SOC Reporting Overview | Your Guide to SOC Reporting
Published on by Robert Ramsay in SOC Reports, Assurance
With cybersecurity concerns at an all-time high and new breaches hitting the news almost daily, more and more businesses are turning to SOC reports to provide peace of mind about data integrity and security. Maybe your largest customer just asked for a SOC report, or you just found out you need one to close a game-changing deal for your company – and now you’re wondering what exactly you need, how long it will take to complete, and what it might cost.
What’s a SOC report?
System & Organization Controls (SOC) reports are business-to-business audit reports that validate the effectiveness of a company’s internal controls over financial reporting (SOC 1) or data security, availability, and confidentiality (or, less commonly, also processing integrity and privacy) (SOC 2). These reports are designed to give companies the ability to demonstrate their commitment to maintaining robust control environments to their clients, vendors, and supply chain.
SOC 1 reports are mostly relevant for companies that manage financial transactions, like payroll companies or third-party administrators. SOC 2 reports are akin to IT audits, focusing on data security, availability, and confidentiality.
The less common member of the SOC reporting family is SOC 3, which is essentially an unrestricted version of SOC 2 that can be freely shared with the general public (e.g., posted on your website), acting as a stamp of approval regarding a company’s data security and privacy controls. Unlike SOC 1 and 2 reports, which are typically detailed and lengthy, a SOC 3 report is a summarized version, making it more accessible to the general public.
Beyond SOC 1, 2, and 3 – SOC 2 Plus
Beyond these three types, the AICPA has developed an extended version known as SOC 2+, which allows auditors to test and report on other frameworks beyond the AICPA’s trust services criteria. This helps businesses serving international customers or specific sectors like healthcare, cloud services, or defense, all of which require compliance with additional frameworks such as ISO, NIST, HITRUST, or the Department of Defense’s Cybersecurity Maturity Model Certification (CMMC).
SOC Readiness Assessments
Before starting the SOC reporting process, our team strongly recommends conducting a readiness assessment, which is similar to gap analysis and helps you get ready for your first SOC report. It’s a great way to identify any deficiencies up front and correct them – so it often leads to a better outcome.
During the assessment, we gather requirements, identify controls that meet the criteria, and assess the current state against where your controls need to be for a SOC report. And the output? A draft SOC report, which gets you further along the path to completing your first SOC report.
Determining costs
The cost and timeline for a SOC report can vary significantly based on the complexity of the operation, the number of locations, and the size of the business. However, businesses can manage costs by taking on more of the readiness assessment work themselves, or by having prior compliance experience with policies and procedures.
In a nutshell
SOC reporting is a powerful tool for businesses to demonstrate their commitment to maintaining strong internal controls over financial reporting and data security. Whether it’s a SOC 1, SOC 2, SOC 3, or SOC 2+, these reports provide businesses with a robust framework for building trust with their clients and ensuring they are meeting the highest standards of security and integrity.
Additional resources
A few other things you might find useful include our SOC Reporting FAQ, packed with answers to the questions we hear most often. Our DIY SOC reporting video series can help you streamline the process and reduce costs, and our video on how to read a SOC report offers valuable insights. Plus, if you’re wondering about the positive impact a SOC report can have on your business, check out our latest success story.
Whether you’re ready to start your SOC reporting journey or have some questions, contact us today to set up a free consultation with one of our SOC reporting experts. As always, we’re here to help.
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