SOC 2 Type II Compliance and Certification

Learn more about SOC 2 Type II audits and reports as well as the compliance requirements involved and how organizations can obtain certification

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SOC is an abbreviation of Service Organization Control. SOC 2 is an auditing procedure that ensures that an organization’s service providers manage their data securely in order to protect the organization’s interests and client’s privacy.

It serves to provide assurance to the organization’s clients, management, and user entities in terms of confidentiality, availability, processing integrity, security, and privacy through effective control mechanisms.

What is SOC 2 Type II?

SOC audits and reports come in two variations:

SOC 2 Type I

This includes an audit and report that an auditor conducts on a specific date.

SOC 2 Type II

This involves an audit and report that an auditor conducts over a specific period of time - typically longer than 6 months.

SOC 2 Type II audits happen when an independent auditor evaluates and tests an organization’s control mechanisms and activities. The goal of this is to determine if they are operating effectively. The principles of SOC 2 are founded on policies, procedures, communication, and monitoring.

A SOC 2 Type II audit report typically includes the following:

  • An opinion letter
  • Management proclamation
  • A detailed evaluation of the system or service
  • Particulars of the chosen trust services categories
  • Tests of controls and the results of such testing
  • Optional additional information (including if the organization complies with AICPA etc.)

SOC 2 Type II Compliance

For an organization to achieve successful certification, it must meet the following criteria.

  • Security. The organization’s system must have controls in place to safeguard against unauthorized physical and logical access.
  • Availability. The system must be available for operation and must be used as agreed.
  • Processing Integrity. The system processing must be complete, accurate, well-timed, and authorized.
  • Confidentiality. The information held by the organization that is classified as “confidential” by a user must be protected.
  • Privacy. All personal information that the organization collects, uses, retains, and discloses must be in accordance with their privacy notice and principles. These are specified by the American Institute of Certified Public Accountants (AICPA) and the Canadian Institute of Chartered Accountants (CICA).

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Why Do People Use SOC 2 Type II?

SOC 2 Type II audits are usually conducted by organizations that provide systems and services to client organizations such as Platform as a Service, Software as a Service, and Cloud Computing.

The client company may request an assurance audit report from the service organization. This usually happens if private or confidential information has been entrusted to the organization providing a service.

If such an organization provides cloud services, A SOC 2 Type II audit report is extremely beneficial. It helps to build trust with stakeholders and clients. Moreover, this type of audit is often a precondition for service organizations that provide services at different levels in the supply chain.

SOC 2 Type II certification comprises a detailed evaluation, by an independent auditor, of an organization’s internal control policies and practices over a defined time frame. Typically, this could be anywhere from six months to a year. This independent review confirms that the organization complies with the strict requirements outlined by AICPA.

The SOC 2 Type II Audit Process entails:

  • Reviewing the audit scope
  • Creating a project plan
  • Testing controls for design and/or operational effectiveness
  • Authenticating the results
  • Delivering and communicating the organization’s report.

How to Comply With SOC 2 Type II

For organizations to be SOC 2 Type II compliant, an independent auditor would review the following practices and policies:

  • Infrastructure - the physical and hardware elements of a system.
  • Software - the programs and operating software of a system.
  • People - the personnel relevant to the operation of a system.
  • Procedures - automated and manual procedures necessary for the operation of a system.
  • Data - the information used and supported by a system.

When organizations enlist the services of third parties who have been granted access to some form of internal system that the client owns, there is an element of internal control risk. The type of access granted and the type of systems used will determine the level of risk that the organization faces.

When organizations who are SOC 2 Type II certified want to develop software and applications, they must do so in terms of the audited processes and controls. This ensures that organizations create, test, and release all code and applications according to AICPA Trust Services Principles.

Final Thoughts

SOC 2 Type II audits and reports are one of the most important compliance verifications that an organization can provide for its customers. It offers detailed evidence that an organization has the appropriate security protocols in place. Not only this but it shows that it is reputable and trustworthy.

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