SSAE18 / SOC Compliance Reports
SSAE18 / SOC Compliance Reports
Ways we can help:
Our professionals can bring experience and insight to your reporting process. By navigating the complexities of SOC and other attestation reporting with the help of a skilled and independent auditor, you can obtain the following:
SOC 1 vs SOC 2 vs SOC 3 Reports
Overview & Comparison:-
SOC 1 is designed for financial audits, while SOC 2 focuses on security and control measures. The SOC 3 report, on the other hand, is a public version of SOC 2 intended for a wider audience. As a service provider, differentiating between these three SOC reports can be daunting.
This article will clarify the types, advantages, and guidance on when to obtain each,making the process simpler for you
Types of SOC reports:
SOC is a verifiable auditing report performed by a Certified Public Accountant (CPA) designed by the American Institute of Certified Public Accountants (AICPA) concerning the systematic controls in place at a service provider, including:
SOC reports enhance your credibility, offering a competitive edge that justifies both financial and time investments. There are three main types of SOC reports: SOC 1, SOC 2,and SOC 3, with SOC 1 and SOC 2 being the most widely utilized
There are two types of SOC audits and reports:
A SOC audit report includes:
With a solid understanding of the differences between SOC 1, SOC 2, and SOC 3, letʼs explore each report in greater detail.
Everything You Must Know About SOC 1 Report:
A SOC 1 report, primarily developed by the AICPA for third-party service providers, assures your clients that their financial information is being managed securely and responsibly.
Types of SOC 1 Reports
SOC 1 encompasses two distinct report categories: Type I and Type II. The Type I report demonstrates that your companyʼs internal financial controls are accurately described and designed at a particular point in time. In contrast, the Type II report evaluates the effectiveness of these controls over a specified duration, often ranging from six months
Benefits of SOC 1 Compliance
SOC reports provide clients with an independent assessment of the effectiveness of controls that relate to your organizationʼs operations, compliance, and financial reporting practices. The benefits include:
When to Pursue SOC 1 Compliance
For newly established businesses, SOC 1 compliance might not be an immediate concern. However, it is crucial to address compliance proactively to avoid last-minute certification efforts, particularly if a deal is at stake. Common scenarios that warrant SOC 1 reports includ:
Who Needs SOC 1 Auditing?
Service providers, such as those in payroll processing, medical claims, loan servicing, data centers, and SaaS providers that handle clientsʼ financial or sensitive information, should prioritize achieving SOC 1 compliance.
Everything You Must Know About SOC 2 Report
In contrast to SOC 1, which primarily focuses on financial reporting, SOC 2 provides a framework for businesses to showcase their data center and cloud security controls.
Developed following the implementation of SAS 70, SOC 2 emphasizes the effectiveness of security measures. It is guided by the Trust Services Criteria outlined by the AICPA, which consists of the following components:
Types of reports under SOC 2
Similar to SOC 1, SOC 2 also has Type I and Type II reports. SOC 2 Type I compliance audit covers design controls’ suitability and effectiveness and provides a point-in-time snapshot of the organization’s controls.
On the other hand, SOC 2 Type II compliance audit looks at the effectiveness of the same controls over a period, say, six months or a year, and takes longer for service providers to prepare for it.
Benefits of SOC 2 compliance
A SOC 2 audit plays a crucial role in regulatory oversight, corporate governance, and internal risk management processes. Any client that needs detailed information and assurance about the controls deployed at the service organization may request a SOC 2 audit.
SOC 2 compliance ensures:
When to get SOC 2 compliance
The marketplace will influence how much you need to be compliant for SOC 2. The bigger the client you pursue, the more likely you will need it. If you process or host non-financial data, you should pursue SOC 2 at some point.
Please note that SOC 2 is not required by big-time compliance frameworks like PCI DSS or HIPAA. However, with the number of data breaches, enterprises especially will want to see SOC 2 compliance before finalizing a deal.
Who cares about SOC 2 compliance?
Unlike SOC 1, where the report is prepared for the clients’ auditors and controller’s office, SOC reports are shared by the service providers, under an NDA agreement, with the clients, managers, and regulators
Who should go for SOC 2 auditing?
Companies that should go for SOC 2 audit include services such as data hosting and processing, cloud storage, colocation, and SaaS.
If you are a service provider storing, processing, or transmitting any information, you may need to get compliant to gain a competitive edge in the market, much like the decision to have an ISO 27001 certification.
SOC 2 audits may also be performed as part of your regular security program or if you suspect a data security issue.
Moreover, if you do not materially impact your clients’ Internal Control over Financial Reporting (ICFR) but do provide critical services to them, you will need to be SOC 2 compliant.
Everything You Must Know About SOC 3 Report:
When compared to SOC 2, the AICPA states that a SOC 3 report is designed for individualsseeking assurance regarding a service provider’s controls—specifically concerningsecurity, processing integrity, availability, confidentiality, or privacy—without requiring thetechnical knowledge to interpret a SOC compliance report. Essentially, SOC 3 contains thesame information as SOC 2, but it is crafted for a broader audience.
Companies frequently utilize SOC 3 reports on their websites, accompanied by acompliance seal, to enhance their credibility.
A SOC 3 report is always classified as Type II, but it does not detail the auditor’s testing ofcontrols.
When to Pursue SOC 3 Compliance
If you aim to strengthen your company’s marketing efforts, a SOC 3 audit can effectively demonstrate your dedication to exceptional service. Think of SOC 3 auditing as a complementary tool to reinforce the findings of your SOC compliance report.
It serves as an impactful marketing asset, attracting new clients who readily recognize the endorsement from a trusted third-party auditor.
Who Needs SOC 3 Compliance?
This report is intended for stakeholders who seek assurance regarding your organization’s controls but may lack the expertise to comprehend the more intricate SOC report. A SOC 3report is straightforward and easily understandable by the general public.
It serves as an impactful marketing asset, attracting new clients who readily recognize the endorsement from a trusted third-party auditor.
Who Should Consider SOC 3 Auditing?
If you are a cloud service provider (SaaS, PaaS, IaaS) managing third-party data, operate a data center colocation facility, or are involved in IT systems management, pursuing SOC 3auditing can help you effectively communicate your controls without overwhelming your audience with technical details.
It serves as an impactful marketing asset, attracting new clients who readily recognize the endorsement from a trusted third-party auditor.
Why Choose IRCLASS (IRQS)?
IRCLASS specializes in IT governance, risk management, and compliance, with a strong focus on cyber resilience, data protection, cybersecurity, and business continuity. As businesses face increasing regulatory scrutiny and evolving cyber threats, we helporganizations strengthen their security frameworks and demonstrate compliance withindustry standards.
Our expertise in SOC 1, SOC 2, and SOC 3 compliance ensures that businesses can establish trust, enhance internal controls, and meet stakeholder expectations for data security and operational integrity. With a practical and industry-driven approach, we enable organizations to navigate complex compliance requirements with confidence.
Frequently Asked Questions
SOC 2 is the acronym for Systems and Organization Controls 2. SOC 2 was developed by the AICPA in 2010. The idea behind developing SOC 2 was to guide the auditor for evaluating the effectiveness of the security protocols in an organization and the operational compliance. It is critical to stay updated with the growing cloud computing and business outsourcing requirements.
SOC 2 or Systems and Organization Controls 2 is a voluntary compliance standard for service organizations, designed by the American Institute of CPAs (AICPA). It specifies the ways for organizations to manage customer records in the growing age of cloud computing. The SOC 2 compliance depends on various trust factors like – data security, availability, processing integrity, confidentiality, and privacy. An organization can acquire SOC 2 compliance by taking care of the following aspect.
For acquiring the SOC 2 type 2 certification, organizations must develop a compliant cybersecurity program. Essentially, the organization must conduct an audit with an AICPA-affiliated CPA. The auditor checks the cybersecurity aspects and trust factors and evaluates the organizational setup with respect to the SOC 2 standard. Based on the audit report, the company can get the certification.
The scope is different for the standards. The SOC 1 reports are based on financial controls and the SOC 2 reports focus comprehensively on availability, security, processing integrity, confidentiality, and privacy. A SOC 1 – Type I audit report describes the organization’s control and the effectiveness of the control measures. A SOC 2 report describes the organization’s controls related to operations and compliance, based on the AICPA.
Organizations like the cloud service providers, SaaS providers, and companies that deal with client information in the cloud necessitate the SOC 2 certification. It is critical for them to abide by the norms and standards. The report exhibits optimal protection and privacy of the client’s data.
Speak to Our SOC Compliance Expert
If you need guidance on SOC compliance or are unsure whether your organization requires a SOC audit, our experts are here to help. Get in touch today to discuss your compliance needs and take the next step toward securing your business.
