With businesses increasingly outsourcing core functions, service organizations are more likely to receive requests for Service Organization Control (SOC) audits to provide proof of a reliable internal control environment. While there are two other SOC reports—SOC 1 and SOC 2—we’ll focus on SOC 3 in this guide.
Keep reading as we discuss and define SOC 3 reports and how you can prepare for a SOC 3 audit.
What is SOC 3 Anyway?
Here’s how the AICPA describes SOC 3:
“SOC 3 reports are designed to meet the needs of users who want assurance on the controls at a service organization related to security, availability, processing integrity, confidentiality, or privacy but do not have the need for or the knowledge necessary to make effective use of a SOC 2 report. These reports are prepared using the AICPA/CPA Canada (formerly Canadian Institute of Chartered Accountants) Trust Services Principles and Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy. Because SOC 3 reports are general use reports, they can be freely distributed.”
A SOC 3 report comprises the same data as the SOC 2 report. The only difference is the former, being intended for public use, contains less detail than the latter. As such, SOC 3 reports don’t mention the descriptions of the tests of controls, the test results, or the auditor‘s opinion on the description of the service organization’s systems.
This is the main reason why many service organizations choose to receive a SOC 3 report to prove their adherence to the five Trust Service Categories to potential clients, investors, and other key stakeholders.
A SOC 3 report allows service organization managers to build trust and confidence within their prospects without having to disclose an overwhelming amount of information. It’s also an incredibly useful marketing tool you can put up on your website to indicate your good standing with data security standards—something that’s incredibly important considering the ever-growing cyberattacks.
How Does SOC 3 Work?
A SOC 3 report is essentially a report on controls of a service organization’s internal control environment other than financial reporting. It’s prepared using the AICPA/Canadian Institute of Chartered Accountants (CICA) Trust Service Principles: Security, Availability, Processing Integrity, Confidentiality, and Privacy.
This report is suitable for users who want assurance on a service organization’s controls related to the Trust Service principles but lack the knowledge to make effective use of the more detailed SOC 2 report. Precisely why many claim a SOC 3 report is like the abridged version of a SOC 2 report.
Below are the main components of a SOC 3 report:
- A concise description of the service organization’s system.
- Determining whether the entity maintained effective controls over its system relating to the principal being reported on—security, availability, confidentiality, processing integrity, or privacy—based on the applicable trust services criteria.
- Management’s affirmation on the controls of the service organization based on the AICPA/CICA Trust Service principle being reported on.
Understanding Trust Services Principle
The Trust Service Principles prioritize e-commerce systems due to the amount of private/confidential/financial information exchanged over the internet on a day-to-day basis.
Any online retailer or service provider—or just about anyone who deals with private information—wants to know whether suitable security practices are being followed by the organization to guard itself against security leaks, data loss, and lost sales.
Since the SOC 3 report is one of the most common reports based upon the trust principles WebTrust and SysTrust, both of which are AICPA-developed to let CPAs build new practice niches, businesses prefer working with service organizations who have a clean chit during the audit.
This certification falls into the following four categories:
- WebTrust. The engagement scope includes any combination of address principles and criteria.
- WebTrust Online Privacy. The engagement scope depends on the online privacy principle and criteria.
- WebTrust Consumer Protection. The engagement scope is based on the processing integrity and relevant online privacy principles and criteria.
- WebTrust for Certification Authorities. The engagement scope considers specific principles and related criteria depending on the certification authorities.
This SysTrust review encompasses a combination of principles, including:
- Security. The system is safe and protected against unauthorized physical and logical access.
- Availability. The system can be used for operation as committed or agreed.
- Processing Integrity. The processing of the system is complete, accurate, authorized, and timely.
- Confidentiality. Any information claimed as confidential is protected as committed or agreed.
What’s the Best Time to Get a SOC 3 Audit?
You should get a SOC 3 audit at exactly the same time you plan on getting a SOC 2 audit. As mentioned before, both the reports provide the same information but have different audiences: internal and external.
Alternatively, you can also consider performing a SOC 3 audit whenever you want to add another dimension to your marketing system. Getting a SOC 3 audit will make it easier for you to win your current customers’ confidence while simultaneously attracting new customers since they’ll instantly recognize the seal of approval from a verified and trusted third-party auditor.
How to Prepare for a SOC 3 Compliance Audit
The audit process that yields SOC 2 reports also develops SOC 3 reports. Precisely why the preparation steps of these reports are the exact same.
Step 1: Devise Relevant and Up-to-Date Administrative Policies
Standard Operating Procedures (SOPs) and administrative policies are incredibly crucial to any security program.
Not only should these policies match your staff structure, workflow, and technologies, but they should also be written in a straightforward manner, sans any legal jargon. The primary purpose to do this is to make it intelligible for the common man—ones who don’t understand technical terms.
As for your security policies, these should dictate how the controls will be implemented across your application and infrastructure. Also, defining the framework for security management in the workplace is also essential.
All your security policies should outline standard security processes for topics, such as:
- System Access — How you’ll grant, limit, or revoke a user’s access to your sensitive data.
- Incident Response — How you’ll report security incidents and investigate and resolve them
- Disaster Recovery — How you’ll implement, test, and manage backup and disaster recovery standards
- Security Rules — How you will assign staff and security roles and responsibilities across your organization
- Risk Assessment and Analysis — How the organization will assess, manage, and resolve security issues
- Security Training — How you’ll conduct security awareness training across your organization
Make sure to review your administrative policies regularly once your team successfully adopts them. You should also update your security policies regularly as procedures change and advance with time.
Step 2: Establish Technical Security Controls
It’s crucial for your cloud security controls to match your administrative security policies.
You’ll have to set up technical security controls across your applications and infrastructure. This includes access control, backup, encryption, firewall and networking, intrusion detection systems (IDS), audit logging, and vulnerability scanning.
Besides that, you should also ensure your team applies security best practices always and that all the security controls are implemented in accordance with the latest Trust Standards Criteria.
Step 3: Collect and Organize the Necessary Documentation
Another crucial step to prepare for a SOC 3 audit is gathering relevant documentation, materials, and evidence. Here’s a list of a few documents that can help streamline the audit process:
- Cloud/Infrastructure Certifications and Agreements — This includes all cloud-and infrastructure-related agreements, certifications, and attestations, such as Service Level Agreements (SLAs), Business Associates Agreements (BAAs), and SOC 2 reports.
- Technical Security Control Documentation — This includes all evidence and documentation around the implementation and management of infrastructure security controls.
- Third-Party and Vendor Contracts — This includes all documentation associated with third-party companies, service providers, and contractors.
- Administrative Security Policies — This includes all administrative policies related to your security program.
- Risk Assessment and Audit Documentation — This includes any existing documentation from previous security assessments or third-party audits.
Step 4: Select a Reputable Auditing Firm
The next task on your checklist after developing your security program and preparing for a SOC 3 assessment is to set up an appointment with a reputable auditing firm.
Be sure to select an organization that has worked with similar-sized companies like yours and has tons of experience performing SOC 3 audits. Additionally, they should also have the security expertise for greater accuracy.