SOC 2 Framework:

As data breaches and ransomware attacks continually make headlines and drive companies to incur multi-million dollar losses, SOC 2 compliance for SaaS is more important than ever. To hedge their losses and avoid unnecessary legal exposures, stakeholders and prospective customers often require service providers to prove their security posture. The SOC 2 framework helps you audit and strengthen your security controls to provide the highest level of data protection and demonstrate this capacity to all interested parties.

Let’s examine the SOC 2 framework and how you can use it to increase your security posture and stakeholder trust.

Is SOC 2 a Standard or Framework?

SOC 2 can be considered an industry standard—although it is not a legal requirement for many companies—and it is commonly referred to as a framework. This security framework was designed by the American Institute of Certified Public Accountants (AICPA) to help service organizations improve their cybersecurity posture. The SOC 2 AICPA framework is based on the Trust Services Criteria (TSC) that covers five core service categories. The TSC categories include security, availability, processing integrity, confidentiality, and privacy.

A SOC 2 attestation helps reassure prospects and stakeholders that your company upholds the highest cybersecurity standards so they can trust you to safely handle and protect sensitive information. As the AICPA designed SOC 2 to help service organizations that handle customer data audit their security controls and processes, you can use this optional security compliance audit to demonstrate a commitment to protecting sensitive customer information.

What Framework Does SOC 2 Use?
What is the SOC 2 framework?

The SOC 2 framework is an auditing guideline that helps service organizations assess the efficiency of their information security measures and controls. The SOC 2 framework outlines the SOC 2 certification requirements. Notable SOC frameworks include SOC 1, SOC 2, and SOC 3—more on those below.

SOC 1

SOC 1 audits focus on your financial controls and whether your SaaS services can directly impact your client’s financial statements. It’s conducted by an external auditor, typically a CPA, who issues a SOC 1 report attesting to the performance of your financial controls. A SOC 1 report will include the scope of the evaluation, your responsibilities, control designs, system description, type of report, and the auditor’s opinion. It helps reassure stakeholders and prospects of your capacity to handle sensitive financial data.

SOC 2

SOC 2 audits focus on service operations and compliance and are based on the five Trust Services Criteria set by the AICPA—security, availability, processing integrity, confidentiality, and privacy. While the five criteria are vital to cybersecurity, security is the only mandatory SOC 2 requirement and is often termed “common criteria” in SOC 2 audits. You have a choice of two SOC 2 reports—SOC 2 Type 1 and SOC 2 Type 2—with the latter setting the gold standard for security controls and compliance for SaaS providers. The SOC 2 compliance isn’t mandatory but is highly beneficial for SaaS providers, cloud service providers, data centers, and HR management services.

SOC 3

SOC 3 reports are stripped-down versions of SOC 2 Type 2 reports and are meant for the public domain. Due to its comprehensive nature, a SOC 2 Type 2 report will contain privileged information about your security controls. As such, you may not use the attestation as-is because it could invite threat actors to penetrate your systems. A SOC 3 report removes all the sensitive information to let you incorporate the attestation report into your marketing efforts.

Is SOC 2 a Governance Framework?

Technically, a SOC 2 framework isn’t a governance framework by itself. However, you can make it a part of your company’s broader risk management and governance framework. While it provides criteria and guidelines to evaluate and report security controls and processes, its application is limited to the five Trust Services Criteria.

A governance framework helps establish and maintain effective governance practices and structures within your company. They guide overall organizational governance, from decision-making to accountability and risk management.

While the SOC 2 certification requirements may help address governance issues such as the implementation of procedures, policies, and controls, it primarily focuses on helping SaaS providers prove their capacity to protect data.

However, you may use SOC 2 alongside governance frameworks such as the Information Technology Infrastructure Library (ITIL) or Control Objectives for Information and Related Technologies (COBIT) to establish top-notch governance practices.

What Is the Difference Between the NIST Framework and the SOC 2 Framework?

The National Institute of Standards and Technology (NIST) framework provides guidelines and best practices for security controls for federal information security while the SOC 2 framework was developed for service providers who use the cloud to handle customer data. Let’s take a closer look at each of these frameworks:

NIST Framework

NIST CSF publishes the NIST 800-53, which is the world’s most comprehensive and respected security publication. The NIST framework comprises eight control families covering over 900 requirements that federal agencies and federal contractors must have in place.

The NIST compliance is mandatory if you’re a federal contractor. But you only need to adhere to the controls related to the data security level—high, medium, or low—of the information you handle. The NIST CSF framework has five core functions: identify, protect, detect, respond, and recover.

SOC 2 Framework

SOC 2 operates on five Trust Services Criteria and offers three reporting options—SOC 1, SOC 2, and SOC 3. SOC 2 compliance isn’t a mandatory requirement. It helps service providers demonstrate their capacity to protect and handle sensitive information.

NIST vs. SOC 2

While the NIST and SOC 2 frameworks focus on cybersecurity, they serve different purposes and use distinctively different approaches. NIST provides a guideline to help companies across all sectors and industries mitigate cybersecurity risks, while SOC 2 applies to service providers.

Unlike SOC 2, which requires SOC reports, the NIST framework doesn’t have a specific reporting mechanism. Companies may use the NIST framework to implement controls that bolster their security posture, but the final product lacks a standardized format.

Ultimately, the NIST framework helps businesses manage cybersecurity risk at the organization level, while the SOC 2 helps service organizations evaluate their security controls and processes.

Starting SOC 2 compliance journey? Use a SOC 2 framework download to help you hit the ground running.

What Are the Pillars of SOC 2?

The five pillars of SOC 2 include:

1. Security

This pillar is the only mandatory criteria. It focuses on helping you secure your IT system and sensitive data from unauthorized access, disclosure, and destruction. It evaluates your IT setup to ensure that you’ve enacted proper safeguards to mitigate security risks. Also, it evaluates controls such as data encryption, user authentication, logical access controls, and network security.

2. Availability

This standard assesses if your safety and security controls live up to the standards you’ve promised your clients. It assesses if your controls are operational and available whenever your clients need them. The criteria covers measures such as fault tolerance, redundancy, disaster recovery planning, and continuous service availability.

3. Confidentiality

This section checks your firm’s capacity to safeguard sensitive client data such as PII, financial information, and intellectual property. The core objective is to protect confidential information from unauthorized access and misuse. It covers security controls relating to encryptions, data classification, confidentiality agreements, and access controls.

4. Processing Integrity

This pillar evaluates your data processing processes for accuracy, timeliness, completeness, and validity. The principle seeks to ascertain if your systems and processes run as intended to produce accurate results. It covers security measures such as error handling, data validations, and reconciliation procedures to ensure data integrity during processing.

5. Privacy

This section addresses your capacity to collect, use, retain, and dispose of Personally Identifiable Information (PII) as dictated by privacy laws and regulations. The main objective is to ensure utmost privacy protection and compliance with privacy laws. It covers controls relating to data retention, consent management, privacy policy implementation, and data subject rights.

Except for compulsory security, deciding which SOC 2 criteria are relevant and applicable to your company can prove daunting. Your auditor or cybersecurity partner will have resources like a PDF of AICPA SOC 2 guide to help with the process.

How Long Is a SOC 2 Certification Good For?

A SOC 2 attestation is valid for 12 months after the SOC 2 report is issued. Technically, your SOC report can’t expire—but it may become outdated—which may cast doubt about your security measures. Your prospects may reject a SOC report if too much time has passed since the evaluation. Given the dynamic nature of cyber threats, most companies renew their SOC 2 documentation yearly.

Prospects value SOC 2 attestation for the same reason—it offers insights into the current performance of your security controls. It may seem harsh, but a potential client won’t care that you had the absolute best security measures two or three years ago. Their primary concern is how your security controls perform today.

The yearly renewal simplifies the process of implementing top-notch internal controls over the long term. Demonstrating that you have consistently maintained a strong security posture builds confidence. Prospects will likely trust you with their sensitive data if your data protection efforts are top-notch and consistent.

What Is the Difference Between SOC 1 and SOC 2?

The core difference between SOC 1 and SOC 2 attestation is the scope of coverage. A SOC 1 report focuses on financial controls, whereas SOC 2 reports focus primarily on the five Trust Services Criteria.

A SOC 1 audit evaluates if your controls adhere to the identified control objective. On the other hand, the SOC 2 audit identifies and assesses whether your controls meet the TSC requirements.

A SOC report only evaluates the design and operational efficiency of the Internal Controls for Financial Reporting (ICFR). It helps reassure clients of your capacity to handle financial information safely and securely. Simply put, the SOC 1 report demonstrates your bookkeeping skills. You’ll need a SOC 1 audit if your bookkeeping practices directly affect your clients’ financial reporting.

SaaS firms that offer financial services such as billing and claims processing can benefit from a SOC 1 audit. SOC 1 audits follow the Statement on Standards for Attestation Engagements 18 (SSAE 18) and require you to set your key control objectives.

Conversely, a SOC 2 audit evaluates your firm’s capacity to handle and manage sensitive customer data safely and securely. An independent auditor, usually a CPA, will assess your firm’s control over one or more of AICPA’s Trust Service Criteria.

Security is the only mandatory criteria during a SOC audit, while the rest—availability, confidentiality, processing integrity, and privacy—are optional, based on the services you provide.

A SOC 2 report is an attestation of your state and the strength of your information security practices. In the report, the auditor offers a detailed opinion about the design and operational efficiency of your internal controls.

The essence of a SOC 2 report is to help prospects and stakeholders assess and determine your infosec posture before they can entrust you with their client’s sensitive data. SOC 2 compliance is beneficial to SaaS vendors, data centers, cloud computing firms, and IT-managed services.

How Do I Prove SOC 2 Compliance?

Proving SOC 2 compliance comes down to having an up-to-date SOC 2 report. First, you’ll need to conduct a SOC 2 compliance audit. That entails deciding the report you wish to use—Type 1 or Type 2—and hiring an independent auditor or CPA firm to conduct the SOC 2 audit.

A SOC 2 Type 1 audit is faster and cheaper but provides limited assurance. A SOC 2 Type 2 assessment is the gold standard but is costlier to implement. During the auditing process, your consultant will identify any shortcomings to help you ensure full compliance with the SOC 2 trust principles.

If your systems are fully compliant, the auditing body will issue a SOC 2 compliance report. You can then provide the report to your stakeholders and potential customers. Since the SOC 2 report, especially Type 2, offers detailed insights into your control designs and operational functionality, it’s an incredibly reliable way to prove SOC 2 compliance.

Each SOC 2 report includes an independent expert opinion about your firm’s security measures. In the opinion letter, an auditor can deem your controls qualified, unqualified, or adverse or may offer a disclaimer of opinion. Prospects use the auditor report to make an informed decision about the risk you pose to their businesses and clients.

Improve Your Security Posture and Grow Your Business with Trava

The snowballing effects of a single data breach drive modern-day stakeholders and prospects to exercise utmost caution when hiring service providers. They gravitate towards SaaS companies that provide the highest levels of data protection assurance. SOC 2 is an excellent way to demonstrate your firm’s commitment to data security. Proving SOC 2 compliance helps build customer trust and gives you a much-needed edge on the market.

Need help proving your security posture with SOC 2 compliance? Schedule a meeting today!