SOC 2 Compliance

All businesses, large and small, are under increasing pressure to demonstrate that they are managing the risk of cyberattacks. This means having the right processes and controls in place to identify risks and vulnerabilities, protect information, as well as detect, respond, and recover in the event of cyber security incidents. As such, many businesses are turning to certification authorities and security frameworks to demonstrate privacy and security best practice and achieve compliance with regulatory bodies. System and Organisation Controls (SOC 2) is one such compliance framework that can help organisations to create a structured approach to cyber security.

WHAT IS SOC 2?

The SOC 2 audit framework was created by the American Institute of CPAs (AICPA) specifically to protect data in the cloud. The aim of the framework is to minimise the risk and exposure to that data and ensure that information security measures are appropriate for the cloud environment. The standard is commonly adopted by software vendors and those providing technical services and systems to third parties. However, it is also relevant for any service provider that stores customer data in the cloud.

SOC 2 is a technical audit that requires companies to follow strict information security policies and procedures for customer data under its Trust Services Criteria. The criteria in the SOC 2 checklist include:

1. Security – systems should be protected against unauthorised access.
2. Availability – systems should be available for operation and meet the objectives.
3. Processing Integrity – system processing should be complete, accurate, timely, and valid.
4. Confidentiality – systems should protect confidential information.
5. Privacy – systems should collect, use, retain, and dispose of information correctly.

Companies can select which trust service criteria to attest and be included in the report. Testing and reporting on these criteria are carried out via audits which are conducted in accordance with the AICPA audit guide. There are two types of SOC 2 reports; Type 1 and Type 2. A SOC 2, Type 1 report describes the service organisation’s systems and controls at a point in time. A SOC 2, Type 2 report provides more assurance as it covers a period of time. It captures the operating effectiveness and suitability of the controls and their design.

WHY IS SOC 2 IMPORTANT?

As more and more companies leverage the cloud to store customer data, SOC 2 compliance is becoming increasingly relevant. The framework helps businesses demonstrate that they are serious about integrity, ethics, and security. By achieving SOC 2 compliance, businesses can realise several benefits:

• Reduce risk – by adhering to strict information security policies and procedures, businesses are far less likely to suffer data breaches or violate user privacy laws.
• Lower costs – by avoiding data breaches. Not only is the immediate business impact avoided, but businesses can also avert regulatory action and significant reputational damage, which can be caused by a security incident.
• Build trust – by complying with SOC 2, businesses can prove to their customers that they are committed to information security. This helps to build trust and gain new business opportunities.
• Gain competitive advantage – not only are customers more likely to trust compliant organisations, but compliant organisations can only share data with other compliant organisations, enabling sustainable business growth.

WHAT ARE THE DIFFERENCES BETWEEN THE SOC 2, ISO & NIST STANDARDS?

While SOC 2 was developed specifically to help businesses manage the risk of storing data in the cloud, it is very similar to other information security standards that businesses may choose to comply with. SOC 2, the NIST Cybersecurity Framework (CSF) and ISO 27001 all approach cyber security, but in different ways and with emphasis on distinct areas of security:

• Scope – SOC 2, ISO 27001 and NIST CSF aim to instil trust with clients that data is being protected and use principles that cover some common areas. While SOC 2 and NIST CSF require organisations to prove that security controls have been implemented. ISO 27001 also requires them to demonstrate the establishment of Information Security Management System (ISMS), involvement of top management and continuous improvement.
• Flexibility – a lot of security frameworks come with very well-defined standards and have very explicit requirements. SOC 2 is similar to ISO 27001 and NIST CSF but allows businesses more flexibility on how to meet the criteria. A SOC 2 report includes the auditor’s opinion on how an organisation’s security controls fit the requirements.
• Market – each of the set of standards provides reputable evidence to prove that proper cybersecurity measures are in place. However, while they are accepted in most industries, ISO 27001 is more internationally recognised. SOC 2 is more suited to SaaS or cloud-based companies.
• Certification – SOC 2 and ISO 27001 audits both require independent accredited auditors. However, while SOC 2 involves an external audit, the results are different as there is no certification as such. Businesses receive an attestation report instead of a certificate of compliance. This confirms whether the security controls meet the relevant Trust Services Criteria in the opinion of an accredited auditor. Meanwhile, NIST provides a rating system that helps organisations to understand and build their cyber security maturity, but it’s not possible to gain certification.

WHICH STANDARD SHOULD YOUR BUSINESS COMPLY WITH?

There are many different information security standards that businesses can use to improve their cyber security posture. SOC 2 is one such standard that can certainly help businesses manage the proliferation of cloud-based security threats. However, while every framework will bring business benefits, compliance can still be confusing, especially when there is so much choice. At Infotrust, we have experience in the most common security standards, making us perfectly placed to help you decide which standard is best suited to your industry and business. We are committed to improving cyber resilience in Australia and beyond. We offer audit services that can help your business achieve compliance. We also provide a wide range of other security services, including penetration testing. To find out more about the security consulting services we offer, download our datasheet.

If you’d like to know more about NIST CSF or ISO 27001, we’ve also created a 3-part blog series where we compare these frameworks to find out which one would be most suitable for your business.