1. What is Service Organization Control 2 Type I / SOC 2 Type I?
Service Organization Control Type 2 / SOC 2 is an audit framework developed by the American Institute of Certified Public Accountants (AICPA) that measures the ability of the services provided by the organization to protect customer data, maintain confidentiality and information security. It is a framework that provides information about the quality of a corporation's management, operational and control systems and processes.
Although SOC 2 is not legally required, it is becoming increasingly important for companies that want to demonstrate their commitment to security and data protection. Conducting a SOC 2 audit is extremely beneficial to businesses as it increases customer confidence, provides a competitive advantage, helps with compliance, reduces risks and facilitates partnerships with larger companies.
During a SOC 2 Type I audit, your cybersecurity controls will be assessed at a specific point in time. This type of audit assesses the structure of security processes and measures without considering their effectiveness. It represents a snapshot of the controls in place at a point in time and is typically used to address security and compliance issues.
The purpose of a SOC 2 Type I compliance audit is to assess an organization's cybersecurity controls against a specific point in time and determine whether the internal controls in place to protect customer data are sufficient and designed properly. It is checked to what extent they fulfill the required criteria for trust services. SOC Type I audits and reports can be completed within a few weeks.
2. Who is a SOC 2 Type I audit intended for?
Organizations that store, process or transmit sensitive customer data and need to provide assurance to potential customers that their data will be handled securely may need a SOC 2 Type I report.
For companies undergoing an initial SOC 2 audit, it is recommended that they start with a Type I audit. It provides an opportunity to evaluate the design of controls and to identify gaps or weaknesses prior to a more in-depth inspection. Type I audits provide assurance to clients and stakeholders about the structure and implementation of controls at a given time.
In order to receive a SOC 2 Type I report, the service organization must hire an independent auditor to perform an audit of their controls. The auditor will evaluate the design of the controls and give an opinion on their effectiveness at that particular time.
3. What is the deadline for SOC 2 Type I Reports?
SOC 2 reports do not have an expiration date, but customers and other stakeholders with whom you may share the report may reject it as out-of-date if too much time has passed. The opinion expressed in a SOC 2 Type I report is generally considered valid twelve months after the date on which the report is issued. Because of this, the majority of companies renew it every year.
Any audit completed more than a year ago is considered morally "outdated" and less valuable to potential clients and partners. They want to know how well your security controls are performing right now, not a year or two ago. Being able to audit every 9-12 months allows you to have operational annual reviews, ensure continuous improvement and raise employee awareness of the importance of information security, etc. A 12-month audit window also results in a cleaner record, which creates increased customer confidence.
SOC 2 type I certification ensures that a company's systems and controls are designed and implemented in accordance with certain standards for security, accessibility, processing integrity and personal data protection. Here is the SOC 2 Type 1 scope and compliance criteria.
4. Audit Scope and Compliance Criteria for SOC 2 Type I
Scope:SOC 2 Type I compliance covers the design and implementation of controls related to security, availability, processing integrity and data protection. Certification is based on a one-time assessment of the control mechanisms and does not include verification of their effectiveness over a certain period.
Criteria:SOC 2 Type I compliance criteria are based on the Trust Services Criteria (TSC) developed by the American Institute of Certified Public Accountants (AICPA). TSC includes five categories: security, accessibility, processing integrity, confidentiality and privacy.
These criteria are designed to ensure that the company's controls protect the confidentiality, integrity and availability of its systems and data and that they are consistent with best practices and industry standards.
5. Steps to achieve compliance in a SOC 2 Type I audit
The SOC 2 Type I audit preparation process includes the following key steps:
- 1. Scoping and Planning: Ex it specifies the scope of the audit, including the determination of the systems, processes and control objectives to be examined.
- 2. Gap Analysis: The consulting organization performs an in-depth gap analysis to identify any deficiencies or non-conformities against the Trust Services Criteria (TSC) requirements.
- 3. Corrective Actions: Based on the gap analysis, the organization implements or improves controls to meet TSC standards.
- 4. Collection of documents and evidence: Documentation is prepared to prove the effectiveness of the control mechanisms.
- 5. Pre-testing: Prior to the actual audit, pre-testing may be performed to verify that the controls are working as required.
- 6. Conduct an on-site audit: The auditor conducts the audit activity on-site or remotely by performing test procedures to evaluate the design and effectiveness of controls.
- 7. Report and findings: After completing the on-site audit, the auditor prepares a report containing the conclusions reached.
- 8. Remediation and follow-up: If control deficiencies are found, the organization takes the necessary corrective action.
During a SOC 2 Type I audit, the auditor may pay attention to:
- Design of processes and implemented controls.
- Assess compliance of controls with TSC requirements.
- Document review, employee interviews and evidence gathering.
- Identifies and reports deficiencies in controls.
- Offer recommendations for improvement.
Preparation tips:
To successfully prepare for a SOC 2 Type I audit, it is helpful to familiarize yourself with the SOC 2 framework, create a readiness checklist, perform a gap analysis, establish policies and procedures, implement controls, train employees, conduct mock audits, collect necessary evidence and involve external experts to assist the process.
6. SOC 2 Type I Audit Program with some approximate timelines:
Pre-audit phase starting from month 1 - month 3:
I. Step 1: Establishing the appropriate policies and processes
II. Step 2: Establishing and documenting
III. Step 3: Update internal processes
IV. Step 4: Assess gaps and perform technical and configuration remediation
V. Step 5: Employee Training
Audit phase after month 4:
VI. Step 6: Initiate SOC 2 Type I Formal External Audit
VII. Step 7: Receive SOC 2 Type I post-audit report
VIII. Step 8: Keeping the SOC 2 Type I report fresh and healthy.
Of the two types of SOC 2 audits, SOC 2 Type I is usually the cheaper and less time-consuming option. This is because the audit window is shorter and the effort is less.
SOC 2 Type I is often faster and more cost-effective than SOC 2 Type II, but SOC 2 Type I tends to be less valuable among larger firms.
ISCS suggests starting with a SOC 2 Type I assessment first to get the confidence you need that you're on the right track before moving on to a SOC 2 Type II assessment.
We have all the necessary capabilities and resources to start a SOC 2 Type I audit consulting process! Feel free to contact us through our contact form and we will get back to you as soon as possible!