Service Organization Controls (SOC) Reports: Types & Step to get
Pritesh Vora
Nov 27, 2024
SaaS adoption has increased across the board, especially in large enterprises. Accelerated digital adoption is a result of the COVID-19 pandemic. It has added to the growing cybersecurity risks of today’s cloud-based environments.
Cloud services provide large enterprises the opportunity to save costs and increase efficiencies. But, it requires them to share sensitive data with service providers.
SOC reports assure customers that their data can be safely handled by SaaS vendors. So, it drives greater transparency and builds trust. It also gives vendors a competitive edge. This article will explain what a SOC report is, why you need one, and the different types of SOC reports.
Key Points
- SOC reports are a compliance standard for service providers who handle sensitive customer data. E.g. healthcare, banking and SaaS companies.
- There are three types of SOC reports: SOC 1 for financial reporting, SOC 2 for design and operational effectiveness of internal controls and SOC 3 for presenting SOC 2 report information to the general public.
What is a SOC Report?
A Service Organization Controls (SOC) report is a detailed account that offers an impartial overview of an organization’s internal controls, specifically focusing on finances, security, privacy, processing integrity, and availability. It is produced after an audit by an independent third-party AICPA-certified public accountant (CPA). SOC audits cover one or all the trust service criteria or the trust services principles:
SOC audits cover one or all the trust service criteria or the trust services principles:
Thus, SOC reports detail the vendor lifecycle and offer actionable feedback on vulnerabilities. This helps the organization remove inconsistencies, if any.
Having a SOC report sends a strong signal to customers that your organization upholds its policies and procedures. Independent third-party auditors create and confirm these SOC reports. The American Institute of CPAs oversees these auditors, specifically SSAE 18 standard compliance.
SOC examinations are not formally required. However, they’re often requested by large enterprises to ensure that vendors operate in a compliant and ethical manner. You can help prospects make easy hiring decisions by presenting your platform as completely risk-free.
SOC 2 Checklist:
Before presenting a SOC 2 report to your stakeholders, you must conduct a SOC 2 audit conducted by third-party auditors. Having strong support before the audit goes a long way.
To assist you, we’ve created a simple SOC 2 checklist to expedite the process of obtaining the SOC 2 report. Take a look below.
Why do you need a SOC Report?
SOC reports apply to organizations that provide services or software such as financial services, payroll, healthcare, and data centers. It also applies to third-party service providers like web hosting, cloud storage, and software-as-a-service (SaaS) companies.
Such organizations store, process, or impact the financial or sensitive data of their user entities or clients.
SOC reports help customers to understand a vendor’s security and legitimacy of data and systems. It also enables vendors to fix flaws and identify vulnerabilities before customers do.
Most large enterprises need a SOC 2 report before they onboard a service provider. It can be difficult to determine which type of SOC report fits your specific business needs. Hence, let’s understand what each type of report entails.
Recently, Dassana decided to choose Sprinto based on its user-friendliness, automated workflows, design, and affordability. Owing to this, they got SOC 2 audited in 2 weeks within 3 sessions.