What is SOC 3 Report – Detailed Guide

66% of US customers wouldn’t trust a company hit by a data breach. In the realm of business, it’s often said that customers reign supreme. You market your product and services so much but what about building trust with your customers and being able to showcase that trust to the world?

The new generation of customers are well aware of data breaches and cyber-attacks and they value businesses that prioritize keeping their data safe and secure. As a service provider, you can win their trust using a SOC 3 compliance report that is approved by AICPA (American Institute of Certified Public Accountants).

With it, you can make your cybersecurity controls public, which is great for marketing purposes, by the way.  So, let’s learn more about it, its key differences from SOC 2, its audit process, and how you can achieve this report.

 

What is a SOC 3 report?

A SOC 3 (System and Organization Control 3) report is proof of a business’s internal controls for security, privacy, availability, confidentiality, and integrity. It is a public certification created by the American Institute of Certified Public Accountants (AICPA) to help organizations keep track of their financial reporting and cyber security. 

This report is made available for public consumption and is often used as marketing material for potential customers. It is customer-facing and doesn’t disclose confidential details, but instead highlights the company’s efforts to safeguard consumer data, emphasizing information security measures. 

How does SOC 3 differ from SOC 2?

The SOC 3 report is very similar to the SOC 2 report in terms of its scope. However, a SOC 3 report is only a generalized overview of a company’s security posture. You can say, it is like an attestation report for SOC 2 without releasing any private data. 

Here are the key differences between the SOC 2 and SOC 3 reports. 

Feature	SOC 2 Report	SOC 3 Report
Purpose	Detailed description in the report for service auditors and customers requiring in-depth security information	A publicly available customer facing report providing a high-level overview of security posture
Level of Detail	Comprehensive; describes controls, tests, and results	Limited; summarizes auditor’s opinion, management assertions, and system description
Audience	Restricted; shared with specific customers and service auditors under NDA	General public; can be posted on the website or distributed freely
Report Type	It can be Type I (point-in-time) or Type II (over a period)	Always Type II
Availability	Not publicly available	Publicly available

Do you need a SOC 3 report?

No, you do not necessarily need a SOC 3 report since it’s not a mandatory requirement. However, a SOC 3 audit report is good to have if you’re into Services, SaaS businesses, B2C, or B2B2C. It is easy to understand for the general public and hence acts like a tool to instill trust in your prospective customers. 

The SOC 3 security framework serves as a testament to the effectiveness of your access controls regarding any relevant Technical Security Controls (TSC). Plus, the viewer does not need extensive knowledge of the system or the signing of non-disclosure agreements (NDAs).

What are the components of a SOC 3 report: With Examples

The components of a SOC 3 report include the management’s assertion and the report of independent accountants. Here are three examples of live SOC 3 reports from Google, Grammarly, and Oracle. 

1. Google’s SOC 3 Report
2. Grammarly’s SOC 3 Report
3. Oracle’s SOC 3 Report

Now, let’s understand its sections in detail.

1. Management’s report of its assertion

In this section, the organization’s management evaluates its performance and outlines the security, availability, processing integrity, confidentiality, and privacy controls it has implemented.

They’ll also specify the Trust Service Principles (TSP) criteria they’ve chosen for their System and Organization Controls (SOC) report. Essentially, management is saying that their controls meet these criteria.

2. Report of independent accountants

The Report of Independent Accountants provides an auditor’s perspective. It explains the procedures the service auditor conducted to assess the controls. Based on their examination, the auditor gives their opinion on whether the controls are well-designed and effective during the audit period. This independent opinion adds credibility to management’s claims.

How to get a SOC 3 report: 4 easy steps

Here are the steps you require to get the report:

Step 1: Choose the type of SOC audit

The first step for you to get a SOC 3 audit report is to decide the type of SOC audit you need to conduct. Most of the management responsibilities you require are similar to those of the SOC 2 report, except they don’t need to define a system description.

To get a SOC 3 report, you need to complete the whole SOC audit process. It makes sense to get both reports because the criteria for SOC 2 is the same as SOC 3.

Find more information about SOC 2 Type 2 certification.

Step 2: Prepare for the audit

Once you have made a decision about the SOC 2 and SOC 3 compliance framework to go with, you should execute each control for the applicable categories. Also, you need to document and show proof of your compliance for review by an auditor.

Step 3: Conduct a readiness assessment

A readiness assessment will determine whether or not your organization effectively manages its SOC 3 controls. It highlights weaknesses or gaps in your processes and policies before the final audit is conducted. You can conduct it internally, use a tool, or engage a consultant.

Step 4: Select a SOC auditor

You are at liberty to choose your auditor at this stage. But before you select one, make sure that their accreditation, experience, process and reputation align with what is required for your company.

The auditor will collaborate with your team over some time before coming up with a SOC 3 report. He/she examines internal security controls within your risk management program according to AICPA’s TSC standards. This may involve testing systems, interviewing employees, collecting evidence, requesting documents and reviewing documentation.

If the auditor agrees that management’s assertion is consistent with the relevant Technical Security Controls; then congratulations! You can publish your SOC 3 report on the website or any other channel.

Pro Tip: Automate the above steps with a GRC platform.

Advantages of being SOC 3 compliant

The main advantage of being SOC 3 compliant is being able to use it as a marketing tool. It is further beneficial to have it as it also shows that your company is in compliance with SOC 2 as well. 

Here’s some more take on why you should consider being SOC 3 compliant:

1. Make security your selling point

The process of getting SOC 3 compliant will make your organization evaluate its internal controls. It identifies weaknesses and gaps that may hamper your security posture. 

By addressing these issues and having them validated by the audit, the organization gains a clearer understanding of its overall security posture and can demonstrate a strong commitment to data protection.

Plus, the SOC 3 report’s marketability gives you a leg up over others. Its transparency lets potential customers easily see your dedication to security, building trust and setting you apart from competitors who might offer less transparent assurances.

2. Complement it with SOC 2

When you aim for SOC 3 compliance alongside SOC 2 security, it’s like getting a two-for-one deal in security assurance. SOC 2 Type II covers most of what you need for SOC 3, so you’re essentially doubling down on security benefits. 

It’s like upgrading your home security system to cover both internal and external threats, giving you peace of mind while also impressing potential customers with your dedication to protecting their data.

Best practices for SOC 3 compliance

1. Set up a data security plan

Develop clear guidelines for handling data based on industry standards. This includes how data is collected, stored, and processed.

2. Choose controls to review

While all SOC 3 compliance audits focus on data security, organizations can also choose to assess other internal controls too.

3. Select the right compliance software

Look for software with advanced features, a good reputation, and extensive integrations. 

4. Evaluate internally

Take a close look at your own controls and compare them to SOC 3 requirements to see where you might need improvement.

5. Fix any issues

Before the audit, make sure to address any shortcomings found during your evaluation. Fill in any gaps with new policies, procedures, or controls.

Why choose SOC 3 with Sprinto?

Data security is one of the highest endeavors of service organizations, but it can be equally intimidating. However, the advancement of AI tools that can assist with GRC (Governance, Risk, and Compliance) has made things easier.  

Compliance automation platforms have come into play providing a more intelligent, scalable, and cost-effective means. These platforms bridge meticulous regulatory requirements on the one hand and streamlined operational security processes on the other.

Sprinto, one such platform, can offer you a holistic view of your SOC 3 audit readiness in its dashboard hence simplifying progress tracking and prioritization of tasks. 

It simplifies and automates the security processes of evidence collection, control mapping, and documentation management through its intuitive user interface, making it sound like an easy task. Plus, the audit readiness assessment is complimentary to the platform.

Frequently Asked Questions

1. What does SOC stand for? 

SOC stands for System Organization Controls. It is a report that validates that an organization is practicing all its functions with privacy, integrity, security, availability, and confidentiality.

2. Differentiate between ISO 27001 and SOC 3.

SOC 3 is an attestation framework for service organizations while ISO 27001 is a certification for information security management systems. ISO 27001 certifies internal processes, while SOC 3 attests to external compliance.

3. Is ISO or SOC better?

ISO is a globally recognized information security certification while SOC reports are required when your company carries out business in the North American region. It depends on your company’s and industry’s requirements if you need ISO or SOC. However, ISO is more expensive and time-consuming than SOC. 

4. Is SOC 3 higher or lower than SOC 2?

Yes, SOC 3 reports are higher than SOC 2 reports as they contain more information and are intended for the general public. However, a SOC 3 report is usually less exhaustive than a SOC 2 one as the latter is more detailed and is used by shareholders and clients.