The American Institute of Certified Public Accounts (AICPA) defines a SOC (System and Organization Control) examination as an audit of controls at a service organization relevant to security, availability, processing integrity, confidentiality, or privacy. It is an auditing procedure that ensures service providers securely manage data to protect the interests of the organization and the privacy of its clients. The reports are part of a suite of standards used to measure how well a given service organization conducts and regulates its information.
What is a SOC 2 Report?
The SOC 2 report focuses on non-financial reporting controls as they relate to a system’s security, availability, processing integrity, confidentiality, and privacy. Unlike a SOC 1 report, which focuses on financial controls, a SOC 2 report is more concerned with data management to address specific criteria related to policies, procedures, and practices.
The 2 Types of SOC 2 Reports
SOC 2 audits and the resulting reports are done by independent auditors using the AICPA guidelines. Service organizations have two options in undergoing SOC 2 audits:
- Type I: Evaluates controls at the time of the audit, i.e., at a single point in time.
- Type II: Evaluates controls over a period, usually between 3 and 12 months.
According to the Cloud Security Alliance, both Type I and Type II reports audit “the design, implementation, and operating effectiveness of controls. But a Type II report provides a greater level of trust to a customer or partner since the Type II report provides a greater level of detail and visibility to the effectiveness of the security controls an organization has in place.”
Related Reading: Understanding the 5 Trust Services Criteria in a SOC 2 Audit
The 5 Key Sections of a SOC 2 Report
For businesses that handle client data, comprehending the finer points of a SOC 2 report is essential to ensuring they follow the strictest security and privacy guidelines. This report is divided into five main sections, each intended to give a thorough review of the organization’s procedures and controls in relation to the SOC 2 requirements. Let’s examine these sections in more detail:
- The Auditor’s Report
- Management Assertion
- System Description
- Description of Criteria
- Other information
1. The Auditor’s Report
The auditor’s report summarizes audit findings and how those findings align with SOC 2 criteria. It is not a “pass or fail.” Rather, it answers the question, “Did the company meet SOC 2 requirements? So, the auditor’s report is an overview of what, if any, issues the auditor encountered and is elaborated in section 4.
2. System Description
A complete systems overview, usually prepared by the service organization. It explains what every customer would want to know about the company, including the types of services it offers, along with a statement of commitment to the SOC 2 criteria.
3. Management Assertion
The formal declaration made by the management of the business assuming accountability for the planning and execution of the controls that were assessed during the audit. It guarantees the adequacy of the control design, the accuracy and completeness of the system description, and, in the case of Type 2 reports, the long-term efficacy of these controls. This section is essential because it reaffirms management’s dedication to upholding strict data security and protection guidelines, giving report readers trust in the company’s internal control environment.
4. Description of Criteria
The most detailed section of the audit report where all the service organization’s evaluated controls are listed. This section serves as a handy index where the reader can find the most important information in the audit.
5. Other Information
An optional part of the SOC 2 report. It is the only section within a SOC 2 report that is not audited. This section is an opportunity for the organization to report additional information about the audit.
Section 5 is where the service organization includes a formal response to any deficiencies reported in the audit. The service organization could, for example, add context to an unfavorable finding that may not have been apparent in the auditor’s description.
The response needs to address both an explanation of what went wrong and the underlying cause. It also needs to include mitigation efforts and a description of action taken to reduce risks and increase client trust. The organization can provide additional explanations and controls put in place as a result of the audit. Here, the audited company can include plans for both SOC 2 and continued compliance.
Getting ready for a SOC 2 audit includes several rigorous steps. The first is understanding the requirements and how the auditor will report compliance. Knowing what will be included in the SOC 2 Report can help service organizations understand the audit process.
Next Steps
Service organizations rely on trust. Customer trust is based on transparency and the unbiased findings of a third party, which a SOC 2 audit provides. If you’re looking for help getting up to speed or taking the big step to a SOC 2 audit, contact us. We can tailor our services to your unique niche.