AICPA SOC 2 framework? SOC 1 vs SOC 2 vs SOC 3
The System and Organizations Control (SOC) framework encompasses a range of reports that serve as highly effective tools for showcasing the strength of information security controls.
A SOC 1 report is tailored for companies whose internal security measures can impact the financial reporting of user entities, such as firms engaged in payroll or payment processing.
SOC 2 reports empower organizations to substantiate their information security controls through assessment against five crucial Trust Services Criteria (TSC): security, availability, processing integrity, confidentiality, and privacy.
In contrast, SOC 3 reports closely mirror SOC 2 assessments, adhering to AICPA SSAE 18 standards. However, SOC 3 reports are designed to be less detailed and more general in nature. They are intended for wider distribution and can be made publicly available. On the other hand, SOC 2 reports are typically kept as private internal documents, shared only with customers and prospects under the protection of a Non-Disclosure Agreement (NDA).
Benefits of SOC compliance
1 SOC 1: This category pertains to the internal controls specifically related to financial statements and reporting. It is relevant for organizations that provide services that have the potential to impact the financial statements of their clients. Examples of such organizations include collections agencies, payroll service providers, and companies engaged in payment processing.
2 SOC 2: Within the SOC 2 framework, the focus is on internal controls encompassing security, confidentiality, processing integrity, privacy, and the availability of customer data. This is essential for organizations that handle, store, process, or transmit various types of customer data. Examples of such entities include Software as a Service (SaaS) companies, data hosting or processing providers, and cloud storage services.
3 SOC 3 reports are essentially the results of SOC 2 assessments, but they are specifically tailored for a broader audience. These reports are ideal for organizations that have obtained a SOC 2 report and wish to leverage their compliance status for marketing purposes aimed at the general public.
4 SOC 1 examines internal controls related to financial reporting, while SOC 2 reports assess internal controls concerning the security, confidentiality, processing integrity, and availability of customer data. SOC 3 reports, on the other hand, review similar controls as SOC 2 but are designed to be less detailed and more suitable for a broader audience.
Businesses have increasingly shifted their operations from on-premise software to cloud-based infrastructure, a transition that enhances processing efficiency and simultaneously reduces overhead expenses. Nonetheless, this migration to cloud services entails relinquishing some degree of granular control over the security of both data and system resources.