What is a SOC Report?

Many people are reluctant to jump into contracts and partnerships until they have firm proof they can trust your data handling processes. It’s why lots of our customers ensure they have regular systems testing and scanning schedules in place.

Service Organization Controls (SOC) reports are one tool that can help reassure clients that data security and finance handling standards are above board. This is vital in a world where cybersecurity threats are growing increasingly sophisticated.

Let’s explore the broader SOC report meaning, what reports involve, why you might need them, and how to choose a suitable report.

What Is a SOC (System and Organization Controls) Report?

A SOC report is filed during a company audit, assessing your internal data controls and processes. It shows clients and customers that you’re following specific practices to protect data privacy, integrity, finance, and security.

Importance of SOC Reports

Building trust in data handling is critical – especially given widespread concerns about data loss and cybersecurity.

75% of all US companies are at risk from “material” cyberattacks – meaning your clients and customers want to know you have their sensitive data locked down.

“In 2023, three in four companies in the United States were at risk of a material cyberattack, according to chief information security officers (CISO). Their concerns are based on the fact that the number of cyberattacks has been gradually increasing in recent years, amounting to 480 thousand in 2022.”

Ani Petrosyan, Statista

SOC reports give prospective customers and client partners clear, thorough insight into your systems management along with all the checks and balances.

Essentially, a SOC report informs prospects and other stakeholders that you are legitimately serious about following data handling policies and that you have controls to ensure security, privacy, and integrity. You’re establishing important credibility and reassurance for anyone who wants to do business with you.

Types of SOC Reports

There are three main SOC reports companies can arrange, however, there is also an additional report for cybersecurity, and a further report involving the supply chain. SOC reports are also typically split into two types – I and II.

Let’s break these main reports down and explore what they cover.

SOC 1

SOC 1 shows your controls can adequately manage financial reports. For example, this report might analyze the systems and processes you have to handle payroll requests or record accounting data.

SOC 1 Type I analyzes how adequate your financial controls are at any given point – i.e., that they are fit for purpose.

Type II, meanwhile, provides deeper insight into your controls, analyzing how they work over an extended period, ensuring financial information is protected.

SOC 2

SOC 2 focuses on your broader data controls and policies, and reassures customers that you are handling their information in line with recommended frameworks.

SOC 2 revolves around five trust service criteria:

• Security
• Availability
• Processing Integrity
• Confidentiality
• Privacy

As an example, the security criterion explores how you protect sensitive data through encryption, firewalls, access controls, and regular auditing such as penetration testing.

SOC 2 Type I focuses on how your data controls operate at any given moment (i.e., making sure they’re fully operational). Type II, meanwhile, considers how effective these controls can be over time, e.g., across a year.

SOC 3

SOC 3 follows is essentially the same as a SOC 2, in that it focuses on trust criteria for how you handle data. The key difference between SOC 2 and 3, however, is how it’s reported in that a SOC 3 report is produced for public knowledge and contains no confidential details.

SOC 3 reports are much more high-level, focusing largely on auditor opinion and basic trust criteria satisfaction.

What’s more, SOC 3 Type I focuses mainly on controls’ designs and whether or not they fit the trust criteria overall. Like with other SOCs, Type II examines a case study of a longer period to ascertain how a company’s data policies work in practice and if they’re operationally effective.

SOC for Cybersecurity

This SOC report ascertains how a company organizes information with regard to cybersecurity risks. It also examines how it manages such risks, and what controls are in place to mitigate data loss and enhance protection. Naturally, it’s a SOC report we broadly recommend to our customers.

Companies undergoing a SOC for cybersecurity may follow various recommended frameworks, such as NIST, to ensure all bases are covered.

Here’s a quick breakdown of the SOC types explored above:

Key Components of a SOC Report

Despite the different types of SOC available, there are some key components that all reports share. Here’s a brief overview of what to expect.

Management Assertion

You, as management, assert that the controls outlined in the report are those you implemented yourself. This is an important section because it shows readers that you understand what tools are in place, and that you agreed to the scope of the report.

Auditor Opinion

The auditor undertaking an SOC report will be completely independent, and will give an honest, professional opinion. Here, they will describe what they analyzed and tested, what frameworks were followed, and whether or not controls fulfil the trust criteria.

System and Control Overview

This is a high-level overview of the systems/infrastructure you have in place, showing the tools and services you use to protect data, for example, and how they support clients. This overview might also describe who has access to systems, if there are any cloud vendors, and which areas were tested.

Test Outcomes

The test outcomes section brings everything together. It’s here where controls, tests performed, and results recorded are summarized, offering total transparency across the trust criteria.

Choosing the Right SOC Report for Your Organization

Choosing the right SOC report depends largely on the data you handle, the industry you operate in, and the audience you’re reporting to. We’ve helped many clients over the years who follow all three main SOC types.

Consider the following points when researching SOC types:

• Does your company handle highly sensitive financial information, and/or operate in a high-risk industry? It’s likely you will benefit from a SOC 1 and SOC 2.
• What do you need to demonstrate to clients and customers? If you run a tech company or financial services, for example, you likely need a SOC 1 report to show your financial data processing controls. Most companies working with sensitive data benefit from both SOC 2 and 3, with the latter giving broader audiences reassurance that you process information securely.
• How much detail do you need? More detailed auditing for the highest level of reassurance is accessible through Type II testing to confirm controls are not only designed correctly but also actually work in practice  for SOC 1 and 2.
• Do you need the report largely for marketing purposes? A SOC 3 report is likely to fit your needs most, because it gives a non-confidential, public breakdown of the measures you have in place.

Best Practices for Using SOC Reports

Here are a few ideas regarding SOC report usage after auditing:

• Use the data to tighten up your data protection and cybersecurity processes (such as by running vulnerability scanning more frequently).
• Take the auditor’s breakdown and create a template or checklist from which you can regularly measure and assess your controls.
• Provide report data to senior management to discuss and prioritize areas for control improvement.
• Consider whether or not additional SOC reports and types are necessary to build a more complete picture.
• Compare the findings of SOC reports with the expectations of your customers, clients, and stakeholders.

SOC reporting can offer useful insight into the internal running of your company’s controls, and is great for building trust. Ultimately, remember that while your organization may be running effectively, there might be areas in need of improvement beneath the surface.

It’s just one reason why we recommend working with our team as part of your ongoing information security risk management.

Contact VikingCloud today to learn more about how our experts can help tighten up and improve your data protection and cybersecurity.