SOC 2 Type ll Compliance (How to Achieve it Faster)

In 2021, security attacks spiked by 31% compared to the previous year. With the number of attacks going higher every year, businesses don’t have the confidence to partner unless you demonstrate that you can protect sensitive data. One way to ensure this is using a SOC 2 Type II report. 

Why do you need SOC 2 Type 2 compliance? Is it because a client asked for it, your competitors are getting it, you want to bolster your security posture, or you aren’t sure why? We aim to give you much-needed clarity before you start your SOC 2 prep work. 

This article discusses what a SOC 2 Type 2 report is and why and when businesses should consider getting one. Also included are tips on preparing for a Type 2 audit and the time, cost, and effort involved in getting the report.

What is SOC 2 Type 2?

A SOC 2 Type 2 report assesses a company’s internal controls and systems concerning data security, processing integrity, privacy, and confidentiality. Developed by the American Institute of Certified Public Accountants (AICPA), it outlines the standards service organizations must follow to safeguard customer data against unauthorized access.

In this regard:

• Being SOC 2 Type 2 compliant indicates that an organization is attested to have strong internal controls that safeguard sensitive information by ensuring security, availability, processing integrity, confidentiality, and privacy.
• A SOC 2 Type 2 report is a document that includes a detailed assessment of the effectiveness of an organization’s internal controls in relation to the requirements stated under SOC 2 over a period of time (6-12 months).
• There is no formal SOC 2 type 2 certification but the report serves as a recognition of implementation and examination of operating effectiveness of controls by an independent auditor.

SOC 2 requires businesses to undergo an audit by an external AICPA-accredited auditor. Depending on the depth of the audit and the audit monitoring period, SOC 2 reports come in two types: Type 1 and Type 2. But more on that later.

Why should companies consider becoming SOC 2 Type 2 compliant?

Soc 2 Type 2 reports are a great way to demonstrate organization security and unlock sales deals as it provides evidence that you have implemented the relevant controls and they function effectively.

Here are some reasons why you should consider becoming SOC 2 Type 2 compliant:

1. Your customers have asked for it 

Enterprise customers prefer the more comprehensive Type 2 report for their vendor contracts. A Type 2 report gives them more assurance on your data security and internal controls.

2. You are already Type 1 compliant

The AICPA doesn’t prescribe any rules or hierarchy between Type 1 and Type 2 reports. Companies typically opt for a Type 2 report after receiving the Type 1 attestation.  

3. You want an external review of your security posture

It’s one thing to follow the best security practices and another to have a third-party credible authority vouch for it. SOC 2 Type 2 stands testimony to your organization’s cyber security information best practices in keeping with the framework requirements.

4. Your SOC 2 report isn’t an urgent need

Your internal controls get monitored over 3-12 months, during which the auditor tests them for design and operating effectiveness per SOC 2 requirements. So, you must opt for a SOC 2 Type 2 only if you have time on your hands – SOC 2 Type 2 reports can take 6-12 months. 

When working with Sprinto, a Type 2 report takes roughly three to four months to complete.  Read how Sprinto helped businesses fast-track their SOC 2 process.

Difference between SOC 2 Type 1 and Type 2

As we mentioned earlier, the primary difference between the SOC 2 Type 1 and Type 2 is the extent of detail sought during the audit and monitoring period.

While a Type 1 report reviews the design of your internal controls at a ‘point in time’ as per SOC 2 requirements, the Type 2 report, in comparison, checks their design and operating effectiveness over 3-12 months.

Type 1 audits, to that extent, are easier – since your organization gets evaluated at a point in time. And therefore, the evidence requirements are fewer too.

How to become SOC 2 Type 2 compliant?

To become SOC 2 Type 2 compliant, companies should understand the AICPA Trust Service Criteria, define compliance scope, implement controls with supporting evidence and engage an independent CPA to conduct audit.

That said, preparing for SOC 2 Type 2, especially if you are starting afresh, can seem daunting. But you can divide and conquer the SOC 2 behemoth by breaking it down into logical steps.

Here are the 3 major steps to be SOC 2 type 2 compliant:

Define your SOC 2 Type 2 scope 

SOC 2 compliance requires organizations to put in place controls in one or more of the five Trust Service Criteria (TSC): Security, Availability, Processing Integrity, Confidentiality, and Privacy. These controls get evaluated on an ongoing basis to ensure the protection of your data.

They were formerly known as Trust Service Principles.

While security is a mandatory SOC 2 need, the others aren’t. You can choose the TSC that’s relevant to your organization. Typically, the choice of TSC gets based on specific customer needs and the type of business.

For instance, while availability as a TSC is relevant for all cloud-hosted organizations, processing integrity makes greater sense for fintech or data processing organizations.

In our experience, most SaaS businesses choose Security, Availability, and Confidentiality as their scope.

Define your controls

Once you’ve picked the TSC that applies to your business, it’s time to implement controls that align with SOC 2 compliance. You can find control templates online or hire a consultant to help. 

To make things easier, classify these controls into two categories:

• Administrative controls: These controls show how you manage people and physical security. They cover documentation policies, onboarding and offboarding procedures, and more.

• Technical security controls: These controls ensure your technical infrastructure is secure and protect customer data from internal and external threats. 

Conduct a Gap Analysis

A SOC 2 gap analysis is a high-level review of your control environment to identify gaps between your current setup and SOC 2 criteria. Depending on the complexity of your environment, it typically involves 1 to 4 hours of evaluation with individuals who can review the controls at a high level.

This analysis covers relevant areas like HR, IT, and engineering. For instance, you might be asked, “Can you explain your process for vetting new hires? Does it include background checks?” 

The output will be a report highlighting the gaps and the controls you need to implement to meet SOC 2 criteria. These recommendations can range from tasks like documenting an annual risk assessment to specific actions like establishing a monthly vulnerability scanning and remediation program in your production environment.