Businesses that handle sensitive customer data need to be certain they are protecting it properly, avoiding data breaches.
The best way to show proper safeguarding of customer data is through meeting SOC 2 compliance standards.
When it’s time to prepare for an audit to show the organization’s commitment to following SOC 2 guidelines, using an SOC 2 compliance checklist provides a helpful test run.
What Is an SOC 2 Compliance Checklist Anyway?
We should start by mentioning that an SOC 2 compliance checklist isn’t an official item. The American Institute of Certified Public Accountants (AICPA) oversees SOC 2 compliance audits, but it doesn’t offer an official preparation checklist. (SOC is short for System and Organization Controls.)
However, there are items an organization should complete as it prepares for an SOC 2 compliance audit. Well-known steps exist that give organizations a playbook to follow when working toward compliance. Companies often use these steps as an unofficial checklist for SOC 2 compliance.
What Is SOC 2 Compliance?
Before discussing the SOC 2 compliance checklist, let’s look at what achieving SOC 2 compliance means.
This is a voluntary compliance standard that companies can use to show how they manage the security of the customer data they store. SOC 2 also covers any data the company may hold on behalf of its clients. Companies that store data, such as cloud companies, can use SOC 2 compliance to show they have a policy in place to handle the data securely.
SOC 2 covers how the company uses and stores the data at the time of collection, during storage, during any editing or usage, and at the time of destruction or deletion.
What Goes Into an SOC 2 Checklist?
Even though there’s no AICPA-generated checklist, those in the security industry have created a testing checklist of sorts.
Working backward, security personnel use the past work of SOC 2 auditors to figure out what organizations need to do to have the best chance at achieving compliance. They use these steps to create unofficial checklists that organizations can use to prepare for the SOC 2 compliance audit.
Using an unofficial checklist during the preparation or testing phase gives the organization a starting point for trying to match the items the auditor is seeking. The unofficial checklists may have a few differences from each other. However, the majority of them have several commonalities that give organizations a trustworthy starting point.
How an SOC 2 Compliance Checklist Works
The SOC 2 compliance checklist specifies a series of steps and criteria for a company to follow as it prepares for an SOC 2 audit.
By working through the components of the checklist, a company should have a better chance of achieving a successful result when the actual audit occurs.
Security teams may find that they do not need to complete every step in the compliance checklist they’re using. Some of the steps may not apply to the company. Other times, the security team may find that it needs to spend quite a bit of time on one step and very little time on other steps.
The checklist is a suggestion on the preparation steps for the company to follow. Companies can tweak how they follow the checklist to meet their specific needs.
Benefits of SOC 2 Compliance
Ultimately, going through the process of completing the checklist gives the company the best chance of having a successful SOC 2 audit. Some of the benefits of achieving SOC 2 compliance include:
- Clear Security Policy: Before hiring a company, clients often want to know whether it takes the security of its data seriously. With SOC 2 compliance, the company shows that it has a detailed security policy in place and that it follows that policy.
- Meeting Client Needs: Having SOC 2 compliance in place before sending a potential customer a business proposal gives a company a leg up against the competition. SOC 2 compliance clearly shows that a company takes security seriously.
- Precise Documentation: A company must have accurate and detailed documentation in place to gain SOC 2 compliance. Beyond passing an audit, the company can use this documentation throughout the organization to ensure employees all know the expectations for maintaining data security.
- Risk Management: Should a troublesome or risky situation regarding data security arise, the SOC 2 compliance process ensures the company is ready to handle it. Employees don’t have to guess about what steps they should take to maintain the company’s data security. All emergency procedures have a clear explanation and are ready to deploy.
Preparing for an SOC 2 Audit
We’ll break down the major components of the unofficial SOC 2 compliance checklist through the following examples.
Paying attention to these items when self-testing before the audit should give the organization a better chance of having a successful outcome on the actual audit.
Example #1: Understanding the Importance of SOC 2
Before tackling an SOC 2 compliance checklist, determine why the organization needs an SOC 2 audit. Some companies want to reach SOC 2 compliance to meet the needs of clients. Others want to be able to advertise SOC 2 compliance to prospective clients.
After digging into the specifics of what the audit entails, the company may find that it doesn’t really need one. The more likely situation, though, will be that the company ends up having a better focus on the specific aspects of SOC 2 compliance that it needs.
Organizations have different reasons for seeking SOC 2 compliance. Spending time studying why they want to pass the audit will help companies determine exactly which steps should be part of the checklist.
Example #2: Selecting the Desired Reporting Function
When undergoing the SOC 2 compliance process, organizations can select from either a Type I or a Type II report. These audit reports both cover similar items, but they differ in the time periods they cover.
Through the checklist, companies may want to spend time studying which type of report will give them the results they need.
Type I SOC 2 Report
The Type I report will measure the data security procedures and policies the organization has in place at a specific time. The auditor will pick the point in time to check the security of customer data, measuring the system’s performance.
An organization may select a Type I report when it needs to achieve SOC compliance as quickly as possible. An organization going through the SOC audit process for the first time may also select a Type I report, just to speed up the process.
However, because the Type I report only looks at a specific moment in time to measure the organization’s performance, some customers may not accept it. Potential customers may prefer to see a more stringent compliance and auditing process, which occurs with a Type II report.
Type II SOC Report
With a Type II SOC audit report, the auditor monitors the performance of the system over a period of time. This period typically will run between 3 and 12 months, although most organizations go with at least 6 months when selecting Type II.
With audit measurements occurring over a period of time, potential customers may feel more comfortable with the accuracy of the audit results. When the organization can maintain its security measures over several months or even over a year, customers may trust the results more.
An organization may select a Type II audit report after passing a Type I report. The organization may want to show that the successful Type I audit report was not a fluke. Sometimes, a specific customer of the organization may demand a Type II report, and they may demand a certain time period for the report to cover.
Understand that the auditor cannot award SOC 2 compliance until the Type II report comes to an end. If the organization has chosen a 12-month Type II audit process, it takes at least 12 months for the completion of the final results. That’s why organizations that need quick results often choose the Type I report to start and do the Type II report at a later date.
Example #3: Meeting Compliance Requirements
For companies in certain industries, achieving SOC 2 compliance isn’t enough to maintain competitiveness in the market. They may need to achieve certain additional milestones and requirements as part of the process.
For example, some industries require that the SOC 2 compliance fits inside the framework of other security certifications. These may include:
- ISO 27001
- PCI DSS
- SSAE 18
Successfully testing these other security certifications along with SOC 2 can be part of the SOC 2 checklist for a particular company.
Example #4: Preparing Security Procedure Documents
Having the proper documentation in place regarding security procedures is a key component of achieving SOC 2 compliance. If the company’s procedural documents are not up to date or thorough enough, the company will not pass the audit successfully.
Before undergoing the audit, the company’s security personnel should take the time to run a self-test on all procedural documents. This is an important step to follow with an SOC 2 compliance checklist.
The organization will want to verify the accuracy of any documentation the auditor needs, including items outlining policies and procedures. If the team discovers through completing the checklist that documents are incomplete, the security team can fix them before the audit begins.
Auditors also use the documentation to familiarize themselves with the systems the company has in place. Poor documentation leaves the auditor with more questions than answers about the company’s processes. This draws out the audit process unnecessarily.
Example #5: Selecting the Common Criteria to Use
The AICPA created the SOC 2 common criteria in 2010. These criteria refer to the five areas where SOC 2 guidelines apply. They are:
- Processing integrity
Each of these criteria has a specific area of data protection that it handles. The individual criteria refer to the different ways in which an organization guards the data it stores.
Picking Only the Criteria That Apply
Determining which of the five common criteria apply to an organization’s audit is something the organization can do while running the checklist process.
During an SOC 2 audit, the auditor will only look at those common criteria that apply to the organization.
Some organizations may only hold customer data in a way that invokes the Privacy and Security criteria, for example. There’s no reason to undertake an audit that handles the other three criteria in this case. The organization can discover this during the self-testing while following the checklist.
Nearly every organization will need to follow the Security criteria. Because of the importance of these criteria, organizations often will start with this one and work outward to determine the other criteria that apply.
Using the Checklist to Find the Right Criteria
It’s important to select the proper criteria that apply to the organization.
If the organization decides to include all five criteria as part of the audit, but it only really deals with three of them, chances are high it will fail the audit for the other two criteria. The organization probably isn’t going to have the proper procedures in place for customer data use cases that it doesn’t actually use.
Some companies even choose to tackle audits for the five common criteria one at a time, allowing them to completely focus on each of the criteria individually. Again, this is something the company can discover while working through the checklist.
Example #6: Performing a Readiness Assessment
Rather than going through a full-fledged SOC 2 compliance audit, some organizations may choose to undergo a readiness assessment first. This involves a CPA running tests similar to an audit.
Think of the readiness assessment as a test run the organization can undertake before going through an audit. The auditor uses the assessment to give the organization an idea of where it stands in terms of SOC 2 compliance.
For many companies, the readiness assessment is a key part of running through the SOC 2 compliance checklist.
How to Use a Readiness Assessment
With the initial results in hand from the assessment, the organization likely will need to make some changes and corrections to its procedures. This is an important step, as the organization needs to successfully complete any recommended changes before undergoing an official audit for SOC 2 compliance.
Understand that the AICPA doesn’t create a specific set of procedures for the auditor to follow during a readiness assessment. Consequently, the deployment of one assessment could be a little different than another auditor’s assessment.
Because of these potential differences, if the organization receives a successful outcome on a readiness assessment, it doesn’t guarantee the same success in an audit. But the readiness assessment at least gives the organization a good idea of where it stands in terms of SOC 2 compliance before undertaking an audit.
Benefits of a Readiness Assessment
Because of the way the readiness assessment works, some of those in the industry refer to it as an SOC 2 compliance checklist. The readiness assessment is probably the closest thing to an official checklist that an auditor can provide (even though it isn’t official).
The assessment helps the organizations learn about what kinds of questions the auditor may have during the SOC 2 audit. The organizations also receive an idea about which procedures they should focus on before the audit.
An organization does not have to use a readiness assessment. But among the items on the checklist, the readiness assessment may provide the most valuable test run for the organization before the actual audit.
How to Get Started With an SOC 2 Compliance Checklist
Making use of an SOC 2 compliance checklist is simply one of the steps in preparing for an SOC 2 audit. Here are some items to consider when preparing for the audit.
Figure Out What You Want to Achieve With an Audit
Start the process by determining exactly what the company would like to accomplish in achieving SOC 2 compliance. By starting with an end goal, it may be easier to determine the first steps to take with the SOC 2 checklist.
Setting goals for the process and determining exactly why the company needs SOC 2 compliance will ensure the company stays on task from start to finish.
Select an Auditor
When the company has a clear idea of what it wants from its SOC 2 audit, it becomes easier to select an auditor. Some auditors will have a specific focus area that may match up with what the company needs.
Prepare for the Audit
The preparation for the audit is where the checklist enters the picture. Follow the guidelines in the checklist that apply to the company’s specific needs regarding SOC 2.
After running through the checklist, the organization should have the information it needs to finalize preparations for the audit.
For organizations that don’t feel as if they are ready for the complete audit, they may consider a readiness assessment, as mentioned earlier.
Perform and React to the Audit
After the auditor completes the audit, he or she may need some additional documentation. It’s also possible the auditor will identify gaps and issues with the company’s security plan, preventing it from reaching SOC 2 compliance.
The company will then be able to react to the audit results, seeking to make the desired changes to reach compliance.
Seek Help From a Third Party
If the organization is struggling to prepare for an audit or to have a successful result in an audit, multiple third-party services are available for hire. These security services specialize in SOC 2 compliance, working to help organizations receive a successful outcome.
A company doesn’t have to hire a third-party organization to help with SOC 2 issues. Some companies can handle the process with their current staff.
However, if the company simply doesn’t have the security personnel on staff to handle its SOC 2 needs, it does have the option of hiring a third-party company to help with the process.