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What Is SOC 2? Definition, Compliance, and Certification

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SOC 2 is a standard created by the American Institute of Certified Public Accountants (AICPA) to help companies ensure that their confidential data is secure and safe. Adherence to SOC 2 compliance demonstrates that an organization has established effective controls over its systems and processes regarding security, availability, processing integrity, confidentiality, and privacy.

Read this knowledge post to find out what SOC 2 stands for and what SOC 2 compliance is. Here, we give a detailed SOC 2 definition, reveal the benefits you can get by obtaining SOC 2 certification, and explain the main types of SOC 2 reports. Understanding what SOC 2 means and achieving SOC 2 certification is essential for organizations looking for the most effective ways to safeguard their sensitive data. 

What is SOC 2 certification?

Let’s start with the SOC 2 meaning. SOC 2 stands for System and Organization Controls 2,  a framework for auditing the controls and processes related to data security, availability, processing integrity, confidentiality, and privacy within an organization.

SOC 2 certification is crucial for businesses that handle sensitive customer data, such as data centers, cloud service providers, software-as-a-service companies, and other tech service providers. SOC 2 certification involves a comprehensive audit performed by independent AICPA-accredited auditors. The audit measures the effectiveness of the company’s controls and processes based on the AICPA Trust Services Criteria.

Why is SOC 2 compliance important?

Ensuring the security and privacy of sensitive information is essential for organizations across all industries. SOC 2 compliance can help you protect your critical data and show your customers, partners, and stakeholders that their information is being properly safeguarded. And not only that. Here are the key benefits you get with achieving SOC 2 compliance: 

  • Data security. SOC 2 compliance ensures that your organization has implemented efficient software and controls to protect your sensitive data against unauthorized access, breaches, and cyberattacks.
  • Risk management. SOC 2 compliance can help your organization identify and mitigate data security and privacy risks. By implementing the controls required by SOC 2, your organization can minimize the risk of cyber security incidents, data breaches, and compliance failures.
  • Regulatory alignment. SOC 2 compliance often aligns with regulatory requirements, such as  ISO 27001, HIPAA, GDPR, and some other standards. By meeting SOC 2 requirements, your organization can ensure consistency across multiple regulatory frameworks.
  • Operational efficiency. Following SOC 2 standards involves improving internal processes, controls, and security practices. This focus on operational excellence can lead to increased efficiency and resilience within your organization.
  • Third-party assurance. SOC 2 compliance provides third-party assurance to your customers, partners, and stakeholders that your organization’s systems and processes meet high security and privacy standards. This can help you build more reliable partnerships and increase your revenue.

SOC 2 certification proves that your company takes data security seriously. By obtaining the certification, you will build trust with your clients and partners, ensuring the safety of their data. 

What are the trust services criteria?

The Trust Services Criteria (TSC) is a set of standards that the AICPA has developed to help organizations evaluate the performance of their systems and data.

SOC 2 trust services criteria

The TSC provides a comprehensive framework for assessing a company’s controls and processes across five key areas.

Security

The security principle ensures that systems are protected against unauthorized access, both physical and virtual, through measures like encryption, firewalls, and access controls.

Availability

This principle focuses on ensuring that organizations maintain the availability of their systems and networks to meet the needs and expectations of their customers. 

Processing integrity

This criterion aims to provide assurance that the processes and operations are conducted accurately, reliably, and in compliance with relevant rules and policies.

Confidentiality

Data classified as confidential is protected as per agreements or policies. This principle ensures that critical information is protected against unauthorized disclosure, ensuring that only authorized individuals can access it.

Privacy

The privacy principle focuses on the use, collection, retention, disclosure, and disposal of personally identifiable information in accordance with specified privacy policies and legal requirements.

Organizations can use the TSC as a tool to measure the effectiveness of their current control practices and to identify areas for improvement. Organizations can present the TSC findings to their customers and business partners as evidence that they take risk management seriously. 

What are SOC 2 reports? 

SOC 2 reports are a set of standards developed by AICPA to evaluate how organizations safeguard customer data.  

There are two main types of SOC 2 reports:

Type I SOC 2 report. This report offers an overview of the organization’s systems and controls at a specific period of time. It evaluates whether the controls are designed and implemented correctly as of a particular date.

Type II SOC 2 report. This report incorporates the same information as a Type I SOC 2 report but accesses the operational effectiveness of the organization’s systems and controls over a longer period of time, typically 6-12 months. 

When deciding between these two types of SOC 2 reports, you need to consider your objectives and time limits. Type I SOC 2 report may be an optimal choice if you’re looking for a quick assessment since it provides an in-moment evaluation of your systems and controls.

On the other hand, the Type II SOC 2 report offers a more comprehensive evaluation of your cybersecurity posture by assessing the operational effectiveness of your systems over an extended timeframe. 

Why do enterprises need SOC 2 compliance certification?

Obtaining SOC 2 compliance certification offers several strong advantages to enterprises.

  • Building trust is essential for organizations handling customer data. SOC 2 compliance assures customers that an enterprise has taken necessary precautions to protect their information, reducing the risk of data breaches.
  • Revenue opportunities. SOC 2 compliance isn’t just about trust; it’s a key to unlocking revenue. Many large organizations require vendors to have SOC 2 certification before engaging in partnerships. Obtaining SOC 2 compliance certification gives enterprises a competitive edge, assuring partners that their data is in safer hands compared to competitors lacking this certification.
  • Robust cybersecurity measures. SOC 2 certification helps establish effective information security measures. When preparing for a SOC 2 audit, organizations adopt best cybersecurity practices, thus reducing the risk of data breaches and their costly consequences. 

Take note that SOC 2 certification is an ongoing process that comprises monitoring and evaluation. Organizations should carry out periodic audits of their controls to ensure they stay up-to-date with evolving threats. Such measures include performing regular risk assessments, implementing dedicated cybersecurity solutions, and introducing relevant information security policies.

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