SOC report, why is it key for the company?

Through a SOC report carried out by an independent certified auditor, a company can demonstrate that it is responsible for carrying out an adequate control of the financial information it manages, transmitting security to customers and suppliers.

Evaluate the processing of data managed in the Cloud through third parties to provide security and trust – this is the raison d’être of SOC reports. Service Organization Controls, translated as controls of systems and organizations), whose importance has grown in recent years thanks to the digitization of many business activities.

However, the intensive use of this type of technology forces companies to invest resources to control the risks associated with the recording, storage, and processing of data through providers. This means that they have to implement appropriate controls to ensure the security, confidentiality, availability, and integrity of all information that is managed and hosted in the Cloud. And here, in a SOC 2 compliance guide, we will tell you all about this sphere of business.

What is a SOC?

An audit of Service and Organization Controls 2 is an Effective tool for evaluating a vendor’s security controls. It is an international standard developed by the American Institute of Accountants American Institute of Certified Public Accountants – AICPA), which had an update in March 2018.

The need for a SOC 2 audit arises when considering that any service provider, in particular technological, can pose a threat to your customers and the company that receiving the service requires having confidence that you will not receive Affectation. Cybersecurity has become a critical part of supplier risk management and a SOC 2 and our audit compliance guide is one of the ways to assess cybersecurity threats.

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There are SOC 2 type 1 and SOC 2 audit reports Type 2:

  • According to SOC 2 Type 1 cases, checks are assessed at a specific time. (as if it were a photograph), with the purpose of determining whether controls are properly designed and appropriate.
  • According to SOC 2 Type 2 reports, the Company controls are evaluated over a period of time, which may embrace a year. It is a historical review of the systems, to determine if Properly designed controls work properly throughout of time.

What are the principles of a SOC 2 audit?

However, SOC 2 audits address different issues in addition to facing an environment in which the risk of Cybersecurity is constantly evolving, data protection regulation. The roles that suppliers play in processes change frequently.

The answer is the principles of trust originally developed by AICPA, also known as Fundamental principles of security:

  • Security (Is the process well protected against unauthorized access?);
  • Privacy (Are we storing personal data and in what way?);
  • Process integrity (are they properly Safeguarding the data and information exchanged between Client and Supplier?);
  • Confidentiality (Are there restrictions on access to the information?).

In the execution of a SOC 2 audit, the Auditors should observe whether these are applied in supplier processes principles and if so, how they comply with them. This makes it possible to determine, in if the company complies with very few (or incorrect) principles, which It is in a lower state of security, as there are not enough controls to the security risks posed by your suppliers. It can also occur that the company is in a state of over insurance: too many wasted resources for risks you don’t actually have.

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How do companies implement and use SOC 2?

According to the compliance guide for SOC 2, the SOC 2 audit helps reduce supplier cybersecurity risks and, if the auditor knows, can strengthen your assessments and better support companies’ internal controls.

The implementation of such an audit requires a clear knowledge of the type of relationship with the supplier and, on this basis, an inquiry into the field of IT security in Relationships with elements of controls and guarantees. Business process owners in the first or second line of defense should also be consulted about the information and resources the supplier can use. It is also important to consider the compliance function, as often cyber security failures can have consequences such as fines and legal liabilities. In the case of international activities, it is necessary to comply with the legislation of other countries.

After identifying security weaknesses and creating a report, remediation and improvement actions must be taken as in any audit, to reduce the supplier’s risk to an acceptable level. The outcome of the SOC 2 audit, along with its findings and recommendations, can be incorporated into the risk management system and follow-up on the supplier’s progress.

Who keeps the SOC reporting?

Entities responsible for providing services related to the recording, storage and processing of data are responsible for providing SOC reports to their customers. The primary purpose of this type of reporting is to provide the organization with confidence that adequate controls have been implemented to manage business information reliably.

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As Underdefense specialists note, SOC reports are issued by an independent audit firm that has its own CPA certification, and this assures the rest of the Stakeholders, especially clients, that there are no cracks through which confidential or compromising information can escape. In fact, the main mission of this type of report is to delineate the maximum internal control over the financial information of another company that manages the business entity, assessing the inherent risk that exists in the implementation of its activities. Check SOC 2 2023 compliance guide for more information.

How does a SOC report benefit a company?

In addition to increasing confidence in the provision of outsourced services, the SOC report presents other benefits for any business entity. For example, it minimizes the impact of audits by regularly evaluating various security-related areas.

At the same time, it improves risk management, provides a competitive advantage for the organization, and optimizes business processes and controls. In addition, it is worth noting that if the audit is integrated into the normal work of the company, it can have a positive impact as a tool for marketing to potential customers. As Underdefense specialists note, any company of a certain size that normally operates in a digital environment should not ask itself whether it makes sense to hire a SOC report, but the key question is which SOC audit it is most interested in to verify the efficiency and security of processes entrusted to third parties. For these two audit firms, the answer lies in understanding the priority market from the company’s perspective, listening to client’s concerns, and determining the long-term benefits of identifying the reliability of their environment through such an audit.

Author: samanvya

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