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Everything You Need To Know About SOC 2
Everything You Need To Know About SOC 2
You Need to
Know About
SOC 2
From the SOC 2 experts at
Table of Contents
SOC 2 Overview 4
What is SOC 2 (and Why Does it Matter)? 6
Why is SOC 2 Important? 7
Real Examples of SOC 2 7
When to Consider Pursuing a SOC 2 Examination 8
Chapter 1 Automating SOC 2 Readiness Assessments 8
Tips and Reminders for SOC 2 9
Key SOC 2 Terms to Know 9
SOC 2 Report Use 10
Types of SOC 2 Reports 11
Sections of a SOC 2 Report 12
SOC 2 Trust Services Categories 13
Five Benefits of Earning a SOC 2 Report 13
AICPA SOC 2 Trust Services Criteria 101 27
Chapter 6 What are the trust services criteria and why are they important?
Tips and Reminders for the Trust Services Criteria
28
31
2
Preface
3
Chapter 1
SOC 2 Overview
4
Protecting customers’ data is a concern for all organizations regardless of
industry or size. Most organizations outsource key aspects of their business to
third-party vendors such as Software-as-a-Service (SaaS) solutions or cloud
hosting providers (i.e. Amazon Web Services or AWS). As companies continue to
share the responsibility of protecting sensitive data, there is increased importance
and scrutiny on the cybersecurity practices implemented at these organizations.
5
What is SOC 2
(and Why Does it Matter)?
SOC 2 is a report on a service organization’s controls relevant to Security, Availability,
Processing Integrity, Confidentiality, or Privacy. SOC 2 reports are intended to inform users
of detailed information and assurance about the controls at the service organization.
These reports are provided by qualified CPAs, who form an opinion about the service
organization’s system and the control environment.
First and foremost, SOC 2 is a report, and therefore you should think of it as a reporting
framework, rather than the common misconception of it as a compliance framework. I go
into that in a lot more detail in this blog post. Think about it this way, SOC 2 is a way for a
service organization to show its customers (through a system description) how they meet
certain criteria prescribed from the AICPA that are relevant to the in-scope categories
(security, availability, etc.).
The auditor’s job is to verify the information in the description provided by the service
organization, as well as identify the specific controls from the description that meet the
criteria. In the case of a type 2 report (period of time), the auditor will also determine if
those controls operate effectively during that period of time. More on the differences
between report “types” in this post.
Let’s use the security category as an example. The system description will describe the
service organization’s system in accordance with certain AICPA defined criteria. One of
those criteria is the control environment of the organization, which, at a high level, will
describe the security controls the organization has related to things like onboarding, risk
management, system operations, change management, logical access, etc.
Those controls will then be shown in more detail in another section of the report (typically
“section 4”) according to how they meet each of the criteria related to the security
category (for example, logical access criteria will have all of the controls related to logical
access under it). In the case of a type 2 report, section 4 will also include the auditor’s
testing of those controls as well as the results of tests over a period of time.
Depending on if the controls are designed appropriately to meet the prescribed criteria, as
well as (in type 2) if those controls operated effectively, the auditor then forms an opinion
for the report on that design and operational effectiveness. Read more opinions in our
report opinions article.
The report itself is provided by the service organization to its customers so that those
customers can have comfort in knowing that the system and its controls are designed
appropriately and operating as described.
6
Why is SOC 2 Important?
SOC 2 reports are becoming more prevalent in the market and more companies are
asking for them in order to meet contractual obligations, supply chain management, due
diligence, or other requirements. For the service organization, the report becomes not
just a means to deliver on these obligations, but also a way of showcasing your security
posture, as well as improving it through making sure your controls will operate properly.
Don’t just take our word for it. According to the AICPA:
With the involvement of CPAs, SOC 2 has the element of trust, as CPAs are held to a
high standard of quality and integrity in how they produce opinions and reports. You can
be assured that a qualified, highly skilled CPA will not only make sure the appropriate
person(s) are testing your environment but that the report itself is structured to meet all
the AICPA requirements.
https://docs.microsoft.com/en-us/microsoft-365/compliance/offering-soc?view=o365-
worldwide
https://aws.amazon.com/compliance/soc-faqs/
https://cloud.google.com/security/compliance/soc-2
NOTE - SOC 2 is not limited to cloud service providers but can be applied to many different
types of organizations.
7
When To Consider Pursuing a SOC 2
Examination
The best day to consider pursuing a SOC 2 examination is when you started your
company, the second-best day is today. In our experience, a SOC 2 examination
is pursued as a reaction to a request from a customer or vendor. This reactionary
response leads to the nightmare stories you have probably read regarding the
SOC 2 process. Undergoing your first SOC 2 examination when you have a big deal
or potential strategic partnership on the line can be a stressful and operationally
draining experience.
Starting your SOC 2 journey prior to receiving a request from a customer or vendor
is analogous to the famous quote by Benjamin Franklin, “An ounce of prevention
is worth a pound of cure.” Preparing for your inevitable SOC 2 examination does
not mean you have to undergo an audit by a third-party professional services
auditing firm or pay exorbitant auditor fees. The Bytechek platform is designed for
organizations that are taking a proactive approach to cybersecurity preparedness
and readiness. Our fully integrated platform quickly assesses your technology
stack against the SOC 2 criteria, providing detailed recommendations and
implementation guidance in minutes.
You can quickly integrate the cloud hosting, system information & event
management, version control, human resources information system, and other
relevant tools with the Bytechek SaaS platform. This eliminates the need for
third-party auditors because our intelligent platform automatically provides
recommendations for controls or security weaknesses identified. This frees up
your team and resources to begin remediation efforts and ultimately earn your
SOC 2 Type 1 report.
8
Tips and Reminders for SOC 2
Remember that SOC 2 is a reporting framework. As a service organization, you are showing
(reporting) what you have in place to meet certain criteria, and a CPA is reporting on if
what you have is adequate and operating effectively.
Always use a qualified, peer-reviewed CPA firm to assist with SOC 2 efforts. Determination
of a CPA firm’s peer review can be done through their home state’s board of accountancy,
or through the AICPA. Make sure they understand IT auditing and SOC 2!
Get to know the description criteria and (for your organization) relevant trust service
category criteria as you are pursuing SOC 2. Understanding the criteria for both before
you start will help with readiness assessments and overall development of your control
environment.
• AICPA
American Institute of Certified Public Accountants
Key SOC 2 Terms To Know
• Service Auditor
As used in this guide, a CPA who performs a SOC 2 examination of controls within a
service organization’s system relevant to security, availability, processing integrity,
confidentiality, or privacy. ByteChek Assurance is a Service Auditor.
• Service Organization
An organization, or segment of an organization that provides services to user
entities (e.g. your company).
• SSAE 18
Attestation standard for SOC Engagements. Relevant sections include AT-C
Section 105 and AT-C Section 205
• Subservice Organization
A vendor used by a service organization that performs controls that are necessary,
in combination with controls at the service organization, to provide reasonable
assurance that the service organization’s service commitments and system
requirements were achieved
9
SOC 2 Report Use
SOC 2 report readers should understand who the service organization is, what
services they provide, and how those services are delivered and managed. Without
this knowledge, the report can be confusing and cause misunderstandings.
Examples of intended users of a SOC 2 report are:
Because of the sensitive nature of the SOC 2 report and intended users of the
report, a SOC 2 report is considered a restricted use report and should only be
provided to readers under a non-disclosure agreement or other confidentiality
agreements. In the event, your company needs or wants a report that is for
general use, they can opt to undergo a SOC 3 examination. A SOC 3 report is
a general use report that can be made publicly available. A SOC 3 report does
not include the full system description (section 3) or the description of service
auditors’ tests of controls and the results thereof (section 4). Distribution of
a SOC 2 report for marketing purposes is ill-advised as section 3 and section 4
contain sensitive information about the system and results of control design or
operating effectiveness. This is why SOC 2 reports are considered restricted-use
reports. SOC 3 reports can be posted on the company website and include limited
information about the system and results of the examination. For example, AWS
makes its SOC 3 report available for download as a PDF.
10
Types of SOC 2 Reports
A Type 1 examination is generally seen as the first stepping stone for an organization
pursuing a SOC 2 examination. This report is a great way for companies to prove to their
customers and vendors that they take security seriously and have partnered with a third-
party auditing firm to prove their security. At ByteChek, we recommend that all companies
pursue a SOC 2 Type 1 examination prior to beginning their SOC 2 Type 2. The level of
effort and time it takes to earn a Type 1 examination is significantly lower than a Type 2
examination.
The level of effort decreases because your company is being evaluated at a point in time.
This reduces evidence requirements and eliminates any requirement to sample test controls
over a period of time. For example, in a Type 2 examination, your auditors may ask you to
provide evidence of security awareness training for a sample of new hires over a three-
month period. Whereas in a SOC 2 Type 1 examination, your auditors should only ask you for
an example of a new hire’s completion of security awareness training.
11
Sections of a SOC 2 Report
In a SOC 2 report, there are five sections to be aware of.
Below is an overview of these sections and their components:
Availability: Information and systems are available for operation and use to meet the
entity’s objectives.
Processing integrity: System processing is complete, valid, accurate, timely, and authorized
to meet the entity’s objectives.
2. Prove security to customers and vendors with one report (audit once, use
many)
13
Chapter 2
What is an
attestation report?
14
SOC 2 reports are, in official terms, attestation reports. So, what does that mean
and why is it relevant when thinking about SOC 2 reports? First, the definition :
• Consulting service - the examination engagement that the CPA will provide in
order to deliver the SOC 2 report.
• Expresses a conclusion - this is the actual CPA’s report (which includes their
opinion), and often included as “section 1” of a complete SOC 2 report.
•
• Written statement - this is “management’s assertion” in the SOC 2 report and
often is included as “section 2”. The management assertion will state that
the company prepared the system description, as well as that the controls in
that description were suitably designed as of a specific date (and operating
effectively over a period of time if a type 2 report).
• Section 4 - shows the criteria that the controls are measured against, the
controls themselves, and in a type 2, the CPAs testing of those controls and
results of tests
15
So why is all of this relevant for SOC 2? The boring answer is that attestations
follow AICPA standards (in particular SSAE 18). But, when you break it down, it
comes down to the assertion made by your company. In your assertion, you are
going to state things like:
• The system can meet the commitments to your customers (for security,
availability, etc.) and that the system has requirements in place to help meet
those commitments. (NOTE - these are measured against the in-scope trust
services criteria).
Your CPA then comes in and measures these assertions through inquiry,
examination, testing, etc. Your CPA then forms the report based on these tests,
and from there, you have your SOC 2 report.
16
Chapter 3
17
There are a variety of SOC reports that the AICPA has come up with, and each
serves their own purposes. In this chapter, we will show you the differences
between the three main SOC reports: SOC 1, SOC 2, and SOC 3.
SOC 1, 2, & 3 AICPA SOC reports come in a variety of forms. The most common
are SOC 1 SOC 2 and SOC 3. Whats the difference? See below for
a summary. Keep in mind even though all of these reports serve
COMPARISON different purposes, the common element is that even has an assertion
and an auditor’s opinion that go with them. To learn more about that,
visit Bytecheck’s SOC pillar page.
System impacts your customer’s Based on your service Only shows system description (no
financial reporting commitments and system control testing shown)
requirement
Based on control objectives Uses set criteria to measure against Can be provided publicly (most
objectives common on your website)
Let’s use an example. Let’s say you are a payroll processor service organization. You take
your customer’s raw data for payroll, run it through your systems, and produce payroll
reports, tax filings, and employee pay stubs for those customers. Payroll is a significant
part of your customer’s income statement in their financial statements. So, you may have
objectives around the accuracy of calculating those payroll items and how you file taxes
with government entities. You may have objectives related to protecting your customer’s
data, which, for example, could be similar to logical access requirements from CC6 in SOC 2.
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Because there are no prescribed objectives in SOC 1, you would have to determine what all
of your objectives for customers are related to your service and include them in the report.
A SOC 1 does have a system description like SOC 2, but the criteria are less than what is
required under SOC 2.
SOC 2 SOC 3
The difference between SOC 1 and SOC 2 So, what is SOC 3 then? SOC 3 is simply a
is that SOC 2 will not cover those financial redacted version of a SOC 2 report. It is still
objectives because SOC 2 is focused on the based on the same trust services categories and
Trust Services Categories as they relate to criteria, but the only thing shown is a redacted
the service commitments you make to your version of the system description. There is no
Section 4 in the report, which would show details
customers. Let’s go back to our example
of the controls, the auditor’s testing of those
payroll processor again. They might also
controls, and the results of testing. SOC 3
need a SOC 2 in addition to their SOC reports are meant for public use, and many times
1. In their agreements, they are making companies will provide them via their website
commitments to customers around the with no NDA required.
security and confidentiality of customer
data, as well as being available 99.99% of The common elements of all these SOC
every month. In this case, the security, reports though is an assertion from company
availability, and confidentiality categories management, and an auditor’s opinion. The
would be in scope for their SOC 2 and can be language in those may be different between
tested in conjunction with the SOC 1 testing, each of these reports, but the purpose of these
sections remains the same.
since both reports are going to share some
similarities in objectives.
Based on the answers to those questions, along with your objectives, you can find your
way to the right path for SOC reporting.
19
Chapter 4
20
Introduction
SOC 2 reports come in two different “types.” Simply put, they are “Type 1” and
“Type 2”. Each one serves a purpose and provides value to the report reader.
Many organizations will use a Type 1 report as a means to get to Type 2, or
some organizations will only use a Type 1 for specific purposes. So, what’s the
difference? Let’s dive into the details of what these variations in SOC 2 reports
entail.
A SOC 2 Type 1 report is as of a single point in time. The reason for that is because
the report focuses on the suitability and design of the system and its controls
to meet the criteria related to the categories in scope. This means that your
path to earning your SOC 2 Type 1 is much shorter than achieving a SOC 2 Type 2
report. When it comes to providing evidence, you’re only providing example pieces
of evidence from a specific point in time, not evidence showing controls operating
over a period of time (i.e. 6-12 months). For example, in a SOC 2 Type 1, you may
be asked to prove that your security awareness training control is suitably
designed. You will be asked to provide evidence of a single new hire or employee
that completed security awareness training. Whereas, in a SOC 2 Type 2, you will
be asked to provide evidence for all or a sample (~25) of new employees that
completed security awareness training during your reporting period.
This is why many organizations will use a Type 1 report as a “stepping stone” after
a readiness assessment is done (and remediation is completed) to show that their
controls are in place, suitably designed, and are ready for a Type 2 assessment.
The reduced evidence requirements in a SOC 2 Type 1 make this the next logical
step after your readiness assessment.
With ByteChek, our fully integrated platform streamlines and automates the SOC
2 readiness assessment process accelerating your organization towards a SOC 2
Type 1. Within minutes of onboarding, you will receive detailed recommendations
for controls not suitable, and also have a clear understanding of which controls
are already in place. Our platform is able to quickly identify controls that meet the
criteria for your SOC 2 Type 1, and testing is complete in minutes, freeing up your
team to focus on controls that need a little extra work.
21
Most companies end up on an annual SOC 2 Type 2 cycle where the prior 12 months
are looked at for operational effectiveness. This report details the auditor’s
testing of the controls and the results of tests as well. Most of your customers or
business partners will look for a Type 2 report as it is the highest level of scrutiny
of the control environment. If you satisfy that, they are satisfied too.
Type 1 / Type 2 - similar reports, yet with different purposes. Are you looking to
showcase your control environment and how it meets the criteria? Type 1 is for
you. Are you looking for that, but also show how your controls operate? Type 2. In
the end, you will have to determine which report is appropriate for the stage that
your company and your control environment is in.
So which type of SOC 2 is right for you? It will depend on your situation, budget,
and customer needs of course, and many companies will go the route of readiness
> Type 1 > Type 2 for their SOC 2 journey.
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Chapter 5
What’s in a System
Description
(SOC 2 - Section 3)
23
Introduction
For most people, when they think of SOC 2 reports, they think about the auditor’s
opinion and the controls (in section 4). But there is another vitally important
section of a SOC 2 report, and that is the System Description (section 3). The
reason this is so important is that, ultimately, it is what your SOC 2 report opinion
is on. Wait, what? The opinion isn’t just about controls you say? That is absolutely
the case and the system description is probably the biggest reason why it’s vital
for your SOC 2.
This chapter is going to let you know more about the SOC 2 system description,
what it is, what needs to be included in it, and some tips on how to make it easier
when developing your SOC 2 report.
In your management assertion, the very first statement is, “we have prepared
the accompanying description of XYZ’s ______ system…”. That statement goes
on to have language about the description being presented in accordance with
the AICPA’s description criteria (DC 200) and what the purpose of the description
is (to inform report users about useful information related to assessing the
risk of using your system - including the controls). There is also an explicit
statement that the controls stated in the description were suitability designed
(and operating effectively - Type 2) in order to achieve commitments and
system requirements based on the applicable trust services criteria. So really,
the controls are already in the description. Section 4 of the SOC 2 report is a
means of displaying those controls, how they map to criteria, and (in Type 2) the
auditor’s tests of controls and results of tests.
That in turn means that the CPA’s opinion, because it is essentially an opinion
on the reasonableness of management’s assertion, is really about the system
description in addition to the testing of those controls for suitability and
operational effectiveness. That’s why the system description is so important. A
poorly written description will not meet the requirements and therefore delay your
SOC 2, or worse yet, result in a qualified opinion.
24
OK, so what’s in the system description?
The AICPA has provided a benchmark of 9 criteria for (what is your customer data), as well as any
system descriptions of SOC 2 reports. They are as other data types that directly supports the
follows: system.
1. Types of services provided - This is pretty 4. System incidents - This part of the description
straightforward. Here you will describe what should discuss any security incidents that rose
services your company provides as it relates to the level where your company failed to either
to the system in scope. There are a couple of meet criteria, your commitments to customers,
key things to remember for this criterion. Some or your system requirements.
companies opt to describe their entire business
in general, which is acceptable, but really this 5. Applicable trust services criteria and related
criterion should mostly focus on the system controls - This is probably the most “bulky”
under examination. Another common theme we criterion of the system description. In this
have seen in the past is companies using their section, you will state the criteria that are
marketing language in this section to describe in-scope so that the reader understands the
the system (think “XYZ Corp., a world-leader criteria you are being measured against. That
in ________” or “providing the best service in part is pretty standard. After that though, is
the industry” and even “______ system saves where it gets super detailed. This is where you
customers money by…”. Think about what we are going to discuss your control environment
discussed above. Management’s assertion and describe the controls that support it. Things
is about this description, and then the CPA’s like logical access, change management, risk
opinion is about the reasonableness of the assessment and mitigation, communication,
assertion. These types of statements are not and other information are all included here, and
measurable and are really just “sales” language. essentially, this is where your auditor would
Stick to the facts of what the system is and find and pull your controls from that get tested
does. in section 4. We recommend that you lay this
section out similar to how the criteria are set
2. Principal service commitments and system up in section 4, which makes it easy for your
requirements – Commitments and system report users to be able to understand your
requirements are crucial for the entire SOC 2 control environment as it relates to the criteria.
report. This section lets the reader know what Start with the control environment, information
those commitments and system requirements and communication, risk assessment, etc. See
are, and where they come from (SLAs, contracts, the link above to read in more detail about the
etc.). This helps give the reader context as to criteria to help you develop this part of your
what trust services categories are in-scope and system description.
why.
6. Complementary user entity controls (CUECs) - A
3. Components of the system - This is where the very important part of the description, CUECs
description begins to get a little technical. are the controls that your customers need to
The components described here include the have in place in order for the system and control
infrastructure, software, people, procedures, environment to be complete and achieve its
and data that support and make up the system. objectives. For example, maybe your customers
For many Cloud Service Providers (CSP), the need to have their own logical access controls
infrastructure section will include their hosting in place so that only authorized users access
provider (such as Amazon Web Services). The your service, otherwise, unauthorized access
Software section should list your software and may cause you to fail to meet your security
applications that support service delivery1. commitments. The important thing to remember
The People section should include a high-level with this section is that it should not be a
overview of the departments or key personnel “laundry list” of things that you want customers
that support the system and what they do. to do in order for you to be covered in case
Procedures should also be high-level, stating something happens. That is what your contracts
what procedures are and their purpose, but we and agreements are for. This is purely just meant
recommend leaving the details of controls for for controls they need to have in place otherwise
later in the description. Data should discuss your system doesn’t work to meet its objectives.
what the data is that the system processes
25
7. Complementary subservice organization 8. Specific trust services criteria not applicable
controls (CSOCs) - This criterion is where you to the system - This is where you would
will discuss the subservice organizations that describe any criterion that is not applicable
support your system and control environment. to your system and why. An example could be
Subservice organizations are a bit more where you have privacy in scope for your SOC
involved than your vendors (or sometimes 2, but you are not a data controller. Therefore,
even critical vendors). Think of subservice things like the notice, choice, and consent
organizations as a vendor that cannot criteria in privacy would be not applicable.
meet your criteria, commitments, or system
requirements. For most CSPs, that is going
to be your cloud hosting provider (AWS, GCP, 9. Significant changes to the system during
Azure, etc.). For example, you cannot meet the the period (Type 2 reports only) - In a Type
physical controls in CC6.4 or CC6.5 without 2 report, if you had any significant changes
them. So, you would list them here and what (how the control environment operates,
criteria they help you meet. Because you are control changes in how they meet criteria, key
only describing them in the system description, personnel changes, mergers/acquisitions, etc.)
but not testing any of those controls (AWS isn’t during the period, you would state those here
letting you visit their DCs), most subservice and their effect on the report.
organizations are “carved out” of the opinion in
a SOC 2 report.
System descriptions contain a lot of important information for your users. That
information has repercussions throughout the whole report, so making sure your
description is well-done and accurate is crucial for your audit.
P.s. We are automating the system description in our product, send us an email to
hear more
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Chapter 6
27
Introduction
The AICPA Trust Services Criteria. It’s what drives SOC 2 reports. That is
because they were designed by the AICPA for use in attestation or consulting
engagements. They are the primary means that you and your CPA use to
measure and report on your controls for the trust service categories. You have
probably heard of those categories: Security, Availability, Processing Integrity,
Confidentiality, Privacy. In this chapter, we’re going to dive into the details of the
criteria including the why, how they are used, and what they mean for SOC 2.
The TSC were designed considering the risks that threaten a company’s ability
to meet its objectives for the internal control system. A company will address
these risks through suitably designed controls that, if operating effectively, will
help achieve the entity’s objectives. The risks that were identified by the AICPA
included:
• The use of third parties (such as service providers and suppliers), who have access
to the system, to provide the company with controls that are necessary, along with
company controls, to achieve objectives
• Control activities related to the design and implementation of controls (CC 5 series)
There are also supplemental criteria for any trust services engagement (think security). Those
include:
For pretty much every SOC 2, you will have the CC 1 through CC 9 series included. When you
add the other categories (availability, etc.) you have to add supplemental criteria that are
specific to that category.
• Availability (A series)
• Confidentiality (C series)
• Privacy (P series)
29
Each series above has a prescribed number of criteria that are intended to meet the
objectives of the criteria (for example, objectives related to change management [CC
8]). That CC 8 series has only one criterion associated with it. That criterion for CC8.1,
along with the criteria for any of the categories you have in scope, won’t change in
your SOC 2. Some of the criteria could be N/A for your company (for example, as a
cloud provider, maybe you don’t handle physical controls in CC6.4), but you would
still show the criteria (like CC6.4), and explain why it’s N/A to you.
For each of the criteria, you then would show your control(s) that help meet that
criterion. There is no prescribed number of controls, or control wording on how to
meet criteria. This is because SOC 2 is not a compliance framework, but a reporting
framework. Your controls may be worded differently than other organizations. Or
maybe you have 3 controls to meet a specific criterion whereas a similar organization
has 5. As long as you are meeting the criteria with your 3, that’s OK.
If you are building your control environment, and getting ready for SOC 2 however,
the points of focus can be great to use as an idea for controls and wording, as
well as understanding what auditors and the AICPA are looking for when meeting
criteria.
30
Tips and Reminders for the Trust Services Criteria
The best way to understand the criteria is to read what they are from the AICPA. The
criteria listing starts on page 13. Read each one and think of what your company does
to meet that criterion. Use the points of focus as a guide to further understand what
the criteria is looking for as well. Here is a snapshot of how to read that document:
CC1.5 COSO Principle 5: The entity holds individuals accountable for their
internal control responsi-bilities in the pursuit of objectives
The following g points or focus, specilied in the COSO fnimework,
highlight important characteristics relating to this criterion:
Points of focus
The trust services criteria are a very important aspect of SOC 2 and are critical
to successfully prepare for and navigate through the SOC 2 process. They are
also critical in having a “clean” SOC 2. If you fail to meet the criteria, which in turn
means you fail to meet your objectives, then you may get a qualified opinion from
your CPA in your SOC 2 report. Make sure you take the time to understand the
trust service criteria before pursuing SOC 2!
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Chapter 7
SOC 2 Information
Flow-down
32
Introduction
SOC 2 is more than just meeting a bunch of criteria with controls. Yes, that is an
important part. But why? How does it get to that point? It is important to know
the flow of information when it comes to SOC 2 because it will help you make
better decisions for your SOC 2, understand how the report works, and know in
greater depth the ins and outs of your report. In this infographic blog, we will show
you that flow down and explain the details.
The Details
Your SOC 2 starts with understanding the promises or commitments your
company makes to your customers. These commitments can be found in customer
contracts, service-level agreements, master service agreements, terms and
conditions, or other similar documents. From these commitments, you can
determine which of the trust service categories should be in scope for your SOC
2. The trust service categories are ultimately what drives the criteria, but more on
that in a bit.
33
The 5 trust service categories that relate to SOC 2 are:
• Availability - Information and systems are available for operation to meet the
company’s objectives.
It’s very likely that you have security included somewhere in your agreement
documents with language discussing protection of data, unauthorized access,
etc. So, that means for pretty much every SOC 2, security is an included
category. It’s also likely that you have some language in your agreements about
the confidentiality of customer data. Confidentiality in that regard is closely tied
to security, but when it comes to the trust services criteria, it has some slight
differences. Read more about that here. For the availability category, think
about if you are committing to uptime percentages, available hours, etc. In our
experience, the Security, Availability, and Confidentiality categories are the most
common for SOC 2.
With the processing integrity category, think about it if you are processing data
on behalf of your customers. Are you committing to the accuracy, timeliness,
completeness of those outputs? I always like to use the example of a payroll
processor. They take the raw payroll data of their customers, then they are
required to (and commit) to produce timely and accurate payroll reports in order
for their customers to make payroll.
With privacy, you really have to think about it from the perspective of if you
handle and interact with the information of data subjects. Many people think
confidentiality and privacy are the same, but that is not correct for SOC 2. If you
do think privacy is in scope, are you providing notice, choice, consent to the data
subjects? The ability to opt-in/out? Do you provide them the ability to modify
their personal data? It is important that this is applicable to the service in scope
for your SOC 2 not just your public website.
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Once you know your categories, the criteria are easy because they are already
set by the AICPA. For each category, there are prescribed criteria that your
organization has to meet. In the end you have your controls in place that satisfy
those criteria, which in turn satisfy the in scope categories, which ultimately
determines if your system is meeting its commitments and system requirements.
So, if you think about it, it really all comes down to your commitments to
customers and what your system requirements are to meet those commitments.
Determining those correctly flows down to everything in your SOC 2. It also
determines what type of report opinion you’ll get if you meet those commitments
and system requirements or not.
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Chapter 8
SOC 2 Report
Opinions
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Introduction
SOC 2 reports are attestation reports. With those types of reports, the
Certified Public Accountant or CPA (i.e. service auditor) will have an opinion
on management’s assertion as it relates to the system and its ability to meet
commitments, system requirements, and objectives. This short chapter will show
you the various types of report opinions that SOC 2 can result in, and what each
means.
The two main factors that drive the other opinions are scope limitations and
material misstatements. A scope limitation is when your company is not able
to provide evidence for the auditor. Material misstatements can happen due
to a system description being misstated, controls not designed appropriately,
or controls not operating effectively (exceptions or deviations in the testing of
controls). A control may have failed due to these exceptions, which in turn caused
you to fail to meet criteria appropriately or fail to meet commitments or system
requirements (this is the most common cause of opinions other than unqualified).
For example, a common control in a SOC 2 report is a requirement to perform risk
assessments on at least an annual basis. If you did not perform a risk assessment
within your testing period, this would be a control failure and would be denoted as
an exception or deviation in your report.
The next most common is a qualified opinion. This means that the report was
mostly OK, but there was an issue somewhere. If there was a scope limitation
and/or material misstatement, it might be material to the report (causing the
qualification), but not pervasive enough to go any further. Should you panic if you
have a qualified opinion? NO! Qualified opinions are more common than you think.
Exceptions happen. It’s not the end of the world. Especially if it was one control
that had an exception and everything else was fine. Many firms opt to explain their
exceptions and why it was a rare occurrence or how they fixed it in an optional
“unaudited” section of the report for management to respond to exceptions in
testing (section 5 of the report).
Less common is the disclaimer of opinion, which mostly results from if there was
a severe inability for your company to produce evidence for the examination (the
scope limitation was material and pervasive).
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The least common is the adverse opinion. This rare report results from if there
were material misstatements that were both material and pervasive to the
point that the control environment is pretty much failing to meet either criteria,
commitments, system requirements, or objectives.
Here is a graphic to help visualize how the opinions (other than unqualified) can
happen:
SOC 2 Reports
Report opinions other than unqualified
You should always strive for an unqualified opinion for your SOC 2. The first step
in that is to make sure you have a solid control environment that is designed
appropriately. A ByteChek readiness assessment is a great way to get that started!
Once suitability is determined to be OK (we recommend a Type 1 report), just to make
sure you operate your controls as described. If you do, you will reduce your likelihood
of exceptions in testing, paving the way for your unqualified SOC 2 Type 2 report.
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About Us
OUR PHILOSOPHY
We found out first-hand how difficult, time-consuming, and expensive
assessments can be — and we knew there had to be a better way. We
asked ourselves, “What can we do to make this suck less?” We’ve taken our
experience and built our philosophy around how to answer that question.
That’s why we built ByteChek.
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About Us
OUR LEADERSHIP
Our dedication to our philosophy
stems from our experience as
auditors, partners, and cloud
security advisors. We’ve been
through hundreds of cybersecurity
assessments — responsible for
consulting and assessing organizations
of all sizes from startups to the
Fortune 500. Our leadership team was
also part of the working group that
helped develop the 2018 version of the
AICPA SOC 2 guide and has developed
numerous trainings for the AICPA.
AJ Yawn
CEO
Jeff Cook
CFO
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