SOC 2

What is SOC II?

SOC 2 (System and Organisation Controls 2) is an audit framework developed by the American Institute of Certified Public Accountants (AICPA). It is used to assess and certify a service provider's security, availability, processing integrity, confidentiality and/or privacy controls for systems and services. SOC 2 reports are typically of particular importance to technology and cloud computing providers, but may also be relevant to other organisations that store or process personal data.

What is it about?

SOC 2 is an audit standard designed to assess and certify the security practices of organisations, particularly service providers that offer cloud computing services. The standard was developed by the American Institute of Certified Public Accountants (AICPA) and focuses on five main areas: security, availability, processing integrity, confidentiality and privacy.

A SOC 2 report provides information on how well a company protects its systems and data. There are two types of SOC 2 reports: Type I evaluates the design of security controls at a specific point in time, and Type II evaluates how effective those controls have been over a longer period of time (usually at least six months).

Organisations often use SOC 2 reports to increase the confidence of their customers and business partners in their services.

Who is affected?

For companies that provide information technology services, especially if they offer cloud-based services, SOC 2 reports are particularly relevant. This can involve a wide range of companies:

• Cloud service providers: companies that offer infrastructure, platform or software-as-a-service (IaaS, PaaS, SaaS).

• Data centres: Companies that provide physical or virtual infrastructures for storing and processing data.

• IT managed service providers: Companies that offer IT services such as network management, system maintenance and security monitoring.

• Software developers: Companies that develop and host software, especially if this software processes personal or sensitive data.

• Financial service providers: Banks, insurance companies and other financial institutions that offer online services.

• Healthcare providers: Companies in the healthcare sector that store or process electronic health data.

• E-commerce platforms: Online shops and trading platforms that process customer and transaction data.

• Telecommunications companies: Providers of communication services for the transmission and storage of data.

SOC 2 was originally developed for technology and cloud computing companies. However, the standard can be useful for any type of organisation that stores or processes sensitive data and wants to strengthen the trust of its customers or partners.

Mandatory criteria:

• Not legally binding: SOC 2 is an industry standard, but not legally required

• Trust Service Principles: Focus on security, availability, processing integrity, confidentiality and privacy.

• Two types of reports:
  - Type I: Evaluates the design of controls at a specific point in time.
  - Type II: Evaluates the effectiveness of controls over a period of at least six months.

• Industry relevance: Particularly important for IT and cloud service providers, but also for other industries that process sensitive data.

• Contractual requirement: Many organisations require SOC 2 reports from their service providers as part of contractual agreements.

• External audit: Conducted by an external auditing company.

• No certification: SOC 2 is an assessment and documentation, not a formal certification.

• Confidence building: A SOC 2 report can strengthen the confidence of customers and business partners.

Advantages of SOC II?

• Confidence building: A SOC 2 report can strengthen the confidence of customers, investors and business partners in the security and reliability of a company.

• Competitive advantage: Companies with a SOC 2 report can positively differentiate themselves from competitors who do not have such an assessment.

• Risk mitigation: By identifying and remediating security vulnerabilities, the risk of data loss or breach can be reduced.

• Compliance: A SOC 2 report can help with compliance with other regulatory requirements, such as GDPR in Europe or HIPAA in the US.

• Contractual relationships: A SOC 2 report can strengthen the negotiating position when signing contracts with new customers or partners, as it serves as proof of robust security controls.

• Transparency: The report provides a detailed overview of an organisation's security controls and processes, facilitating internal and external communication on security issues.

• Continuous improvement: The process of preparing for a SOC 2 audit promotes the continuous review and improvement of security measures.

• Due diligence: For organisations using third-party services, SOC 2 reports provide a valuable resource for due diligence.

• International recognition: SOC 2 is internationally recognised and respected, which is an advantage for global companies.

• Flexibility: Organisations can choose which of the five Trust Service Principles (Security, Availability, Processing Integrity, Confidentiality, Privacy) are most relevant to them and adjust the audit focus accordingly.

How does the audit work?

• Preparation: Selecting the audit firm and defining the scope of the audit.

• Planning: Determining the time frame and the systems to be audited.

• Documentation: Collection and review of internal controls and processes.

• Fieldwork: Testing and review of controls and systems.

• Report: Summary of findings and any recommendations.

• Closure: Final report is submitted to the organisation.

• Follow-up: Implementation of improvements for future audits.

The process can take several weeks to months, depending on the size of the organisation and the scope of the audit.

BFMT's experts have the necessary qualifications and expertise to provide you with the best possible support and audit on this topic.