SOC 2 Compliance: The Complete Guide [For SaaS]

SOC 2 Compliance: The Complete Guide [For SaaS]

SOC 2 is stressful. There are no two ways about it – especially if you’re going through it for the first time. Every audit is different and there’s no simple checklist to work through. It can feel like you’re being asked to build a piece of towering flat-pack furniture without the instructions. You can see all the pieces scattered across the floor and you know roughly where they should all end up, but it’s hard to know where to start. 

There’s a lot to digest and high costs to consider. It’s not something you want to get wrong. Don’t worry though, we’ve been through the SOC 2 process plenty of times and can break down the complexity for you. When it comes to SOC 2, there isn’t much we haven’t seen before.

We’ll give you an understanding of the importance of a SOC audit, why you need it, and what kind of evidence you’ll have to provide. We’ll also run you through common questions around how reports are structured and what you can expect in terms of pricing.

What is SOC 2?

In simple terms, a SOC 2 audit assesses whether a service organization is managing its customers’ data in a safe and effective way within the cloud. It provides evidence of the strength of your data protection and cloud security. However, it’s not a box-ticking exercise where you can simply follow instructions to gain certification. Instead, SOC 2 describes five important criteria that are required to maintain robust and effective security practices. Each company then details its own specific processes and controls that meet these criteria.

The report offers detailed, documented proof of the integrity of your data in the cloud to any organization that works with you. It’s especially relevant to organizations that handle or store customer data in the cloud, such as Software-as-a-Service (SaaS), cloud computing, or Platform-as-a-Service (PaaS) businesses. 

SOC 2 is often compulsory for service businesses aiming to partner with major enterprises. Think about it from the perspective of an organization bringing a new SaaS vendor into their supply chain. They might have excellent information security themselves, but now they’re trusting a third-party vendor with their data too. 

SOC 2 offers an effective way to establish this trust and offer peace of mind to both existing and prospective business partners.

What does SOC stand for?

The full name for SOC 2 is ‘Service Organization Control 2.’ It was created by the AICPA (American Institute of Certified Public Accountants).

There are two types of SOC 2 reports:

  • Type I reports describe a vendor’s systems and whether their design meets the five trust principles  at a single point in time.
  • Type II reports assess the operational effectiveness of the controls and systems which you have in place. A type II report therefore covers an ongoing and longer period of time than a type I report – usually within the region of three to twelve months.


SOC 2 Criteria

There are five key criteria described by SOC 2 for assessing how a business manages data. These are known as the five ‘trust service principles’ and every organization will have a unique approach to meeting these five criteria. 

Security

This principle refers to protecting your network and systems from unauthorized access. You need to show you have access controls in place so that only authorized users can access your applications and data. 

These controls could include things like network/application firewalls, two-factor authentication, and intrusion detection. Essentially, describing how you store customers’ data and which protections are in place to stop the wrong people from getting their hands on it. 

Availability

Availability describes the accessibility of your systems. For example, how you make sure that systems or services are accessible to both parties as set out in your service agreement. Controls to help meet these criteria would include network performance monitoring, disaster recovery processes, and your procedures for handling security incidents. 

Processing Integrity 

This principle is all about assessing whether cloud data is being processed correctly and your systems actually achieve their purpose. For example, controls need to be in place to ensure data is processed accurately, securely, and in a timely manner. Process integrity controls can include quality assurance procedures and tools to monitor data processing. 

Confidentiality

Next to trust service criteria is related to trusting the specific service providers who have access to certain data. To be specific, any data that should only be viewed by a specific set of people or organizations are considered confidential. This includes financial data, intellectual property, and any other form of sensitive business information. 

Controls to protect confidentiality can be put in at the network and application levels with both firewalls and stringent access controls. Encryption and data loss prevention tools are also valuable for safeguarding confidential information during its transmission. 

Privacy

Any data that can be used to identify an individual is described as personally identifiable information (PII). For example names, addresses, and social security numbers. The principle of privacy refers to how your organization’s systems deal with personal information. That includes how it’s stored, used, retained, and deleted. 

Private data can be protected from breaches and unauthorized access through rigorous access controls, two-factor authentication, and encryption.

Feeling overwhelmed?

Don’t be! You can take away hours of effort and stress by automating SOC 2 with Sprinto. We’ll run through the SOC 2 report structure then give you a breakdown of how Sprinto helps reduce both costs and workload for you and your team.

SOC Report Structure 

Unlike some regulatory reports, your SOC 2 report will be unique to your organization. It’s this specific information about how you comply with the five trust principles that give regulators and business partners the details they need about how you manage cloud data. Reports can range from 25 pages to well over 100, so we’ll outline the key areas of a report structure instead of walking you through a whole one.  

All SOC 2 reports have five main sections:

  1. Report from the auditor
    • The auditor’s opinion on whether your organization has passed. It will provide a summary of the entire SOC audit.
  2. Management assertion
    • This is where the company can make their own assertions about the systems and controls that have been subject to the audit. Usually a short section.
  3. System description
    • A detailed overview of the systems you have in place. This can run for 20-30 pages depending how complex the systems are.
  4. Tests of controls
    • This is the longest part of the report (sometimes reaching 100 pages), detailing every test performed throughout the audit. 
  5. Other information
    • A section for any additional information. 

There’s no sugarcoating it. Writing and reviewing a SOC 2 report is a big job, and a reason many organizations choose to outsource or automate the task.

SOC 1 vs. SOC 2 

Prior to 2014, SOC 1 was the compliance requirement that cloud vendors had to meet. A SOC 1 audit focuses on the internal controls in place related to financial reporting (IFCR). It’s essentially confirmation that a business has done its due diligence when it comes to how their service may affect their clients’ financial reporting. 

SOC 2 was introduced as more and more companies moved to cloud-based data storage. It focuses on the five trust principles outlined earlier in the guide and provides evidence of long-term, ongoing processes that can be trusted to protect customer data.

The Importance of SOC 2 Compliance 

Data breaches, phishing attacks, and ransomware are rampant in the US right now, and organizations don’t want to be the next headline. They’re more careful than ever about who they trust to handle their confidential cloud data. For some organizations, SOC 2 is about much more than peace of mind – it’s a strict prerequisite for doing business. 

Data breaches are a huge area of concern for organizations across the world. It’s no longer enough for businesses to only think about their own data security – they need to ensure vendors in their supply chain take cybersecurity seriously too. SOC 2 compliance gives both you and your customers the peace of mind that data is secure and safe from breaches.

SOC 2 gives potential customers assurance that you have a clear and documented understanding of how data security fits into your operations. It shows you have the tools in place to monitor for threats, respond to attempted unauthorized access, and keep services and business continuity going in the event of security incidents. 

A SOC 2 accreditation will help you differentiate against competitors without SOC 2, opening up more businesses to work with you and increasing potential revenue. On top of that, it will help to secure your own organization against data breaches that could cost you millions in fines and severe reputational damage. 

If you’re looking to work with top-tier organizations, SOC 2 tends to be non-negotiable. For security-savvy businesses, SOC 2 compliance is a minimum requirement when considering onboarding a new SaaS vendor. 

How Much Does a SOC 2 Report Cost? 

There’s no one-size-fits-all cost for SOC 2. It can depend on the size of your business and the complexity of your infrastructure. But one thing tends to be true for every organization – it’s not cheap.

SOC 2 Audit TypeEstimated timeEstimated cost
Type 1 Audit1-2 months$10,000 and $40,000
Type 2 Audit3-12 months$30,000 to $100,000

Without SOC 2 automation tools, there are other costs to bear in mind. You need to consider factors such as lost productivity, as your employees will be helping auditors instead of doing their day job. Training costs and build vs buy decisions for new tools can add up too. Taking lost time into account, costs can reach up to $150,000 for a SOC 2 audit. hey might have excelle

By reading this guide you’ve learned:

  • What SOC 2 compliance and why it’s important 
  • The five key SOC 2 trust principles
  • How to structure a report

Now it’s time to start. But first, you’ll want to take away any unnecessary stress and costs by automating the process where you can.

Become SOC 2 compliant without hassle

An automation tool such as Sprinto can take a lot of these secondary costs away. It can help to smooth out the complicated and time-consuming audit process of SOC 2, meaning your auditor can start work quickly. You’ll also free your employees up to work on what they’re best at.

We built Sprinto to replace all the manual, error-prone, repetitive busy work with automation. Our program is designed to make your move with confidence, rather than slowing you down. Unlike most other tools on the market, Sprinto offers 100% case coverage and completely manages the auditor for you. Sprinto helps you save hundreds of hours, fix issues quickly with continuous monitoring, and obtain a hassle-free SOC 2 attestation. Want to see it in action for yourself? Get your free demo here.

Posted in:

Cybersecurity SaaS Bussiness Security

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Pritesh Vora

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