what is soc 2 | A Practical Guide for SOC 2 Compliance

A Practical Guide for SOC 2 Compliance

Executive Summary

Today, we will cover what is SOC 2 is, the differences between SOC 2 and SOC 3, Auth0 SOC 2, SOC 2 compliance consulting, SOC 2 bridge letters, companies offering SOC 2 audit readiness as a service, and SOC 2 compliance consulting services. 

We have much more to cover. The scope of these topics mentioned in this paragraph extends well beyond what’s mentioned above. Let's get started.

 

 

SOC 2 is an independent compliance review or audit conducted by a licensed CPA organization to evaluate whether a service organization’s security controls are well-designed and properly implemented for Type II. 

The SOC 2 audit assessment measures how effectively these security controls operate over time according to the AICPA Trust Services Criteria, which include security, availability, processing integrity, confidentiality, and, most importantly, privacy. 

A typical SOC 2 report features the auditor’s opinion, management’s assertion, and a system description based on the 2018 Description Criteria, along with the tests of controls and their results.  

Timelines & Cost  

A Type I can be finished within weeks (once ready), while a Type II requires a 3 to 12 month observation window plus audit/report time. External audit fees for both Type I and Type II vary depending on scope and maturity. Many customers reside in North America, ask Type II, while international customers often expect ISO/IEC 27001.  

SOC 2 Compliance Requirements

The SOC 2 compliance requirement revolves around the two tables below. The below mentioned two high-level tables are the foundation requirement for the SOC 2 audit

WHAT ARE THE FIVE PRINCIPLES OF SOC2?
Privacy
Security	Availability
Processing Integrity	Confidentiality

What is SOC 2  

The SOC 2 is an audit.. This is not a certification like other security frameworks. This audit validates how efficiently a firm safeguards customer data based on the five principles of TSC

DEFINITIONS OF TRUST SERVICE CRITERIA PRINCIPLES
Security	Overall protection from unauthorized access includes both physical and logical. Access physical & logical control, network & system protection, monitoring, penetration assessment
Availability	Verify that systems are operational and usable
Processing Integrity	Make sure the data is correct, legitimate, and not unauthorized altered
Confidentiality	Prevent unauthorized disclosure of private information, Access control & security controls
Privacy	Before being stored or transmitted, any consent form that contains sensitive information (such as patient information or permissions of health care) should be encrypted

What is SOC 2 Compliance  

SOC 2 is an independent audit of a service organization’s controls over the systems and services offered to customers using the five trust service criteria. It's not a certification like ISO 27001; it's an audit, which means it assesses internal controls. Only a Certified Public Accountant can carry out the SOC 2 audits. 

It’s a restricted-use report from an independent CPA, following AICPA standards. It offers customers, partners, and procurement teams assurance that the service organization’s systems and controls address the TSC related to security and operations. 

Type I: A point-in-time opinion on the suitability of the design of controls as of a specific date. 

Type II: A period-of-time opinion on both design and operating effectiveness over a defined window, usually from 3 to 12 months. 

What are SOC 2 controls?

The following are some common examples in which auditors are interested while performing an audit. This will also help the reader to understand what is SOC 2

WHAT ARE SOC 2 CONTROLS?
TSC	High-Level Control	Controls Descriptions
Security	Access Management	MFA, SSO, least privilege, and access reviews are some most important controls
Availability	BCP & DR	Backup schedules, restore tests, DR Drill exercises
Processing Integrity	Information Accuracy	Input validation, QA gates, reconciliations, and key management
Confidentiality	Data Protection	Encryption, key management, secure transfer
Privacy	PI PII	Notice, consent, retention/disposal, disclosures

Also read HybridPetya Ransomware Bypasses UEFI

SOC 2 policies and procedures

These policies are most widely used in different security frameworks, and these are the core policies for any audit. The policies may vary from company to company. The policies and procedures in the topic of what is SOC 2 play a vital role in understanding the topic

Policy Name	Purpose	Example Procedures
Acceptable Use Policy	Defines company systems and resources	Prohibit unauthorized and personal use
Access Control Policy	Access control for systems and data	Role-based access
Business Continuity & DR policy	Operation continuity during a disaster	Restore testing, DR drills, and recovery SOPs.
Change Management Policy	Manages system changes to reduce risk and errors	Change requests and its approvals
Confidentiality Policy	Protection of information/data	Data classification, NDA enforcement
Encryption Policy	Data encryption at all levels (rest and while in transit)	Data in transit uses SSL/TLS, etc, and AES-256 for information storage
Incident Response Plan	Clear SOP at the time of a security incident	After the incident, a post-mortem review of the security collapse
Vendor Management Policy	Compliance for  3rd parties partners and vendors	Vendor risk assessments, SLA
Password Policy	Complex password policy	Minimum length, MFA enforcement, and rotation schedule.

 

SOC 2 Scope 

The Defining SOC 2 audit scope, or any audit scope, is one of the most critical steps in preparing for compliance. In the topic of scope, what is SOC 2? The scope is one of the most vital parts. The table below is a standard reference table. The scope may be bigger or narrower, depending on the service size offered by the service organization. 

Scope Items	Description	Examples	Evidence Required
Services in Scope	Define which products or services are covered by the audit.	SaaS platform, API services, cloud hosting.	Service catalog, architecture diagrams
Trust Services Criteria	Based on customer need, what are the applicable criteria	Privacy, Security, Availability, Confidentiality, Processing Integrity	Risk assessment results and Policy documents
System  Boundaries	Identify infrastructure, applications, and locations included.	AWS servers, databases, office network, production apps.	Network diagrams, asset inventory
Policies & Procedures	Mapping of policies with SOC 2 criteria.	Incident Response, Vendor Management, Access Control, Encryption	Approved policy documents
Controls in Scope	Technical and administrative controls implemented.	MFA, SIEM monitoring, vulnerability management, and backup testing.	Screenshots, configuration files, logs
Locations	Physical and cloud environments are included in the audit.	Data centers, cloud regions, corporate offices.	Lease agreements, cloud provider attestations
Report Type	Choose between a point-in-time or period-based audit.	Type I (design only), Type II (design + operational effectiveness).	Engagement letter, auditor confirmation

What companies offer SOC 2 audit readiness as a service?

The companies that offer SOC 2 audit readiness as a service and SOC 2 compliance consulting services are mostly audit firms. In case the next SOC 2 audit is delayed, and customers need an interim assurance service organization to provide a SOC 2 bridge letter 

What is a SOC 2 bridge letter?  

The Bridge letter is used when the SOC 2 audit report has passed a year and has a gap since the last audit period. This letter is not provided by the CPA. This usually covers the gap of 1-3 months and is used as a substitute for the SOC 2 report

What is Auth0 in SOC 2

A cloud-based solution for identity and access management (IAM) platform called Auth0. The Auth 0 provides applications with safe authentication and authorization services without creating them from scratch

Who Needs a SOC 2 Report?  

Organizations like Technology & SaaS, Financial Services, Healthcare, E-commerce & Retail, Data Centers & Cloud Hosting often come across SOC 2 requests during vendor security reviews and RFPs, especially in the region of North America.  

WHO NEEDS SOC 2 COMPLIANCE
Technology & SaaS	Financial Services	Healthcare	E-commerce & Retail	Data Centers & Cloud Hosting
WEBHR/CRM/ERP	FinTech	Telemedicines	Payment Gateways	Azure/AWS/GCP
SaaS	Payment Processors	HealthTech SAAS		Manage IT    Services

What is SOC 1?

The organization services that impact client financial reporting OR SOC 1 compliance apply to services rendered by an organization that directly or indirectly affect a client's financial reporting procedures, such as actions or transactions that affect the integrity, completeness, or accuracy of the client's financial records. 

WHO NEEDS SOC 1 COMPLIANCE
Financial Services	Payroll Processing	Insurance	Payment Processing	Mortgage and Loan Servicing
Investment Firms	HR Outsourcing  Firms		Credit Card Processor	Mortgage Originators
	Payroll Service Provider	Claims Processor Firm	Wire Transfer	Loan Servicing

Why SOC 2 or Why SOC 2 is Important?  

The demands of customers are the primary reason SOC 2 is significant. Getting a SOC 2 compliance report gives authorities, customers and partners, and business associates assurance that you are managing data safely.  

What Does SOC 2 Stand For?  

System and Organization Controls 2 is what SOC 2 stands for. The framework developed by the Certified Public Accountants of AICPA ensures that service organizations adhere to strict security controls and safeguard client data.  

SOC 1 VS SOC 2 VS SOC 3  

SOC 1: Security controls that are pertinent to internal control over and specifically to financial reporting by user entities.  

SOC 2: The security controls that are related to AICPA trust service criteria, i.e., security, Availability, processing integrity, confidentiality, and privacy. 

SOC 3: A widely circulated general-purpose report that summarizes the SOC 2 outcome; the said report omits specific controls and findings from it before circulating.  

In the topic of what is SOC 2, The SOC 2 focuses on non-financial controls that safeguard customers' data and also assurance the service reliability. It is the most frequently requested standard operating procedure for Technology & SaaS, Data Centers & Cloud Hosting.

Feature	SOC 1	SOC 2	SOC 3
Goal	Financial reporting controls	Privacy, Security, availability, confidentiality	Summary for the public
Target Groups	Regulators & Auditors	Partners & Customer	Public
Reporting Type	Controls objectives	Detailed system description	Summary only
Trust Services Criteria	Not applicable	✅ Yes	✅ Yes
Distribution	Restricted	Restricted	Public
Scenario	Financial audits	Cloud services	Marketing, public trust

Also read Why Active Directory Needs Protection

SOC 2 Type I vs Type II?  

Select Type I when you need a quick trust signal to move deals forward, but lack operating history. It provides an opinion on the design of implemented controls and the overall security design as of a specific date.  

Choose Type II It’s a report by an independent auditor that proves an organization follows strong security and privacy practices when handling your information.

SOC 2 vs ISO 27001  

SOC 2 vs ISO 27001 both consider good security frameworks. The SOC 2 is a very US-focused audit that provides a detailed, private report, and that is very common in North American enterprise purchases.  

ISO 27001 is a global standard of security certification of your Information Security Management System (ISMS). This is a well-known and famous accredited body among security professionals. This security standard is a public certificate widely recognized globally across many regions and for multinational RFPs.  

Which is better, SOC 1 or SOC 2

People usually ask what SOC 2 type 2 is, or what is SOC 2 type 2 compliance is. A SOC 2 Type 2 report assesses the overall design and operational efficacy of controls over a period of time. The time usually takes 6 to 12 months. However, a SOC 2 Type 1 report evaluates the design of controls only at a single point in time, giving an indicator of whether an organization's data security systems are appropriately structured. SOC 2 type 2 is a detailed audit based on TSC

What is the SOC 2 report, & What does the SOC 2 report cover 

• Independent service auditor’s report (opinion)  
• Management’s assertion  
• System description prepared using the 2018 Description Criteria (DC-200) with revised  implementation guidance from 2022  
• Applicable TSC (Security is required; others are optional)  
• Tests of controls and results (including any exceptions and management responses)  
• Subservice organizations and method (inclusive vs carve-out is common)  
• Complementary User Entity Controls (CUECs): controls your customers must perform (e.g., managing end-user access to your SaaS, securing their endpoints) for your system to remain secure.  

Continuous Compliance 

The audit is not one-time only. It's a continuous process. Keep the SOC 2 as a part of operations activity:  

Every Month

Review access, remediate vulnerabilities, and review SIEM alerts.  

Every Quarter 

Align with vendors for risk reviews, test the backup and restore activity, and conduct capacity checks on machine hardware.  

Every Year 

Strict risk assessment, new and modified policy approvals, and the most important activities are incident response, disaster recovery, business continuity exercises, and privacy program checks.  

Controls & Evidence Auditors Frequently Test 

In this section, we describe what an auditor checks and expects as evidence. This section is about the technical and operational controls that should exist and work efficiently

Security (The Common Criteria)  

Access management: 

MFA on systems and services, SSO, least-privilege to users and services, periodic access reviews, and joining and leaving of employees' access.  

Operations & resilience: 

Vulnerability scans and remediation evidence, SLAs, logging and alerting (SIEM) and their review evidence, and incident response tabletop exercises, as required by any auditor.  

Change management: 

Approvals of policies, peer review, CI/CD controls.  

Availability  

The uptime for systems and services, capacity planning of system hardware, the backup and restore tests, disaster recovery and business continuity exercises, and their outcomes.  

Processing Integrity  

Input validation means only correct and authorized data is submitted to the system. Monitor the performance and alerts, quality assurance, and reconciliations to make sure that processing results (for example, salaries) match the input of data, monitoring for failures.  

Confidentiality  

Data classification and access control, PAM, encryption in transit and at rest, key management, secure file transfer, and handling of NDAs.  

Privacy  

The Privacy principle of the AICPA Trust Services Criteria, auditors primarily check how an organization collects, uses, retains, discloses, and disposes of personal information or data. Ensure that consent and retention are the key to success here. 

In SOC 2 readiness and audit, what organizations make mistakes 

Unlike the above section “Controls & Evidence Auditors Frequently Test,” which primarily talks about the Technical and operations controls, this section describes the process and planning errors by the organization. In this section we will cover common SOC 2 audit exceptions and how to avoid such errors

Risk Assessment

Under what is SOC 2, the risk is one of the most important parts. An incomplete and ineffective Risk Assessment leads to too many controls or a lack of controls. Documented the risk assessment, policy approvals, evidence, and training.   

Organizations use the newest technological platforms to expand their business; their risk management practices should evolve and mature accordingly. Frameworks do not mean buying firewall or security boxes to implement; you need to understand the risks haunting your business functions

Who can do the SOC 2 audits done. You need to hire consultants. Inadequate risk assessment can result in poor control acquisition, wasteful tool purchases, and the failure to notice important security flaws. Additionally, it could lead to improper control implementation, in which the implemented safeguards do not correspond with the actual business risks.

In addition to widening compliance gaps, this misalignment makes the company more susceptible to operational disruptions and security breaches. 

Thus, establishing efficient security controls, attaining SOC 2 compliance, and preserving customer trust all depend on carrying out a comprehensive, accurate, and continuous risk assessment.

Paper controls without operation

Auditors test for evidence over time, not just policies, and at the same time, a lack of documentation, policies & procedures leads to incorrect execution of controls

Vague system description

Use DC-200 to avoid gaps in disclosure that raise auditor questions.  

Missing CUECs

Customers may rely too much on your report; clarify what they must do (e.g., manage user access).  

Rushing Type II

If you lack operating history, first do Type I or a short Type II (3 to 6 months).  

Evidence chaos

Centralize and automate evidence collection (access exports, EDR coverage, scan reports, change approvals).  

Lack of senior management buy-in

This will lead to a delay in the completion of the audit

Lack of transparency

Sometimes, people fear that they are under audit, so they worry about being transparent

Your Step-by-Step SOC 2 Roadmap (From Zero to Clean Report)  

The timelines and cost 

The timelines and cost depend on the services organization's requirements (especially the prep), costing, and the audit firm's credibility. However, the below estimated chart may be used as an example reference. This table also helps to understand the overall SOC 2 audit process and questions like how long does a SOC 2 audit take and how much does a SOC 2 Audit Cost?  

Aspect	SOC 2 Type 1	SOC 2 Type 2
Purpose	Point‑in‑time attestation of control design	Control design attestation & its operational effectiveness over a period.
Audit Duration	Estimated 2–3 months, including prep	Estimated 3–12 months observation + 1–2 months audit activities
Observation Period	None	6–12 months
Report Handover Time	2–4 weeks after audit	4–8 weeks after observation.
Audit Cost (audit‑only)	$5K–$20K	Between $7K–$150K
Total with Prep	Between $30K–$80K	Between $70K–$290K
Total with Prep & Monitoring	Estimated $40K–$140K	Estimated $80K–$350K

Executive alignment & goals

Why now? What deals depend on it? Which TSC matters? (Security plus Availability/Confidentiality are common.)  

Readiness assessment

Gap analysis against the 2017 TSC (with 2022 points of focus) and DC-200 disclosures.  

Remediation & controls

Policies, MFA/SSO, device hardening/EDR, encryption in transit and at rest, logging/SIEM, vulnerability management, vendor risk, change management, incident response, disaster recovery/business continuity, and privacy program (if applicable).  

Evidence program

Assign control owners, and set schedules (monthly access reviews, quarterly scans, annual risk assessment, disaster recovery tests, and policy approvals).  

Internal dry-run

Walkthroughs and sample evidence; close any gaps.  

Select a CPA firm

Look for relevant sector experience and clear sampling/test plans.  

Fieldwork

Provide artifacts and walkthroughs, answer inquiries, and manage exceptions with root cause and remediation.  

Report

Review opinion, exceptions, CUECs, and distribution (NDA, trust portal). Plan for continuous monitoring for an annual refresh.  

FAQ  

Is the SOC 2 required by law?  

The simple answer is no. The SOC 2 audit shows how well you care for clients. The SOC 2 is a market-driven and customer care-focused assurance.  Many enterprise buyers require it during vendor security reviews and contracts.  

Which TSC do I need?  

Security is mandatory; add availability and confidentiality based on uptime and contractual needs; include privacy if you directly handle PI/PII, which is very delicate in case it is committed with customers.  

How long is an SOC 2 report valid?  

The SOC 2 report validity is for one year, and many customers do not expect an expired report.  

Can I share my SOC 2 publicly?  

SOC 2 is restricted-use; most vendors may share it under NDA.

In the end:

I tried my best to cover what is SOC 2. Please note, are SOC 2 reports confidential? And how often are SOC 2 done? Yes! It's confidential and is executed this activity annually.  The Service Organizations can show their dedication to data protection by coordinating security, availability, confidentiality, processing integrity, and privacy controls with business objectives. How long does SOC 2 take? Again, it depends on the business's length and its priorities. However, it usually takes a year. In the end, knowing SOC 2 enables companies to improve their overall risk management posture in addition to meeting customer expectations.