition to the SOC2 Type I, here we must assess the effectiveness of controls over a predefined period, typically one year.
2. Focus: Reviews not only the design and implementation of controls but also their operational effectiveness through the review of evidence over the entire period.
3. Documentation: In addition to reviewing control design and implementation, requires evidence of control execution to demonstrate that controls have been consistently operating effectively throughout the assessment period.

Of the two types of SOC 2 audits, a SOC 2 Type 1 is generally the less expensive and less time-intensive option. On the other hand, a SOC 2 Type 2 report is the better option if you want a report that demonstrates your strong security posture.

6. How do I get a SOC 2?

You will have to go through the SOC 2 third-party audit process. This involves hiring an accredited third-party auditor from AICPA to assess your information security and create a report that details your security posture and the controls you have in place to protect your organizational and customer data. However, there’s a lot of preparation you need to do before you're ready for an audit.

Here’s an overview of what the full SOC 2 process looks like:
I. Scope your SOC 2 report, identifying which criteria are relevant to your business. ISCS can help you here.
II. Implement the required controls and test them. ISCS can help you here.
III. Hire an auditor from an accredited AICPA firm. ISCS can advise here.
IV. Run thru the audit and collect evidence and documentation. ISCS can stay on your side here and help you smoothly run thru the required evidences.
V. Finalize the SOC 2 audit activities and receive a SOC 2 report. ISCS can help you formalize and close the audit activities successfully so that we can celebrate together afterwards!

7. How long does it take to get a SOC 2?

The average SOC 2 process takes between six months to 2 years from the moment you start preparing the controls to when you have a completed SOC 2 report in hand. This is because you’ll need to see which controls are missing, set your security controls, test them, collect evidence, and then find an auditor. Once you’ve found an auditor, their assessment will take between 2 and 4 months.

ISCS can help you with obtaining both of the SOC2 Types (I and II). We possess unique experience and knowledge in the Security and Compliance areas that can help you unlock your security potential. Our Services for SOC 2 Attestation are:

1. Consulting service for you to evaluate what the right report is the correct one.
2. We can help you define the scope that you need and the underlying criteria that you must pass to achieve any of these two SOC 2 Type reports.
3. We can perform the audit preparation and internal audit/gap analysis assessment of your current environment to receive preliminary report of your status.
4. We can add a consulting service on top if you want to understand where the gaps are and what you need to remediate/fix to comply with SOC 2 requirements.
5. The top of the iceberg is our ultimate SOC 2 Audit and Consulting service that will fully guide you thru the entire SOC 2 journey and we will act as Subject Matter Expert (SME) and play a crucial end-2-end role for your success.
6. Once SOC 2 report is acquired, we can help you maintain compliance and stay in line with the newest requirements and keep your status in healthy state!

We have all the necessary capabilities and resources to start playing on your side without undue delay! Do not hesitate to contact us in our contact form and we will step-in the next 24 hours for you!