SOC 2 updates in 2023: Decoding the impact on your business

The compliance landscape is ever-shifting; as tech marches forward and new threats emerge, CISOS must be nimble to adapt to new compliance challenges that emerge. Along with CISOs, the frameworks and standards they rely on must also change.  One such standard, SOC 2, recently got an update from the American Institute of CPAs (AICPA). In 2023, the AICPA introduced SOC 2 updates with a focus on providing interpretive guidance for auditors. These changes, also called “Points of Focus,” are designed to enhance the effectiveness and relevance of SOC 2 audits. In this guide, we’ll dive into the latest SOC 2 updates and what they mean for service organizations. Plus, we’ll see how Sprinto can be your ally in navigating these shifts.

SOC 2, short for Service Organization Control 2, is a control framework designed to gauge the shields service organizations put up to guard customer data and confidential info. Designed to build confidence amongst customers, business partners, and stakeholders that their data remains safeguarded in an ever-evolving threat landscape. SOC 2 isn’t just a checkmark; it’s a must for service providers of all sorts.

However, before we move to the latest changes, if you are new to the framework, we recommend that you read our comprehensive SOC 2 guide to understand the SOC 2 Trust Services Criteria before reading this one.

Recent Changes in SOC 2: What do the updates deal with?

It is important to note that the changes to the points of focus in 2023, do not in any way alter the original Trust Services Criteria established in the 2017 TSC. The criteria remain the same and continue to be valid. However, they provide an additional layer of clarity for these criteria and update them to make them relevant to new technologies, threats, and vulnerabilities. The important changes in their risk assessment process and CPA Attestation Standards have been summarized below.

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Also check: Top 9 Risk Assessment Tools

Control Environments and Internal Control Setup:

• CC1.3 and CC1.5: These items address newly identified privacy concerns about the reporting structure of your org and disciplinary actions that may be undertaken.
  

These revisions talk about how to set up your internal controls and manage your information classification and architecture, data flow, asset inventory, and more to prevent unauthorized access.

Data Management, Privacy, and Communication with Customers:

• CC2.1: Tackles management, classification, completeness, and accuracy (C&A), and asset storage.
• CC2.2: Grapples with communication issues related to privacy knowledge and awareness, as well as the reporting of privacy-related incidents (relevant when Privacy TSC is applicable).
• CC2.3: Focuses on communication about privacy-related incidents (relevant when Privacy TSC is applicable).

They provide detailed guidance on managing and identifying threats to data integrity and recovery and provide effective strategies for mitigating data leaks and privacy incidents.

Risk Assessments and Vulnerabilities:

• CC3.2: Addresses the identification of vulnerabilities in system components and provides additional guidance on assessing the significance of risks for sub-service organizations.
• CC3.4: Evaluates changes in internal and external threats and vulnerabilities that an organization may encounter.

They deal primarily with a more detailed way to evaluate risks to the organizations by identifying new threats and vulnerabilities and how they interact with each other in case of a security event.

Logical and Physical Access:

• CC6.1: Addresses accessing and using confidential information for identified purposes when Confidential TSC is applicable.
• CC6.4: Addresses the recovery of physical devices.

They evaluate logical access controls and physical infrastructure in line with regulatory requirements. It deals with various access levels, including employees, contractors, vendors, and partners. It also details the device recovery process from laptops to work phones.

System Operations and Monitoring:

• CC7.3: Addresses the impact on, use, or disclosure of confidential information in the event of a security incident when Confidential TSC is applicable.
• CC7.4: Addresses the definition and execution of breach response procedures when the Privacy TSC is applicable.

They detail the control activities that should be considered during internal audits and IT assessments and how to outline them within SOC 2 reports. It also talks about the importance of laying out protocols in the case of breaches to minimize privacy concerns.

Change Management:

• CC8.1: Addresses the process for managing patch changes, details how to design changes and testing updates so it does not impact system resilience, and handling privacy requirements during the design and test phase.

They talk about the implementation of software patches and how to manage identification, testing, and performance so that sensitive information is not at risk during these changes.

Risk Mitigation:

• CC9.2 Addresses identifying and evaluating risks and vulnerabilities arising from vendor partnerships.

They offer guidance on residual risks after internal controls are in place and management has evaluated whether to accept, reduce, or share them. It outlines best practices for assessing software vendors and how to handle reporting incidents related to vendor risk. 

Checkout: SOC 2 Compliance Checklist: A Detailed Guide for 2024

Implementation Guidance: How to Interpret the AICPA SOC 2 Update?

• Increased scrutiny of inherent risk areas: Auditors will intensify their scrutiny of inherent risk areas, leading to more meticulous examination of potential vulnerabilities.

• Enhanced evidence requirements: There is a greater emphasis on evidence concerning data completeness and accuracy, requiring organizations to demonstrate the integrity of their data.

• Greater emphasis on vendor risk management: Greater emphasis on the importance of robust vendor risk management procedures.

Implications for Service Organizations: How Organizations can Adapt? 

• Detailed data requirements: Organizations must furnish more granular data, particularly in areas fraught with inherent risk. They must also have a clear idea of the residual risk after all mitigation strategies have been set in place as part of a risk mitigation strategy.

• Robust evidence needed: The prerequisite for robust evidence regarding data completeness and accuracy places an additional onus on organizations to ensure that auditors easily understand their data architecture and data flows.

• Vendor risk management: The need for fortified vendor risk management procedures becomes pivotal in meeting the updated standards. They need to have robust measures in place to assess vendor risk and react to breaches from the vendor side, whether that’s through an alert system or periodic review of vendor security.

• Adapting to new SOC 2 report formats: Service organizations must acclimate themselves to potential format alterations in SOC 2 reports to illustrate measures taken in the above three facets.

How to Stay SOC 2 Compliant?

Given that the compliance landscape keeps evolving, you need to stay abreast of the changes happening around you and plan to remain compliant or at least have visibility of when you run the risk of non-compliance. Suppose you have engaged a consultant to do your compliance or are doing it manually. In that case, there is considerable dependence on these individuals, and in case of attrition or the end of a vendor relationship, you may be stumped about where to get started. Hence, it’s essential to invest in software tools that help you achieve continuous compliance whether that is for SOC 2 or any other framework. Here’s how you can go about it.

Invest in a continuous compliance platform

Use a continuous compliance platform like Sprinto to give you instant and real-time visibility into your compliance with each framework. Round-the-clock monitoring of controls and tiered/prioritized gap analysis can help you ensure that you don’t ever step out of best practices. It can also help you by pointing out your residual risks and probability of risks under multiple functions with owners so you know where to focus.

Strengthen internal processes and policies

Beef up your organization’s core operations, especially in areas with inherent risks. Make them tougher and more resilient. One way to do this is to have detailed policies in place for disaster recovery and other contingencies so you ensure business continuity is not impacted by any breaches.

Check data accuracy and completeness

When you submit data for an audit ensure that the data isn’t just accurate but encompasses all the relevant data along with a holistic view of how it is processed. If you provide incomplete data it can impact how the auditor views your security posture.

Improve vendor risk management

According to a study by Verizon up to 62% of data breaches occur due to poor third-party risk management. This is emerging as a favorite way for malicious agents to gain access to company data. You need to periodically vet your vendor’s risk management policies to minimize your exposure and also have some system in place to detect vendor data breaches that may put your data at risk.

Get ready for format changes

Prepare for the possibility of SOC 2 reports changing their format requirements. Stay vigilant by keeping abreast of any updates or modifications to the reporting format. Being proactive in adapting to these changes will enable your organization to maintain its compliance posture effectively.

Preparing for Framework Changes: Advice from the Experts 

We know that navigating SOC 2 changes and keeping up with compliance updates can be taxing. These are the top recommendations by our leading ISC 2-certified compliance expert Devika Anil, to help you stay ready so that the next time there’s a framework update, you aren’t caught off guard.

Stay on top of changes

Make continuous education part of your compliance strategy. Ensure you regularly check the AICPA website for updates on the frameworks and regularly work with your team to review your compliance status in light of updates.

Invest in compliance automation

Make technology your ally in streamlining compliance, opt for a compliance automation platform to help you automate your tasks like evidence collection and monitoring. Once you set up compliance automation tools with your tech ecosystem, the tool can do a lot of heavy lifting, especially in giving you a prioritized list of the compliance gaps and how to solve each. It can also help make reporting a breeze to help you get stakeholders on your side and ensure you can ‘sell’ your security posture when needed.

Foster a collaborative approach

Compliance is a team effort. You have to collaborate with IT, Legal, HR, and other functions to ensure you meet compliance requirements. Having a clear decentralized responsibility chart where you outline expectations from other departments will help you ensure that the whole org is on the same page. Onboarding the function heads of these departments onto your compliance automation platform where compliance actions are mapped/tagged to them can help you expedite the entire process and minimize the follow-up needed.

Bring in a neutral third-party

Just like you can’t edit your writing, it’s very difficult to be objective about compliance status when you are evaluating your work. Bring in a third party to evaluate your compliance status and this fresh perspective can help you find blindspots.

Ensure thorough documentation and tracking

Make documentation the corner store of your compliance program, and ensure a simplified way of tracking all your documentation. If you are using a compliance automation platform, make that the hub for all your documents and training. Ensure that all employees mandatorily go through and accept the documentation during onboarding. This will show regulators, auditors, and stakeholders that you are committed to compliance across the board.

Get Help in Staying Compliant

Sprinto’s compliance automation can be your reliable ally in adapting to the nuances of compliance changes. Through our Custom Framework/Controls feature, we offer you the flexibility to tailor your compliance controls in alignment with the revamped SOC 2 requirements. With our continuous monitoring, you can proactively maintain compliance. Sprinto doesn’t limit its support to just SOC 2; we cater to over 15 other compliance frameworks. This ensures that your organization remains compliant across the entire spectrum of regulations. Need help getting started.