Expect The Unexpected: Ensuring A Frustration-Free SOC 2 Audit

By Ama Boateng, ERMProtect IT Security Consultant

A SOC 2 Audit has become the gold standard in Information Security to combat the rising trend of third-party cybersecurity breaches.

For service providers, getting a SOC 2 Type 2 Attestation report is a powerful tool that demonstrates the organization’s commitment to securing client data and minimizing exposure to security, reputational, and operational risk. For security-conscious businesses, SOC 2 compliance by a third-party vendor should be a minimal requirement when considering a SaaS provider.

Like many other audits, the SOC 2 audit may breed stress and anxiety. However, there are a few things your organization can do to avoid unexpected surprises that may cause excessive frustration.

First, Let's Understand What is a SOC 2?

A SOC 2 audit is an audit of a third-party service provider’s non-financial reporting controls related to the security of an IT system. Auditors examine systems and attest that they  are suitably designed, in place, and appropriately protecting sensitive client data. This in-depth audit is signed by a licensed CPA with deep IT expertise, providing a level of security assurance that is being required  by more and more businesses before they entrust third-party vendors with their data.

Obtain Executive Buy-In

For a smooth and successful SOC 2 audit, it is important to ensure that senior executives support the project. An initial SOC 2 audit can be arduous and time-consuming, depending on the scope and level of complexity in the environment. It is important that top management understands the time, effort, and  resources (cost and personnel) that must be allocated to the project to ensure a successful outcome.

A SOC 2 examination is rigorous. It assesses the administrative and technical controls and processes across all functional areas of your organization, including human resources, finance, Information Technology, Information Security, engineering, operations, etc. Support from top management will help ensure that you have sufficient time and resources needed to successfully complete the audit. This could also help ensure that parties involved in the audit recognize the urgency and appropriately prioritize any requests presented to them.

Designate A Project Manager

Assigning a project manager is an essential step in streamlining the flows of information within your organization as well as with your external auditor. The broad scope of a SOC 2 audit requires the collection of information and documentation from business functions including HR, operations, systems admins, database professionals, and others. It is recommended that the project manager leads a SOC 2 team that includes an executive sponsor, a technical lead, team leads for the various departments, and perhaps a writer.

Designating a single point of contact can make this process faster and more efficient.  Each security control will require a subject matter expert to provide evidence of that control’s effectiveness for the auditors to review. If you do not designate someone to coordinate that information flow, the auditors will have to track down documentation function by function. This complex process will extend the life of the project considerably.

Define Your Controls

In preparing for a SOC 2 audit, management will be required to describe the technical, physical, and administrative controls that are in place to safeguard the data in the organization. These controls must illustrate the organization’s ability to meet its service commitments and system requirements based on the Trust Service Principles that include data security, data availability, data processing integrity, data confidentiality, or privacy.  Although the data security principle is required to be addressed in all SOC 2 audits, the remaining trust service criteria - data availability, data processing integrity, data confidentiality, and privacy -  can be limited only to the principles that are relevant to the outsourced service being performed.

Unlike PCI DSS and other audits which have very rigid requirements, SOC 2 reports are unique to each organization. Controls should align to the Trust Service Principles that are in scope at the organization.   Ultimately, it is important that you document the description of your actual controls and not simply copy the examples of controls from other companies that are not reflective of the organization’s environment. During the audit, the service provider will be required to provide sufficient evidence, including written policies and procedures, system configurations, reports, logs, and other artifacts, to support the design and/or operation of the controls. Failure to present the requested evidence could result in exceptions that could impact the SOC2 opinion.

Set Realistic Expectations

Proper preparation and setting realistic expectations can smooth the way to an efficient and successful audit. Many service providers seek to become SOC 2 compliant in response to a demand from potential or existing clients. As a result, they often feel the need to rush the process or skip essential steps, such as performing a readiness assessment. It is important to become well-informed about the process of SOC reporting and set realistic goals. As a great resource of information, companies can utilize the AICPA guidebook entitled SOC 2 Reporting on an Examination of Controls at a Service Organization Relevant to Security, Availability, Processing Integrity, Confidentiality, Or Privacy. This guide can help you understand what goes into planning, performing, and reporting on SOC 2 or SOC 3 engagements. It also outlines the responsibilities of the service provider and the auditor during the engagement.

Management must understand the following expectations:

1. Cost.

The cost of SOC 2 engagements can be high and greatly depends on the several factors. The complexity of the infrastructure plays a crucial role in determining the total cost of a SOC 2. Some of the other factors that may play into the cost of a SOC 2 Type 2 audit include:

  • Scope of the SOC 2 Type 2 report.
  • Size of your organization.
  • Number of in-scope processes and systems.
  • Complexity of the environment and systems.
  • Auditing firm.
  • Location(s).
  • Control Environment Maturity.

It is important to understand that there is no “one size fits all” SOC 2 audit. Every SOC 2 engagement is different, and the factors that drive the difference are the same reasons  why a service auditor cannot provide a single standard price for every SOC engagement. Thus, the cost may widely vary from one to another.

2. Time.

The SOC 2 reporting process takes place in several stages and can last for several months depending on the nature of the engagement. The variation is caused by firm maturity, motivation to get the SOC 2 report, project complexity, the type of report (Type I vs. Type II), and variations at each stage of the reporting process.

The following is an overview of each stage of the process:

  • Planning and Strategy. In this stage, the team establishes procedures for communication, and sets priorities and scope for the SOC 2 report.
  • SOC 2 Readiness Assessment. For organizations that elect to undergo a readiness assessment or gap analysis before the formal audit, this stage enables you to identify the gaps and other weak points within your environment that could cause you to fail an examination.
  • Remediate Identified Issues. Timing for this stage may vary greatly depending on the extent to which management is willing to allocate resources to resolve gaps, the nature of the gaps, and how motivated management is to achieve SOC 2 compliance.
  • Audit Fieldwork. Audit fieldwork begins when management feels certain they have completed remediation. At this point, the auditors will collect and examine audit evidence for the SOC 2 audit report, usually both remotely and on-site.
  • Audit Report. After the conclusion of audit fieldwork, the audit firm will compose the final SOC 2 report and complete other administrative tasks needed to meet AICPA requirements.
  • Maintenance. SOC 2 reports are required annually, so it is critical to maintain the program in between them.

3. Effort.

Again, a successful SOC 2 audit requires significant efforts from the team and members of the different areas of the organization. This will require realignment of priorities and cooperation of all members that are involved. The project manager and auditor should work together to set attainable goals and expectations for the project.

The Importance of Readiness Assessment

A SOC 2 Readiness Assessment is essentially the rehearsal dinner of your SOC 2 Audit. A carefully performed SOC 2 readiness testing could mean the difference between a qualified and an unqualified auditor opinion. It allows the service organization to evaluate the entire control environment fully and comprehensively before launching an official SOC 2 audit.

This is a time to truly get to know your organization and every moving piece within it. The readiness assessment helps to identify any control gaps that may exist in the design and operation of information security internal controls. By doing this, you are able to remediate any existing weaknesses and deficiencies to avoid suffering the consequences of a less than satisfactory opinion in the final audit report.

A readiness assessment can also help to narrow down the scope of the audit to the exact business process and the specific systems to be included in the SOC 2 audit, which can help  save valuable time and resources. Defining the scope for a SOC 2 audit means determining which of the relevant Trust Services Principles need to be included in the examination. The number of Trust Services Principles covered by a SOC 2 is determined by your organization’s reporting needs and client demands.

We recommend that you engage the service auditors in the readiness assessment as they have the experience needed to guide you during this process. They can help define the scope of the audit, document  controls, and identify any deficiencies that need to be remediated in your environment before the audit begins.

Professional Assistance Preparing for Your Next SOC 2 Audit

ERMProtect’s SOC 2 team regularly works with service organizations to achieve top-level compliance that benefits all stakeholders. We help organizations avoid anxiety, confusion, and wasted time and dollars when it comes to managing their information security compliance programs. We work hand-in-hand with you to streamline the SOC 2 examination process, while guiding you to implement a more secure environment.

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