SOC 2 audit checklist

SOC 2 compliance boosts competitiveness, ensures regulatory compliance, and smooths relationships between user organizations and digital service organizations. Compliance is essential for cloud-based data processors that must assure potential clients and protect their reputations.

Follow our SOC 2 audit checklist to achieve SOC 2 compliance. This checklist includes:

• Assessment of whether you need a Type 1 or Type 2 report
• Project scoping by comparing data processing operations with TSCs
• Communication of project goals to internal stakeholders. Feedback from senior managers and experts.
• Inventorying assets within the SOC 2 scope
• Risk assessment for all assets, focusing on TSCs and business needs
• Gap analysis to identify compliance gaps
• Developing a risk treatment plan
• Implementing controls to meet SOC 2 criteria
• Document reviews. Checking policies for access management, authentication, user management, encryption, firewalls, and incident responses.
• Continuous monitoring systems aligned with SOC 2 recommendations
• Internal audits to verify readiness for the SOC 2 audit
• Choosing a suitable audit partner
• Working with auditors to facilitate fieldwork and assessment
• Feedback following the publication of the report draft. Implementation of corrective actions.
• Receive the final report and SOC 2 accreditation. Continuous monitoring and compliance actions until the annual SOC 2 renewal.

Introduction

SOC 2 (Systems and Organization Controls 2) is a security framework created by the American Institute of Certified Public Accountants (AICPA). SOC 2 audits are carried out by Certified Public Accountants (CPAs) accredited by the AICPA.

When writing a SOC 2 report, auditors assess data security controls and policies according to AICPA's Trust Services Criteria (TSCs). If the organization meets SOC 2 standards, it receives accreditation for one year. This certifies that the company meets high information security standards and is a trusted partner for user organizations and customers.

Understanding SOC 2

SOC 2 is a security framework that grades security against five TSCs: Data security, availability, integrity, privacy, and data confidentiality measures. SOC reports also show that companies deliver services that align with marketing promises and contractual agreements. They assure user organizations that service organizations are what they claim to be.

The use of TSCs gives SOC 2 audits a broad scope. Auditors produce a general security assessment of a company's data security posture. SOC 1 reports focus on financial reporting measures.

There are two SOC 2 audit types. SOC 2 Type 1 reports assess static controls and policies. They show that an organization has robust controls at a single point. SOC 2 Type 2 reports assess continuous compliance and have 3–12 month audit periods.

The importance of SOC 2 compliance

Many digital companies demand that partners meet SOC 2 standards. SOC 2 compliance focuses on protecting data against external threats and vulnerabilities. Companies know that the partners they use to store or process data take security seriously.

SOC 2 is also invaluable from the perspective of service organizations. The SOC 2 framework guides service organizations as they design secure systems. Systems aligned with SOC Trust Services Criteria meet potential clients' requirements. Compliance gives compliant service organizations a competitive advantage.

SOC 2 also has regulatory compliance importance. Meeting SOC 2 standards helps companies comply with GDPR of Health Insurance Portability and Accountability Act (HIPAA) requirements. While SOC recommendations are tailored to the US market, they apply worldwide—enabling companies to secure cross-border data processing operations.

Who should consider a SOC 2 audit?

SOC 2 audits are advisable for companies that process, store, or transmit user data. Cloud Service Providers (CSPs) commonly use SOC compliance to retain the trust of user organizations. Online retailers may seek SOC 2 certification to demonstrate their commitment to securing financial data.

SOC 2 compliance is routinely used by health organizations that need to secure private health information (PHI). It also relates to financial companies seeking compliance with anti-corruption and data security laws.

Companies often seek SOC accreditation to meet customer demands. For example, cloud infrastructure providers may need to demonstrate their security credentials before clients use their services.

Who conducts a SOC 2 audit?

Audit firms carry out SOC 2 audits. These firms are independent of the company being audited and user organizations. Auditors are CPAs and should be AICPA-approved.

Auditors join the compliance journey after the preparation and risk assessment phases. Assessors check policy documentation and compare security controls to SOC requirements. They determine whether the organization satisfies relevant Trust Services Criteria.

Auditors visit the organization regularly to test security systems and verify staff training. They combine feedback from fieldwork and paper assessments in a SOC 2 report. Auditors may schedule corrective actions before awarding certification. They could also make an "adverse" judgment and deny accreditation. In that case, companies need a fresh audit process.

Publication of the report completes the SOC 2 compliance process. Reports are generally private, and use is limited to the service organization and relevant user organizations.

Auditors and service organizations work closely during the compliance journey. Companies need audit partners with strong customer service records and the ability to cooperate with clients to improve their security posture.

Steps to prepare for a SOC 2 audit

Successful SOC 2 audits depend on careful preparation. Much of the hard work takes place before engaging auditors, and there are many potential ways to slip up. Use these audit preparation steps and our SOC 2 audit checklist to ensure a successful outcome.

Define your objectives

Understand why you are pursuing SOC 2 compliance. Do your data processing operations require a SOC 2 audit? Or can you achieve compliance and serve customers without a formal assessment?

Set clear SOC 2 audit objectives from the start. For example, your SOC 2 project may focus on winning a single contract. It could aim to achieve GDPR compliance. Use that goal to guide planning and project implementation.

Remember that SOC 2 compliance comes with a price tag. Compliance is good value if you handle large amounts of sensitive data. However, if that does not apply, other security frameworks may be preferable.

Choose the type of SOC 2 report

There are two SOC 2 report types. SOC 2 Type 1 reports assess security systems at a single moment. The point-in-time approach generates a still-frame image of policies and controls. This process is quick and assesses the five Trust Services Criteria. It is also cheaper than Type 2 audits.

SOC 2 Type 2 reports assess compliance over between 3 and 12 months. They entail repeated audit visits to carry out fieldwork. Type 2 reports are more detailed than Type 1 reports. They suit situations where you need to provide robust assurance to partners. However, they are more time-consuming and expensive than Type 1 assessments.

Determine the audit scope

Audit scope determination defines the systems and policies that require assessment. Auditors rely on service organizations to scope their assessments, making it a vital step in the SOC 2 process.

Systems are in scope if they relate to services that the organization promises to provide and relate to the five Trust Services Criteria.

Consult internal stakeholders to determine what lies inside your audit scope. Enlist external experts to verify that you have made an accurate scoping assessment.

Companies may exclude network systems, web apps, or cloud assets from the scope. Organizations can also choose assessments on security and availability and leave out integrity, privacy, and confidentiality.

Just remember: audit scope should reflect your business activity. Partner organizations that expect robust privacy controls will want to read about them in a SOC 2 report.

Conduct internal risk assessment

Inventory all assets that fall under the SOC 2 project scope. SOC 2 compliance teams assess each asset against critical risks and vulnerabilities.

Take into account both internal and external risks. For example, customer financial data containers may face external security threats from ransomware and internal threats from unauthorized access and improper disclosure.

Remember to assess risks in line with AICPA's Trust Services Criteria. Assign each risk a score based on probability and impact. Document whether existing systems already neutralize critical risks. If not, the next stage involves identifying where action is needed.

Gap analysis and remediation

Gap analysis determines where existing controls are insufficient. Compliance teams compare policies and controls against the SOC 2 framework. They identify gaps and record them in a risk treatment plan. The treatment plan lists and prioritizes core risks that require urgent remediation.

Design and implement necessary controls

The next stage involves aligning security systems with SOC 2 compliance requirements.

For instance, a company discovers significant issues with ensuring data availability. In that case, regular data backups, redundancy for operational systems, and new change management policies may be necessary.

If confidentiality is a concern, organizations may need to implement or refine their access control systems. Encrypting data, changing data classification rules, improving audit logs, and addressing employee training could all play a role.

If privacy considerations are critical, companies might want to assess their data retention and disposal policies. Employee training in safe data handling and disclosure is essential. And the company may need stronger encryption for data centers.

This phase aims to meet audit requirements. Put yourself in the place of a SOC 2 assessor and compare all actions against Trust Services Criteria.

Undergo a readiness assessment

Before engaging auditors, organizations should schedule a SOC 2 audit readiness assessment. Readiness assessments employ gap analysis remediation to verify the closure of compliance gaps.

Assessors interview stakeholders to obtain feedback and identify outstanding issues. The internal audit report confirms that the organization meets SOC 2 compliance standards and is ready for a full SOC 2 audit.

Choose an audit firm and begin the SOC 2 audit

As noted earlier, choosing a high-quality SOC 2 audit firm is critically important. Refer to the AICPA audit portal to find accredited CPAs.

When searching for auditors, you'll encounter large firms and independent specialists. Larger organizations tend to work with larger audit firms. Small businesses can often find cheaper rates with independent CPAs.

Consider plenty of options. Stick to AICPA-accredited specialists and verify that the CPA has an IT specialism. Use review websites to double-check that auditors have a solid track record.

When you find a suitable partner, arrange a SOC 2 Type 1 or Type 2 audit. Auditors will suggest a timescale and request appointments for on-site fieldwork. Agree on a plan and supply relevant information when requested.

Auditors will review documentation—including policies and procedures. They will carry out fieldwork to assess the design of the organization's information security systems. During Type 2 audits, assessors also check logging and monitoring to ensure continuous SOC 2 compliance.

Establish continuous monitoring practices

Continuous compliance is central to the SOC 2 Type 2 audit process. Companies must show evidence of proactive compliance management. They should actively seek vulnerabilities and update security systems before threats materialize. Companies must ensure security tools keep pace with cloud deployments or other technological developments.

Organizations should continuously monitor user activity and threats. Security teams must schedule periodic internal audits that are informed by SOC 2 compliance requirements. Updating employee training is critical. Up-to-date incident response plans should also handle crises if they occur.

SOC 2 compliance checklist

Achieving SOC 2 compliance isn't simple. However, the task is easier if you stick to the SOC 2 audit checklist below:

• Assess whether you need a Type 1 or Type 2 report
• Scope your preparation by comparing data processing operations with TSCs
• Communicate project goals to internal stakeholders. Obtain feedback from senior managers and experts.
• Inventory assets that are within the SOC 2 scope
• Carry out a risk assessment for all assets, focusing on TSCs
• Use gap analysis to identify compliance gaps
• Combine risk assessment and gap analysis to develop a risk treatment plan
• Implement controls to meet SOC 2 criteria
• Review documentation. Check policies for access management, authentication, user management, encryption, firewalls, and incident responses.
• Create continuous monitoring systems in line with SOC 2 recommendations
• Use an internal audit to check your readiness for the SOC 2 audit
• Choose an audit partner who understands your company and has a robust reputation
• Provide documentation and work with auditors to facilitate fieldwork
• Provide feedback following the publication of the report draft. Implement reasonable corrective actions.
• Receive the final report and SOC 2 accreditation

Common challenges and how to overcome them

SOC 2 projects vary depending on organization size, sector, and data processing activities. Despite this, compliance teams tend to confront similar challenges. When you understand SOC 2 compliance roadblocks, you are well-placed to overcome them.

Challenge 1: scope

One of the biggest challenges is knowing what lies in scope and what to ignore. Remember that SOC 2 audits concentrate on whether organizations meet their security obligations. Auditors will check promises to respect confidentiality or meet strict data processing integrity criteria.

Use the internal audit process to establish SOC 2 compliance boundaries. If clients don't expect constant data availability, don't make it a focal point of preparation. Foreground privacy and access controls instead. It all depends on what services you provide and what data you protect.

Challenge 2: picking the right report

SOC 2 Type 2 reports are more impressive and carry more authority. However, companies can experience problems by prematurely diving into the Type 2 process. Sometimes it makes sense to opt for a Type 1 audit to establish the SOC 2 scope and implement basic controls.

Type 2 audits assess operational security over time. Continuous compliance is challenging for inexperienced organizations, who may find a staged compliance journey more beneficial.

Challenge 3: documentation and evidence

Auditors expect documentation of security controls and processes. Purchasing threat detection systems or updating access management tools is insufficient. Companies need threat management and access policies that explain how they defend data and how users should act.

During the preparation phase, companies should document the architecture of their ISMS. Policy libraries must document core processes. Regular audits should update documents to reflect external developments. Many organizations neglect paperwork, but it's a critical part of the SOC 2 process. Don't get caught out.

Benefits of being SOC 2 compliant

Companies gain various benefits from achieving SOC 2 compliance. Most importantly, compliant organizations develop stronger security systems. Organizations improve their security postures and implement continuous monitoring to adapt to future threats.

SOC 2 certification makes service organizations more competitive. Cloud providers use SOC reports to assure clients about their data protection credentials. User organizations know that potential partners are serious about safeguarding data and privacy.

Customer trust is another common benefit. Companies that comply with SOC 2 standards experience fewer data breaches and respond to security issues efficiently. Customers trust their services - a significant advantage in today's digital landscape.

SOC 2 compliance also aids regulatory compliance. Companies meeting AICPA's TSCs tend to meet GDPR, CCPA, SOX, and HIPAA standards. Regulators look favorably on organizations that undergo SOC 2 audits.

Finally, compliance leads to efficiency gains. SOC compliance helps build efficient data handling and classification systems. Companies reassess the way they store data and streamline policies, which results in better customer service and more secure working practices.

FAQs

How frequently should a company undergo a SOC 2 audit?

Companies generally undergo SOC 2 audits when requested by user organizations. Companies should renew SOC certifications annually following a successful Type 1 or Type 2 audit. Annual visits from the same audit firm establish continuous assessments. Companies can update controls, processes, and policies to reflect changing threats and technical opportunities.

What are the potential consequences of not being SOC 2 compliant?

SOC 2 compliance failures result in lost contracts and regulatory penalties. Clients question whether companies are reliable security partners, and customers reconsider purchasing decisions. Previously compliant firms may also lose track of emerging threats, creating new data security risks.

How does SOC 2 differ from other compliance standards like ISO 27001 or HIPAA?

SOC 2 assesses service organizations' business operations. Auditors compare companies' promises with Trust Services Criteria to determine how closely the promises match existing controls and policies.

ISO 27001 is a general standard for designing Information Security Management Systems. It provides a flexible register of controls for almost all industries. Compliance involves a broad approach to security - not just protecting data related to business operations.

HIPAA is a specialist health compliance standard. Many HIPAA rules fit into the SOC framework, and SOC 2 compliance helps companies protect health information. However, health organizations should undergo specialist HIPAA audits to ensure they meet privacy regulations.

Conclusion

SOC 2 compliance smooths relations between digital companies. Compliant cloud providers or financial companies secure data and ensure user privacy. User organizations know that third-party providers are dependable and safe to use. Compliance builds trust and long-term business relationships.

Companies that handle data or provide third-party cloud services should be SOC 2 compliant. Boost competitiveness, protect your reputation, and begin preparation for your first SOC audit today.

Disclaimer: This article is for informational purposes only and not legal advice. Use it at your own risk and consider consulting a licensed professional for legal matters. Content may not be up-to-date or applicable to your jurisdiction and is subject to change without notice.