The top 5 SOC 2 compliance traps companies fall into

Today, information technology companies are really concerned with the protection of their data. And rightfully so!

Data protection is important, as mishandled data can make your company vulnerable to breaches. Therefore, to mitigate risk and remain competitive, all companies need to ensure that their data is handled in a secure way. The best solution is to make sure your company complies with a widely agreed upon set of rules or principles.

This post will outline what SOC 2 compliance is, the importance of being compliant, the principles behind SOC 2, and the top 5 SOC 2 compliance traps that companies fall into.

What is SOC 2 compliance?

SOC 2 compliance is a report introduced by the AICPA, a service organization that controls security concerns such as availability, processing integrity, confidentiality, and privacy of customer data. Moreover, it’s an auditing procedure that can guide your company to better manage customer data.

For example, companies that make use of third-party tools or outsource business operations to outside vendors are at the highest risk for data breaches. When choosing a third-party SaaS provider, your company should ensure that the provider integrates with a SOC 2–compliant partner to secure customer privacy and the interests of the enterprise.

Therefore, SOC 2 compliance applies to nearly every SaaS company, as well as any company that integrates with SaaS companies to store its customer data. SaaS companies need to provide SOC 2–compliant services, and their clients are also responsible for ensuring that the compliance is enforced and maintained in all other areas.

Why is SOC 2 compliance important?

Increasingly, organizations are using cloud-based solutions to handle or store data. Essentially, these companies are relying on a third party to protect their data. Therefore, in order to reduce vulnerabilities, they need to make sure that their providers comply with security requirements before integrating. This is where SOC 2 compliance is relevant. When companies choose a SaaS provider, being able to prove good security practices with something like SOC 2 compliance is either helpful or a requirement. 

For your customers, having SOC 2 provides a sense of confidence that you have sound controls and procedures to achieve reliable and constant services. By choosing a company that is SOC 2 compliant, they will be more at ease that their customer data is secure. Subsequently, this protects your company’s reputation by preventing data breaches and showing that you follow industry-recognized standards. When your company has a good reputation, customers will be more willing to work with you, which then gives you a competitive advantage.

Furthermore, all of this saves you money! If you compare the cost of becoming SOC 2 compliant to the cost of a data breach, it is a no-brainer to choose the former.

So how do you become SOC 2 compliant?

The five principles of SOC 2 compliance

Outside auditors evaluate customer information security processes at your company and award the SOC 2 certification. They base the evaluation on five principles that your company’s data tools and services should meet in order to be SOC 2 compliant.

But do not make the mistake of seeing SOC 2 compliance as a checklist. Think about which principles are important in protecting the customer data at your company and focus on these. Even if your company passes an audit for SOC 2 compliance, if the controls are approved by the auditor but don’t relate to your business needs, then you won’t be as secure as necessary.

The following are the five principles of SOC 2 compliance.

Security

This principle is highly related to the protection of system data and resources against malicious and unauthorized access. Access controls help to prevent system abuse, misuse of the software, information theft and unauthorized changes, disclosure, and removal of data. Security tools like Application Security Management and two-factor authentication are very useful to avoid unauthorized access and other security breaches.

Availability

This principle relates to the accessibility of services, products, and systems as codified in a contract or service-level agreement. Both parties select the minimum level of performance of the system’s availability. Sometimes, system availability can be affected by protocol measures of information security, so it’s crucial to analyze the service level before the restriction of availability by security measures. The availability principle does not include system usability and functionality but observes site failover, network performance/availability, and incident handling of security.

Processing Integrity

This principle refers to whether or not a data system accomplishes its goals. It has to produce and process data at the right time at the right cost. So, there should be timely, valid, authorized, accurate, and complete data processing. However, it does not measure data accuracy or integrity. Coupling quality assurance operations with the monitoring of data processing can prevent inaccuracy and ensure processing integrity.

Confidentiality

This principle refers to the confidentiality of information like business or internal company data, customer data, price lists, and intellectual property. Many organizations encrypt data with transmission to ensure confidentiality. To keep the confidential data safe, network and web application firewalls, external access controls, strict internal controls, and other useful strategies are very efficient.

Privacy

This principle relates to the customer’s personal information that a system collects, discloses, uses, retains, and disposes of. It is possible that the data can contain identifiable information such as customer name, address, and phone numbers. Other user data like health, gender, race, and religion may also require additional security measures. Precise access controls need to be applied to such information under SOC 2. Organizations should also meet the requirements of generally accepted privacy principles (GAPP) by AICPA.

In summary, the auditor will be looking to see if the security controls at your company are suitable and operate to meet the control objectives for each of the above principles. Of course, it does not happen without challenges.

Challenges

SOC 2 auditing has some challenges. Among them, two are more significant.

Employee investment

Although SOC 2 reports are beneficial, they do consume a lot of time! An organization and its staff will be put under a lot of strain during audits. There will be multiple audit requests and requests for the modification of documents and business operations. This can and will interrupt business, so employees have to be invested in complying with the requests and resolving any issues found in the audits.

Financial investment

SOC 2 auditing is not cheap, so it requires a lot of financial resources. The minimum cost can be tens of thousands of dollars. There are also indirect costs with additional services such as employee background checks, pen testing, and third-party scanning.

Five SOC 2 traps to avoid

While planning your SOC attestation, here are five traps you should avoid.

#1. Poor scoping of the audit report to determine the boundaries and services of the data system

A critical mistake most companies make is to forget to clearly define which services will be used or excluded in the system that’s defined in the SOC report.

#2. Insufficient documentation on the key internal controls that are in scope

It’s important that management or the CTO develop a description of the key internal controls of a system. This should sufficiently detail the following:

  • The design of the system
  • The infrastructure of the system
  • The software used by the system
  • Data and information used by the system

#3. Starting the audit test without doing a readiness assessment

Beginning the SOC 2 compliance audit before your company’s ready will result in a lengthy audit process. Time will be wasted and will thus cost the company. Be sure to ask for a readiness assessment from your audit partner. This will uncover issues and help you fix them before the SOC 2 audit.

#4. Not clearly defining audit boundaries between your company’s environment and third parties

Most companies make use of outside vendors to perform services, such as a cloud service provider. Companies should be sure to distinguish compliance within their company and within their service provider.

#5. Not consolidating your various compliance requirements into one SOC report

Don’t miss the opportunity to consolidate other compliance requirements into your SOC report. SOC 2 reports can include related subject matter, an approach that can reduce your costs and resource efforts.

What’s next

SOC 2 compliance is a major step towards working with larger customers and enhancing your security. If you’re working on becoming SOC 2 compliant, Sqreen can help you in multiple areas, from Asset Inventory to Incident Management. 

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This post was written by Daniel de Oliveira. Daniel is a developer, writer, and data analyst. He has experience working with Springboot, Flutter, Angular, and Django.

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Source: Sqreen