Difference Between SOC 2 and SOC 3 Compliance

Difference Between SOC 2 and SOC 3 Compliance

As business owners of SaaS firms, navigating the world of SOC compliances and regulations can be challenging with its legal speak, audits and whatnot. Nonetheless, data security is paramount; therefore, it pays to explore this landscape with a good understanding of SOC compliance. 

In this article, we dwell on SOC 3 vs SOC 2 compliance and discuss their similarities and differences. 

What is a SOC 2 report?

A SOC 2 report is a detailed description of your SOC 2 audit process. It is an evaluation by an independent certified auditor of whether your business provides a secure, available, confidential, and private solution to your customers. The auditor releases the report after examining your organization’s control over one or more of your chosen Trust Services Criteria (TSC)

The SOC 2 report contains the auditor’s detailed opinion on your organization’s internal controls’ design and operational effectiveness.  It is, in essence, a testimony to the strength of your infosec practices. It is meant to enable the report users (your customers and customer’s customers) to assess and address the risks arising from their relationship with your organization.

To read more about SOC 2 compliance, read the Founders’ Guide to SOC 2.

To learn more about what a SOC 2 Report looks like and contains, read SOC 2 Report Example.

What is a SOC 3 report?

A SOC 3 report is a public account of your organization’s internal controls over the chosen TSC (Security, Availability, Confidentiality, Processing Integrity, or Privacy). While it is similar to SOC 2 in its scope, it provides a relatively generalized overview of how your organization approaches data security.  Therefore, organizations use them for marketing purposes to amplify their security readiness to prospective customers.

According to the American Institute of Certified Public Accountants (AICPA), a SOC 3 report is, ‘designed to meet the needs of users who need assurance about the controls at a service organization relevant to data security, availability, processing integrity, confidentiality, or privacy, but do not have the need for or the knowledge necessary to make effective use of a SOC 2 Report.

Here’s Google Cloud’s SOC 3 report example. 

SOC 3 vs SOC 2 Report Similarities

To best appreciate the differences between SOC 2 report vs SOC 3 report, let’s first dive into their similarities.

Audit Scope

The two frameworks are based on the five principles laid down by the AICPA’s Trust Services Criteria – data security, confidentiality, availability, privacy and processing integrity. The organization chooses the TSCs based on the services it provides to its customers. 

Here’s a quick overview of the five Trust Services Criteria.

Security 

It must be in scope for every SOC 2 audit and is, therefore, referred to as the common criteria. It requires you to enable access the SOC 2 controls, entity-level controls, firewalls, and other operational/governance controls to protect your data and applications. This TSC takes substantial effort and will require participation from your IT Development, IT Infrastructure, HR, senior management, and operations teams.

Availability

The Availability criteria in SOC 2 focusses on minimizing downtime and requires you to demonstrate that your systems meet operational uptime and performance standards. It includes network performance monitoring, disaster recovery processes, and procedures for handling data security incidents, among others. Business continuity, data recovery and backup plans are critical pieces here.  

soc 3 vs soc 2

Confidentiality 

This principle requires you to demonstrate the ability to identify and safeguard confidential information throughout its lifecycle by establishing access control and proper privileges (to ensure that data can be viewed/used only by the authorized set of people or organizations). Confidential data includes financial information, intellectual property, and any other form of business-sensitive details specific to your contractual commitments with your customer. 

Processing Integrity 

This principle assesses whether your cloud data is processed accurately, reliably and on time and if your systems achieve their purpose. It includes quality assurance procedures and SOC tools to monitor data processing. This is relevant for businesses that execute critical customer operations such as financial processing, payroll services, and tax processing, to name a few.

Privacy

It requires you to protect Personally Identifiable Information (PII) from breaches and unauthorized access through rigorous access controls, two-factor authentication, and encryption. Privacy is relevant to you if your business stores customers’ PII data such as healthcare data, birthdays, and social security numbers.

SOC 2 vs SOC 3 Audit Standard

Both the audit processes are based on the same standards (AT-C Sections 105 and AT-C Section 205) and guidance. For that matter, you cannot generate a SOC 3 report without first complying with the requirements for a SOC 2 report.

Difference Between SOC 2 and SOC 3 Compliance

The key difference in the SOC 2 vs. SOC 3 reports is in the reporting. 

Scope of the Report

SOC 2 reports comprehensively describe your audit process and contain your auditor’s detailed opinion on the design and operating effectiveness of your internal controls. They include the auditor’s opinion, management assertion, detailed system description, control testing, and results. SOC 3 report, on the contrary, does not describe the controls tested, the test procedures and the results of the test procedures. It contains only an abbreviated version of the auditor’s opinion, management assertion and system description.

Intended use of Report 

SOC 2 reports are need-to-know basis reports intended for the use of your organization’s management, your customers, and their customers’ auditors. SOC 3 reports, on the other hand, are general use reports that can be distributed publicly by your organization. Organizations typically display their SOC 3 reports on their website and use them for marketing their security posture.

If a SOC 2 report is for the many stakeholders of the organization you are selling to, SOC 3 is for that organization’s customers.

SOC 3 Report vs SOC 2 Type

SOC 2 reports come in Type 1 and Type 2. While a SOC 2 Type ii report affirms that your organization’s internal controls are in place to meet SOC 2 requirements at that point in time (it’s like a snapshot), Type ii confirms your controls’ operating effectiveness over time.A SOC 3 report, however, is only a Type 2 one; in that, it comes with an evaluation period. 

soc 2 vs soc 3

How to choose between SOC 2 vs SOC 3 Report

In our experience, organizations typically start with a SOC 2 Type 1 or SOC 2 Type 2 before going in for a SOC 3 report. This is because a SOC 3 report cannot be generated without first complying with the requirements for a SOC 2 report. Besides, SOC 3 requires the same planning and audit process preparation level as a SOC 2 Type ii report. Many organizations, therefore, decide to add SOC 3 only after getting their SOC 2 Type ii reports. 

Frequently Asked Questions

What is the SOC 2 and SOC 3 Difference?

The two reports differ in the detail the reports carry and the intended users of the reports

A SOC 2 report describes the auditor’s opinion, management assertion, controls, tests and results in detail. It is intended for use by the top management of the organization undergoing the audit process, its customers and their auditors. It’s for restricted use only.

A SOC 3 contains only an abbreviated version of the auditor’s opinion, management assertion and system description and doesn’t describe the controls tested by the auditor, the test procedures and the results of the test procedures. It’s for public consumption, and organizations typically display it on their website.

What is a SOC III?

SOC 3 is a security framework designed by the AICPA  to meet the requirements of users who need assurance about the controls at a service organization relevant to the five TSCs of security, availability, processing integrity, confidentiality, or privacy, but don’t have the need for or the knowledge necessary to make effective use of a SOC 2 Report (which is more detailed).

What is the difference between SOC 1, SOC 2 and SOC 3?

SOC 1 reviews your company’s internal controls over financial reporting, or, simply put, a SOC 1 looks at how well you keep your books. 

SOC 2 examines your organization’s control over one or more of the Trust Services Criteria – Security, Availability, Processing Integrity, Confidentiality and Privacy.

SOC 3 reports also test your organization’s internal control over one or more of the TSC, but these are essentially marketing tools and can be used by you to showcase how effective your internal controls are. You could post it on your website and even use it on your various collaterals since these reports are tailored for a general audience. Unlike a SOC 2 report, this report isn’t private and is always available in Type ii only. And since the SOC 3 report doesn’t go into as much detail as the SOC 2 , you really cannot just get a SOC 3 alone for your customers. A SOC 2 is a must.

Is there a SOC 3?

Yes, very much. For instance, AWS has made its whitepaper for its SOC 3 report public. Google Cloud also made its SOC 3 compliance report available. Anyone interested in these companies can read the reports. SOC 3, therefore, makes for a nifty marketing document too.

Get SOC 2 the Smart Way

We understand that you would have a lot of questions about SOC frameworks. We are happy to answer those and take your business successfully through its SOC 2 journey. Book a demo with us and learn about how Sprinto can help you.

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