What is a SOC 2 Report?

A SOC 2 (Service Organization Control 2) report is a type of report that provides assurance on the security, availability, processing integrity, confidentiality, and privacy of a service organization's system. It is a widely recognized report that is often requested by customers, vendors, and other stakeholders as evidence that the service organization has implemented effective controls to protect their sensitive data.

The SOC 2 report is based on the Trust Services Criteria (TSC) established by the American Institute of Certified Public Accountants (AICPA). The TSC are a set of principles and criteria that service organizations must follow to demonstrate that they have adequate controls in place to meet their customers' needs.

There are two types of SOC 2 reports:

• SOC 2 Type 1 report: This report provides assurance on the design of controls as of a specific date.
• SOC 2 Type 2 report: This report provides assurance on the design and operating effectiveness of controls over a specified period (usually 6 or 12 months).

The SOC 2 report is typically issued by an independent auditor who evaluates the service organization's controls against the TSC. The report includes a description of the service organization's system, the control objectives, the control activities, and the auditor's opinion on the effectiveness of the controls.

Service organizations can use SOC 2 reports to provide evidence of their controls to customers and other stakeholders. SOC 2 reports can also help service organizations identify areas where their controls could be improved to protect their customers' sensitive data better.

Who needs a SOC 2 report?

Service organizations that handle sensitive data or provide services to clients that require assurance of security, availability, processing integrity, confidentiality, and privacy of their data often need a SOC 2 report. This may include:

1. Cloud service providers (CSPs) that provide Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS) solutions.
2. Data centers that provide colocation, hosting, and other IT services.
3. Managed service providers (MSPs) that provide managed IT services to their clients.
4. Software as a Service (SaaS) providers that handle customer data.
5. Health care providers, insurance companies, and other entities that handle sensitive personal or medical information.
6. Financial institutions, such as banks, credit unions, and investment firms.
7. Payment processors, such as credit card processors.
8. Any organization that needs to demonstrate the effectiveness of their controls to customers, vendors, or regulators.

A SOC 2 report provides assurance that the service organization has adequate controls in place to protect sensitive data and ensure the availability, processing integrity, confidentiality, and privacy of the data. This can help service organizations attract and retain customers who require a high level of security and assurance.

SOC 2 reports are based on the Trust Services Criteria (TSC), which are a set of principles and criteria developed by the American Institute of Certified Public Accountants (AICPA). The TSC consist of five categories of criteria that define the attributes of a secure, available, processing-integrity, confidential, and private system. These categories are:

1. Security: The system is protected against unauthorized access, use, or disclosure.
2. Availability: The system is available for operation and use as agreed upon.
3. Processing integrity: System processing is complete, accurate, timely, and authorized.
4. Confidentiality: Information designated as confidential is protected as agreed upon.
5. Privacy: Personal information is collected, used, retained, disclosed, and disposed of as agreed upon.

A SOC 2 report contains a description of the service organization's systems, the controls in place to meet the TSC, and the results of the auditor's testing of those controls. There are two types of SOC 2 reports: Type 1 reports describe the design of the controls in place as of a specific date, while Type 2 reports describe the operating effectiveness of those controls over a period of time (typically six months to a year).