Compliance fatigue is real. Between adhering to industry regulations, customer security questionnaires and contractmandated standards – it‘s easy to be overwhelmed. Yet in today‘s environment, demonstrating adherence to security, privacy and operational controls via audits is no longer optional.
This is where SOC attestations have emerged as a standardized way for organizations to showcase they can be trusted with customer data. By 2025, 87% of mid-large enterprises are projected to rely on SOC reports, according to leading research firms.
But confusion persists on what exactly SOC 1, SOC 2 and SOC 3 attestations entail and how they vary.
In this comprehensive guide, we simplify the nuances between the trio of SOC compliance certifications to help you:
- Determine which SOC report fits your business needs
- Gain clarity on the audit process
- Ensure successful, pain-free SOC attestations
Let‘s get started!
What Exactly are SOC 1, 2 and 3 Reports?
SOC stands for "System and Organization Controls". These independent audits examine the internal controls implemented by a service organization to meet compliance, security and operational criteria.
SOC 1: Validates financial reporting controls tied to GAAP/IFRS requirements
SOC 2: Focuses on security, privacy, availability and processing integrity controls
SOC 3: Provides a summarized view of SOC 2 controls to share publicly
They are administered by CPA firms based on predefined AICPA standards. lets unpack what each actually entails…
SOC 1 Audit Scope and Purpose
The primary focus of a SOC 1 report is…
Use Cases: Cloud payroll providers, payment processors, etc.
Key Differences from SOC 2:
- Scope tied to financial reporting risks
- Mandatory for public companies
- Technical infrastructure not evaluated
And more differences covered shortly…
SOC 2 Audit Scope and Purpose
The primary focus of a SOC 2 report is…
Use Cases: SaaS companies, infrastructure providers, healthcare sector
Trust Principles Evaluated:
- Security
- Availability
- Confidentiality
- Privacy
- Processing Integrity
SOC 3 Audit Scope and Purpose
The key difference between SOC 2 and SOC 3 is…
Use Case: Marketing to general public consumers
Key Characteristic:
- Summary of SOC 2 controls
- Public disclosure allowed
Let‘s now spot the subtle differences between the trio…
Spotting the Differences: SOC 1 vs SOC 2 vs SOC 3
While the overarching purpose of demonstrating credible third-party evaluated controls is consistent across the SOC attestations, they have distinct focus areas, requirements and target audiences.
| Audit Standard | SOC 1 | SOC 2 | SOC 3 |
|---|---|---|---|
| Objective | Financial reporting risks | Security, privacy & availability risks | Public trust principles summary |
| Audience | CPAs, regulators, customer finance teams | Prospective cloud customers, management | General consumer public |
| Coverage | Service impacts on financial reporting | Infrastructure, policies, and processes | High-level summary of SOC 2 controls |
| Distribution | Restricted | Under NDA | Public marketing |
What remains consistent is that all SOC attestations provide a competitive advantage while meeting compliance and security imperatives.
According to leading analyst firm, KuppingerCole, 72% of organizations saw measurable security improvements from obtaining SOC certifications.
With clearer objectives around the purpose of each report, let‘s now demystify what exactly happens during a SOC audit…
Peeling Back the Curtains: What Happens During a SOC Audit?
While SOC attestations involve an extensive auditing process, breaking it down into clear milestones makes the journey predictable.
Here is a step-by-step overview into what organizations can expect:
- Determine your optimal SOC Type
- Not all reports may be suitable for your business model
- Find the right audit partner
- Engage an experienced, reputed CPA audit firm
- Perform risk assessment
- Uncover control gaps or improvement areas through self-assessments
- Plan remediation measures
- Fix issues before actual audit begins
- Finalize audit plan & timeline
- Document controls landscape for auditor clarity
- Conduct onsite audit
- CPAs will test controls through interviews, observations and sample checks
- Remediate issues
- Resolve any lingering gaps identified during audit
- Compile audit results
- Auditors will ready the final audit report
- Renew and repeat annually
- Maintain evidence of continued compliance
While seeming elaborate, the process becomes quite predictable once organizations have gone through it the first time. Let‘s cover some leading practices to ace your first audit…
Best Practices to Ace Your First SOC Audit
Having assisted various high growth companies demonstrate compliance, here are few key recommendations:
1. Build a centralized audit knowledge base
Retain audit reports, trailing remediation evidence, communications and more in an accessible system of record that both business users and auditors can tap into anytime.
2. Conduct periodic control self assessments
Internal control testing simulations throughout the year uncover gaps early for smooth sailing through actual audits.
3. Involve leadership commitment
Executive support and involvement in compliance success incentivizes teams and aligns audit prep with strategic priorities.
4. Clarify provider vs auditor responsibilities
Clearly outline what falls under the purview of the CPA auditor vs your internal IT/InfoSec teams to efficiently collaborate.
5. Automate audit planning and scheduling
Leverage purpose-built audit management tools like AuditBoard, Galvanize and RSA to autogenerate audit plans tailored to your environment.
As we covered in an exclusive podcast with veteran CISO Shane McNamee, "timing is everything when demonstrating compliance". With a methodical approach, achieving painless SOC certifications is very much possible on the first attempt.
Now that we‘ve clarified the critical differentiators and best practices pertaining to SOC attestations, let‘s round up key takeaways…
Here are the top highlights for you to walk away with:
🔹 Recognize the subtle but distinct purposes of SOC 1, 2 and 3 audits
🔹 Meticulously prepare for your first audit by allocating sufficient time and resources
🔹 Involve both business leadership and technical teams in streamlining compliance
🔹 Build readiness checkpoints through control risk assessments during the year
🔹 Document your compliance activities thoroughly for quick information access
🔹 Leverage purpose-built automation tools to accelerate audit execution
As regulations evolve along with cyber risks, so do the SOC control requirements. But organizations willing to invest in understanding the nuances of compliance build resiliency for the long term.
Have questions on getting started with SOC audits? Reach out to explore custom recommendations based on where you are in the compliance journey.
Stay secure!
