If your company is a service organization that offers cloud-based technologies and support services such as tax or medical claims processing, document management, data hosting, platform as a service, data as a service or other data security functions, you are already aware of the need to perform regular service organizations controls (SOC) examinations.
These SSAE assessments, generally performed annually, furnish internal and external stakeholders with assurance from a third-party auditor that your information security systems, procedures and protocols are in compliance with industry standards. Because the nature and type of SOC reports varies according to your organizational needs, it is important to delve into more detail, including the question of SOC 2 vs SOC 3 reports.
SOC 1 Reports Refresher
If your company is in the business of regularly performing financial statement audits, it is crucial that you are in compliance with industry regulations such as the Sarbanes-Oxley Act. The SOC 1 report provides a third-party auditor’s attestation as to whether your management’s descriptions of the suitability and design of your security controls and system are accurate. This SOC 1 report can either pertain to a specified date (Type 1) or relate to a particular period of time (Type 2).
What Are SOC 2 and SOC 3 Reports?
SOC 2 and SOC 3 examinations come into play when your business is not contending with the financial information covered in SOC 1 reports. The criteria involved in both SOC 2 and SOC 3 reports have been set forth by the American Institute of Certified Public Accountants (AICPA) and mandate that your organization’s controls are in compliance with specific trust principles.
These include the following:
- Security. Your cyber environment is protected against physical and virtual unauthorized access.
- Availability. The customer can access your environment for authorized use and operation.
- Processing integrity. All processing within your system is timely, accurate, complete and authorized.
- Confidentiality. All information determined to be private/confidential is protected according to any agreements that have been made.
Within each of these areas are specific requirements that must be met in order for an auditor to provide SOC 2 or SOC 3 certification. It should be noted that adherence to all of these five trust principles is not essential for SOC 2 or SOC 3 compliance; each business can determine which applies to their own needs and specify the parameters to the SOC 2 or SOC 3 auditor.
SOC 2 VS SOC 3 Report
In many ways, these examinations are quite similar. Both require that your company demonstrate that your controls have been designed and are operating in accordance with the relevant AICPA trust principles listed above. The auditor who conducts the assessment must, therefore, do a great deal of the same type of work regardless of whether a company has requested SOC 2 or SOC 3 certification.
What distinguishes the SOC 2 from the SOC 3 report becomes evident in terms of the final document the examiner produces. The SOC 2 report is restricted and can only be used by the organization’s management, customers and prospective clients. In addition, it contains components including opinions by the auditor and management, a complete description of all systems and security controls and results of all tests conducted by the auditor.
By contrast, the findings of a SOC 3 audit can be disseminated to anyone and everyone, including making them available on the company’s website. Much less complex in scope, the SOC 3 report contains a brief description of the company’s background as well as short auditor opinions and management assertions.
Whereas the SOC 2 examination goes into great detail about the nature of all security controls, the methods used to test them and in-depth auditor findings, the SOC 3 audit is much shorter and more general. Even so, it allows you to display a seal showing SOC 3 certification on your website. This visible badge of honor serves as a way to highlight your company’s dedication to ongoing information and controls security and often gives a positive boost to your marketing campaign.
Which Type of Report Is Right for Your Company?
When organizations are attempting to determine the best vehicle for showing that their security control environment meets AICPA standards, they must decide whether to obtain a SOC2 report, a SOC 3 audit or both. The answer to this question depends on your organization’s objectives as decided by management. The primary question to ask when making this determination is how you want to utilize the information. Are you only interested in broadly distributing the findings online, or are your priorities directed more toward producing a detailed document to be given to a limited group of direct partners and other stakeholders?
Of course, you always have the option to invest in documents that show both SOC 2 and SOC 3 compliance, a move that is particularly useful if the findings of your SOC 2 examination are stellar.
Whether your organization facilitates e-commerce businesses or stores or processes client data, it is incumbent upon you to prove that you follow best practices for keeping data secure. SOC audits offer flexibility and customizability while simultaneously furnishing management and stakeholders with varying degrees of valuable information. Regardless of which report or combination of assessments you ultimately choose, you can be sure that SOC 2 or SOC 3 compliance provides many benefits to your company and the customers you serve.