A SOC 2 Type I audit is an audit reporting on the policies and procedures a company has established at a particular point in time. It is generally the first step taken and is often referred to as “test of design.” It will answer the question, “are the controls properly in place?” A SOC 2 Type II audit is a “test of effectiveness” over a period of time. The “period of time” is generally no less than 6 months and no more than a year. It will answer, “is your company following it’s own policies?”
When the industry replaced SAS-70 reports with SOC 1 and SOC 2 reports as the new standard, there was initially a lot of confusion. SOC 1 reports are often referred as “SSAE 16.” These reports typically only cover the controls that support financial reporting. SOC 2 on the other hand is an audit against the Trust Services Principles and Criteria. SOC 2 reports are generally best for technology service providers that extend beyond financial services. SOC 2 is the best choice for most businesses.
If you’re selling services to mid-market and enterprise companies you may be asked, “Do you have a SOC 2 Type II report?” If the answer is “no” your company may find it more and more difficult to make these sales. With almost daily headlines of companies being breached, the need for information security and compliance (with laws and industry standards) continues to increase. A SOC 2 report will help your company sell to bigger and bigger customers.
A SOC 2 report will help your customers trust that you follow security best practices. SOC 2 reports are generally carried out by businesses performing information systems processing or technical services to other business. The SOC 2 report provides third party assurance that an adequate baseline of Information Security controls have been put in place. Businesses of all sizes can have a SOC 2 audit, however, it is most beneficial for businesses looking to sell in the enterprise market.