A beginner's guide to SOC 2 compliance

The latest update to the service organization controls 2 (SOC 2), a voluntary compliance framework, was published in October 2022. SOC 2 helps organizations manage customer data securely. Organizations can use this framework to recognize loopholes in existing controls and cybersecurity policies, and map these loopholes with the listed controls in the standard. They can then implement better controls in line with their risk requirements. It is specifically intended for all service organizations. With the proliferation of SaaS and IaaS organizations, numerous companies will benefit from SOC 2 compliance.

This blog will explore the following topics:

1. What is the SOC 2 security standard?

2. What are SOC 2 requirements?

3. What are the different types of SOC 2 audits?

4. Is SOC 2 similar to ISO 27001?

5. Who needs SOC 2 compliance in 2023?

6. How does a SIEM help with SOC 2 compliance for cloud security?

1. What is the SOC 2 security standard?

SOC 2 is a voluntary certification and framework created by the American Institute of Certified Public Accountants (AICPA). It is part of a family of similar frameworks, like SOC 3 and SOC 1.

• SOC 2 is a set of auditing guidelines that help service organizations prove the effectiveness of their information security program to their customers. It helps them manage customer data based on five trust service principles: confidentiality, integrity, availability, security, and privacy. The organization would furnish detailed SOC 2 reports to their business partners, suppliers, etc.
• SOC 3 is a report meant for public perusal. It lets the public know about a service organization's internal controls to ensure confidentiality, integrity, availability, security, and privacy. Confidential enterprise data that is not meant for the public eye is removed from the SOC 3 report. It can be considered a simplified version of the SOC 2 report.
• SOC 1 outlines a service organization's internal controls on financial reporting.

The SOC 2 is not a mandatory regulatory standard; it is a benchmark that is widely accepted and acknowledged. Similar to ISO 27001, SOC 2 lets companies decide which security controls they need to implement based on their unique risk exposure.

2. What are SOC 2 compliance requirements?

To understand the SOC 2 compliance requirements, we must first understand its structure. To do this, let us first explore three key terms or tiers in the structure.

• Trust service criteria: Trust service criteria, or TSCs, can be considered the fundamental unit of the SOC 2 framework. They are the essential requirements or controls to be implemented by an organization.
• Trust service principles or categories: SOC 2 lists its TSCs, under five trust service principles: security, availability, integrity, confidentiality, and privacy.
• Focus points: Focus points are guidelines that an organization can refer to while implementing TSCs. They are listed under each TSC. In the latest update of the standard, there are around 300 points of focus in the SOC 2. The focus points listed under the first principle, which is security, are mandatory for organizations to obtain SOC 2 certification.

Understanding the five trust service principles and their respective TSCs

The five trust service principles are:

• Security: The TSCs under the security trust service principle deal with access control, network security, incident response, and data encryption methods. The TSCs and focus points that fall under the security principle have to be compulsorily implemented to clear a SOC 2 audit. Under security, there are nine listed TSCs. These consist of:
  • Control environment
  • Risk assessment
  • Communication and information
  • Monitoring of controls
  • Design and implementation of controls
  • Controls over logical and physical access in SOC 2
  • Systems and operational controls for SOC 2
  • Controls for SOC 2 management
  • SOC 2 Risk mitigation controls

  Each of the TSCs listed under the security principle have relevant focus points under them for organizations to implement.

• Availability: The availability principle lists three TSCs. They require service organizations to focus on business continuity and disaster recovery, and test the efficiency of the disaster recovery plan continuously. The main aim of these criteria is to ensure the availability of systems and entities for operational use.
• Processing integrity: This principle deals with ensuring that established security processes and systems are carried out in an authorized and timely fashion, without any data tampering. This can be ensured by implementing security controls like data validation, data reconciliation procedures, and data quality assessments. There are five TSCs listed under this principle which deal with the implementation and communication of system processes involved in the generation and use of data being processed.
• Confidentiality: Confidentiality TSCs can be addressed using measures like data encryption and classification, and data access controls which ensure sensitive data is protected from any kind of modification or tampering.
• Privacy: As the name suggests, this principle deals with ensuring the privacy of personally identifiable information and how it is gathered, processed, stored, and disclosed. This can be certain confirmed through regular risk and privacy impact assessments.

Risk assessment, gap analysis and mapping of internal controls

Once you grasp the five trust service principles and understand which apply to your situation, be prepared to carry out a risk assessment at least once a year. This is because a SOC 2 certification is valid only for a period of 12 months from it's date of issue. After a risk assessment, the next step is conducting a gap analysis, and then mapping the existing internal controls with the TSCs listed in SOC 2 to understand which of the controls must be implemented. Documentation of these processes is required for a successful SOC 2 audit.

3. What are the different types of SOC 2 audits?

Companies that aim to get SOC 2 certified must conduct internal and external audits. While the common practice is to conduct at least one internal audit every year, the AICPA prescribes two kinds of external audits. Let's take a look at how each type works.

Type 1: In a SOC 2 Type 1 audit, the aim is to give a glimpse of the current compliance status of the company to the auditors. Organizations can expect audits conducted on specific dates with the objective of assessing whether enterprise systems are suitable for implementing the necessary SOC 2 controls. The auditor might take a look at one specific requirement at random to check whether it has been implemented correctly.

Type 2: The objective of a SOC 2 Type 2 audit is to see whether an organization can consistently comply with the required security controls for a prolonged period. Organizations will be assessed for a particular evaluation period and regularly checked to ensure they are SOC 2 compliant throughout. The auditor will examine the required controls, all security systems and processes, and their operational efficiency for the evaluation period.

4. Is SOC 2 similar to ISO 27001?

SOC 2 is similar to ISO 27001 in several ways. Both are frameworks that are risk-based and let the organization determine which security controls need to be implemented as per its requirements. SOC 2 and ISO 27001 are reputable certifications that clients and users expect from organizations that deal with their confidential information. While SOC 2 is limited to US-based companies, ISO 27001 is a certification that applies to companies all over the world.

5. Who needs to comply with SOC 2?

While it is specifically meant for US-based companies, SOC 2 is not restricted to a particular sector or industry. Typically, SOC 2 compliance is important for service-based organizations. You should consider getting a SOC 2 certification if you're a:

• Cloud service provider
• SaaS organization
• Managed services provider (MSP)
• Managed security services provider (MSSP)
• Business that stores customer data in the cloud

6. How does a SIEM help with SOC 2 compliance for cloud security?

Cloud security is a hot topic due to the increasing risk of data theft and unauthorized access to important files. According to Gartner, end-user spending on the cloud is predicted to increase by 20% in 2023. Whether you are a MSP who directly deals with end users, or an organization that offers Technology as a Service (TaaS) products or services to businesses that deal with end users, SOC 2 is a framework that you'll be expected to comply with.

With the fast-paced increase in cloud adoption and hybrid work, organizations will have to invest in solutions that address both on-premises and cloud security needs. ManageEngine Log360, a SIEM solution with integrated cloud security capabilities, helps enterprises with SOC 2 compliance and cloud security needs in several ways.

CASB: Log360 performs deep packet inspection to scan files and inform you about possible data exfiltration. It also provides visibility into shadow applications and prevents data leakage.

Monitoring cloud platforms: Log360 comes with a dedicated cloud security add-on that helps security analysts collect, monitor, and analyze logs from major cloud platforms like Amazon Web Services, Microsoft Azure, Google Cloud Platform, and Salesforce. Its alerting and reporting features provide several predefined reports to track user activity on the network.

Risk scoring and automated incident response: Equipped with SOAR and UEBA capabilities, Log360 employs ML algorithms to detect anomalies in the behavioral pattern of users and assigns a suitable risk score to alert the analysts. It also lets security admins set up automated workflows to respond to threats immediately.

Compliance management: Compliance analysts can create custom compliance reports and schedule them according to their requirements. They can also choose to be notified automatically via email whenever their scheduled report is created. Analysts can use Log360 to create customized reports for Type 1 or Type 2 audits.

If you're a service based enterprise that is planning to get SOC 2 certified anytime soon, you should consider opting for a compliance management solution like Log360, which can help you automate several tedious processes like audit reporting, monitoring security controls, and incident response.

To get started, you can choose to speak with our product experts and receive a personalized demo, or download a free trial version for 30 days to check it out for yourself.