The basics of SOC reporting – evaluate your organization and service providers with accuracy
What is a SOC report, and why do I need one?
System and Organization Controls (SOC) reports provide an independent evaluation of relevant systems and controls, giving you a professional and objective review of your business (overall or in a specific area, depending on the report type). These reports can help your stakeholders (customers, shareholders, and regulators) have confidence in your processes and procedures. Plus, they can help you identify organizational gaps, needed efficiencies, and areas of improvement. A variety of SOC reporting types exist, each used to measure different aspects of your organization.
What are the different types of SOC reports?
- SOC 1: This reports on internal controls that affect the user entities’ financial reporting (internal control over financial reporting, or ICFR) process or SOX 404 key controls.
- SOC 2: This provides detailed information about how various IT risks are addressed, using the American Institute of CPAs (AICPA) Trust Services Criteria categories: security, availability, confidentiality, processing integrity, and privacy. This report can play an important role in the oversight of an organization, vendor management programs, internal corporate governance, and risk management processes.
- SOC 2+: This demonstrates compliance with the same Trust Services Criteria as a SOC 2, as well as a second, industry-recognized framework selected by the service organization. A SOC 2+ report can be an effective tool to show the depth and maturity of an organization’s information security practices and programs.
- SOC 3: This report’s scope and supporting examination procedures are the same as for a SOC 2. By contrast, the report deliverable is designed for general use and can be more widely distributed than a SOC 2.
As you can see, a wide variety of SOC reports exists. Which report is best for you will depend on the services you provide as well as the potential risks and focus areas of your customers and report users.