Service organizations looking to build out secure IT infrastructure can rely on SOC reports to audit their security controls. Besides strengthening and optimizing your security posture, SOC compliance also provides security assurance to your stakeholders. Read our guide to learn more about SOC reports, especially SOC 2 vs SOC 3, and how they can help you.
What Is a SOC Report?
A System and Organizations Controls (SOC) report helps a service organization audit its internal controls for systems or services offered to customers or other stakeholders.
There are three types of SOC reports:
- SOC 1 reports help service organizations audit their internal controls for financial reporting and are not typically distributed to the general public.
- SOC 2 reports are based on the AICPA Trust Services Criteria (TSC) and help service organizations audit security controls for various types of services.
- SOC 3 reports are less technical and geared toward marketing to the public as proof of security assurance.
Although SOC reports are not a legal requirement in most cases, they can help you optimize your security controls and strengthen your overall security posture.
What Is a SOC 2 Report?
A SOC 2 report helps service organizations audit the controls used in providing services to stakeholders or clients. SOC 2 reports are also intended for business audiences and tend to be more technical than SOC 3 reports.
Based on the AICPA Trust Services Criteria (TSC), the SOC 2 framework addresses five major trust principles upon which service organizations audit the effectiveness of their controls:
- Security of IT infrastructure and data processing systems
- Availability of essential services (e.g., cloud storage, application hosting)
- Processing integrity of systems, ensuring accuracy, completeness, and verification
- Confidentiality of information processing and implementation of access controls
- Privacy of highly sensitive personal data
SOC 2 reports are also grouped into SOC 2 Type 1 and Type 2 audits. The major differences between SOC 2 Type 1 vs Type 2 include:
- SOC 2 Type 1 reports evaluate the effectiveness of controls at a specific point in time while SOC 2 Type 2 reports audit control effectiveness over a much longer period.
- SOC 2 Type 1 reports are much less cumbersome to prepare for, unlike SOC 2 Type 2 reports, which require extensive preparation.
- SOC 2 Type 1 audits are conducted over shorter timepoints than SOC 2 Type 2 audits.
The SOC 2 report validity periods also differ for SOC 2 Type 1 and Type 2 reports.
Determining which SOC 2 report best applies to your organization is helpful in optimizing your security controls, especially with the help of a SOC 2 compliance partner.
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Who Does SOC 2 Apply To?
SOC 2 reports serve as tools for service organizations to show they meet the data security and privacy needs of customers, clients, and other stakeholders in the most effective ways possible.
A SOC 2 report will apply to your organization if you:
- Collect and process data via a data center
- Host applications on cloud or local servers
- Provide outsourced security services
- Manage cloud-based services (e.g., software-as-a-service (SaaS))
It helps to audit your service controls via SOC 2 reports to stay ahead of the greater need for data security assurance across business and regulatory environments.
What Are the Benefits of SOC 2 Compliance?
Beyond optimizing security controls and building greater security assurance amongst stakeholders, SOC 2 compliance will help you secure the privacy of sensitive data.
Furthermore, ongoing SOC 2 compliance will save you from reputational damage from data breaches along with any related security gap remediation costs. SOC 2 audits will also help you build robust cybersecurity risk management processes.
What Is a SOC 3 Report?
On the other hand, SOC 3 reports are meant for public audiences and are less technical than SOC 2 reports. SOC 3 reports are also distributed in places such as company websites.
SOC 3 reports are also based on the AICPA TSC principles and help a service organization report on its controls to lay audiences. However, there is no designation between Type 1 and Type 2 reports for SOC 3. All SOC 3 reports correspond to the longer, Type 2 timeline.
Who Does SOC 3 Apply To?
A SOC 3 report is designed to cater to public audiences that are interested in learning about a service organization’s controls but do not have the expertise to understand the technicalities of SOC 2 reports. Essentially, SOC 3 reports are much simpler versions of SOC 2 reports that help satisfy the needs of a service organization’s customers—often alongside their SOC 2 reports.
What Are the Benefits of SOC 3 Compliance?
Like SOC 1 and SOC 2 reports, SOC 3 reports also help demonstrate the effectiveness of a service organization’s controls regarding a specific service. SOC 3 compliance will help you:
- Demonstrate your commitment to data privacy and security
- Build trust amongst existing and potential customers
- Differentiate your organization within the industry
Since SOC 3 compliance is not a legal requirement, your organization will also stand out for its commitment to auditing the controls that handle customers’ sensitive data.
SOC 2 and SOC 3 Differences
When comparing SOC 2 vs SOC 3, the main differences include:
- SOC 2 reports are meant for business audiences, while SOC 3 reports cater to public interest.
- Preparing SOC 2 reports requires more expertise than that for SOC 3 reports.
- SOC 2 reports describe the details and results of the tests conducted during audits, while SOC 3 reports do not.
Determining whether to complete a SOC 2 or SOC 3 report will come down to your intended audience. In many cases, companies will conduct a SOC 3 audit after a SOC 2 audit.
Similarities of SOC 2 and SOC 3
Looking at the similarities of SOC 3 vs SOC 2, both SOC 2 and SOC 3 reports are based on the AICPA TSC principles. As such, you can use a completed SOC 2 report to later facilitate the completion of a SOC 3 report. Another similarity of SOC 2 vs SOC 3 is that both SOC 2 Type 2 and SOC 3 reports include an auditor’s opinion of the operating effectiveness of controls.
Are SOC 2 and 3 Reports Mandatory?
Legally speaking, SOC 2 and SOC 3 reports are not mandatory by any federal or state laws. However, increasing data privacy and security concerns are leading more companies to demand for SOC 2 reports during the negotiations leading up to business relationships.
As such, a SOC 2 report may be necessary if you want to provide data security assurance to:
- Potential and existing customers
- Business partners
- Third-party vendors
SOC 3 reports are also necessary for organizations looking to brand themselves as committed to high levels of data security and privacy. For many businesses, SOC 2 is de facto required.
How to Become SOC 2 and SOC 3 Compliant
As with most security audits, compliance with SOC 2 or SOC 3 starts with leveraging a SOC 2 audit checklist to streamline the compliance process. A SOC 2 audit checklist will help you:
- Identify which SOC 2 report will best address your compliance needs
- Test for compliance with the AICPA TSC principles
- Stay on track for SOC 2 compliance readiness
Conducting SOC 2 gap assessments is also essential to identifying gaps in SOC 2 compliance and further optimizing your security posture. The checklist used for SOC 2 audits can help you streamline SOC 3 controls, ensuring that you address all the steps necessary for compliance.
How RSI Security Can Help You
SOC 2 and 3 compliance are both critical to optimizing and bolstering your security posture and overall data security. Working with a SOC 2 compliance partner will help guide the process, ensuring a smooth compliance review and audit. RSI Security’s SOC 2 compliance experts team will help you develop effective processes to achieve and maintain SOC 2 compliance in the short and long term. Contact RSI Security today to learn more and get started!