What Is SOC2 Compliance?

Table of Contents

SOC2 compliance is important for service organizations that want to protect their customers’ data. For instance, organizations that use a SaaS provider (Software-as-a-Service) can use SOC2 to verify that their provider meets specific security requirements. The mishandling of data by service organizations can make them vulnerable to today’s main cyber risks threats, namely phishing, ransomware, malware, and credential stuffing attacks.

In this blog post, we will not only explain what SOC2 compliance is, who it is for, what type of third party performs a SOC2 audit, and what its Type 1 and Type 2 and key trust service principles are, but also what are the main differences between SOC1 and SOC2 along with SOC2 compliance’s key benefits.

What is SOC2 compliance?

Developed by The American Institute of Certified Public Accountants (AICPA), SOC2 (System and Organization Controls [SOC2]) defines criteria for customer data management, which are based on five Trust Service Principles (TSPs): Security, availability, processing integrity, confidentiality and privacy.

SOC2 was created to give customers and clients assurance that the service providers they are using have adequate controls and security measures in place to protect their data. Unlike PCI-DSS’ stringent set of security requirements, SOC is rather a framework allowing organizations to design their own controls as long they effectively serve the trust principles.

SOC2 compliance is considered as the gold standard for data security in the cloud in terms of third-party assurance, helping you build trust with customers and clients and reduce the risk of data breaches.

Who is it for?

SOC2 applies to any technology service provider or SaaS company that stores, processes, or transmits customer data, including cloud computing, managed security, health care claims management and processing, and sales force automation providers.

What type of organization can perform a SOC2 audit?

A SOC2 audit must be performed by a qualified, independent third-party auditor, including CPA (Certified Public Accountant) firms.

The auditor will review the service organization’s SOC2 report and issue a SOC2 attestation report that includes the auditor’s opinion on whether the service organization has met the SOC2 criteria.

What are SOC2 Type 1 and Type 2?

SOC2 audit reports come in two types:

  • The SOC 2 Type I report is an attestation of the controls at your company’s service organization at a specific point in time and it certifies that these are suitably designed and implemented.
  • The SOC 2 Type I report is an attestation of the controls at your company’s service organization over a period of time and it certifies that these are suitably designed and implemented and are effective.

What are SOC2’s key controls?

The Service Organization Control 2 (SOC2) set of compliance requirements and auditing processes was created to help companies determine if their business partners can secure data properly. This includes protecting clients’ interests from unauthorized access as well as maintaining privacy for all those involved in the transaction process. SOC2’s 5 key security controls or Trust Services Criteria (TSC) are described in the following:

  • Security refers to protecting information and systems from unauthorized access, use, or disclosure, through the use of security systems or processes including firewalls, encryption, and two-factor user authentication.
  • Availability encompasses the accessibility of the system and data, as per conditions that are specified and agreed upon in a contract or Service Level Agreement (SLA), as well as the ability of the system to perform its required function at specified times.
  • Processing integrity ensures that customer data is complete, valid, accurate, timely, and authorized, and that processing is carried out in accordance with stated policies and procedures.
  • Confidentiality addresses the data considered confidential when its access or disclosure is restricted to authorized individuals, or when its unauthorized access or disclosure would have a negative impact on customers.
  • Privacy covers the collection, use, retention, and disposal of customer data in a manner that is consistent with an organization’s privacy policy, as well as relevant laws and regulations.

What’s the difference between SOC1 and SOC2?

SOC1 and SOC2 are both compliance standards regulated by the AICPA. However, they have different goals, control coverage types, audiences, and intended uses, and they’re not upgrades to each other, as described in the following list:

Different overall goals

While SOC 1 focuses on helping organizations report on internal controls for financial statements by its customers, SOC 2 is more general and assesses a given service provider’s controls for various TSC, namely security, confidentiality, availability, processing integrity, and privacy.

Different types of control coverage

While SOC 1 auditing strictly covers the processing and protection of customer information across business and IT processes, SOC 2 can cover the five principles, either as a given selection of them or the five of them.

Different audit audiences

While the purpose of the SOC 1 audit is for Certified Public Accountants (CPAs) in an organization’s management, external auditors and users to have confidence that its financial statements are accurate, the goal of the SOC 2 audit is to provide executives, business partners, and external auditors with an assessment on whether or not their company’s security measures meet industry standards.

Different audit intended uses

While SOC 1 helps user entities get the impact of service organization controls on their financial statements, SOC 2 helps oversee organizations, supplier management plans, internal corporate governance and risk management processes, as well as regulatory oversight.

You might need a SOC 1 or SOC 2 report if you’re an organization hosting customer systems, such as an infrastructure-as-a-service (IaaS) or a platform-as-a-service (PaaS), or hosting software in the cloud, such as a software-as-a-service (SaaS) entity, or a data center.

Choosing between SOC 1 and SOC 2 should come down to a) the type of compliance requirements you are bound to b) the type of assurance you need to deliver to your customers c) and the type of information you are responsible for protecting.

What are the key benefits of SOC2 compliance?

There are many key benefits of SOC2 compliance, including the following:

Secure business partnerships

SOC2 compliance can help you build trust and secure business partnerships. If you’re a SOC2-compliant organization, your potential partners will know that you have the necessary controls in place to protect their data.

Improve your security measures

SOC2 compliance can help you identify and improve your security measures in terms of both technology and processes, which means that your organization will be better protected against cyber attacks.

Prevent incidents and financial losses

SOC2 compliance can help you prevent incidents and financial losses that could result in damage to your reputation or legal action taken against your organization.

Protect your brand image and reputation

SOC2 compliance can help you protect your brand image and reputation by demonstrating your commitment to protecting your customers’ data. With ongoing breaking news of company data breaches, showing a seal of security compliance will help you win and maintain customer trust.

Appeal to investors and buyers

SOC2 compliance can help you appeal to potential investors and buyers as it demonstrates that you are a responsible and reliable business, and also that you have the necessary controls in place to protect their investment.

Comply with others 3rd-party requirements

SOC2 compliance can also help you comply with the other requirements such as PCI-DSS, ISO 27001, and HIPAA, but also with your clients’ and partners’ requirements if they have SOC2-related clauses in their contracts.

In short, SOC2 reports aren’t just a regulatory compliance exercise for good measure, but also a valuable marketing tool to win new business.

As stated in our other blog post detailing some of the above benefits of SOC compliance, starting your SOC2 compliance journey early will allow your organization to grow in an environment with strengthened controls, making any of your future compliance projects faster and easier to get done.


Today, more than ever, the ongoing success of your business relies on trust. Trust of your employees, your partners, and most importantly, your customers. SOC2 compliance is the best way to ensure that trust. Not only does it help secure your customers’ data, but it also helps differentiate your business in the marketplace. For any business putting client trust front and center, SOC2 compliance is the way to go.

SOC2 compliance is not a one-time event, but rather an ongoing journey that requires commitment from the entire organization.

Contact us today is you need help with your SOC2 compliance.

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