What Is SOC 2 Compliance? (And What’s in a SOC 2 Report)

SOC 2 compliance is a common way for service organizations to show customers that they have controls in place to protect systems and sensitive information.

It is especially important for SaaS companies, cloud providers, managed service providers, and other businesses that store, process, or manage customer data. Enterprise buyers often ask for a SOC 2 report during procurement because it gives them independent assurance about how a service provider handles security and operational risk.

SOC 2 is built around the AICPA Trust Services Criteria covering security, availability, processing integrity, confidentiality, and privacy. A SOC 2 examination results in an independent auditor’s report describing the organization’s system, applicable controls, and the auditor’s findings.

What Does SOC 2 Compliance Mean?

SOC 2 compliance generally means that a service organization has designed and operated controls that address the Trust Services Criteria included in its SOC 2 scope.

The term “SOC 2 compliant” is commonly used in business conversations, but SOC 2 is more accurately an attestation examination rather than a certification program.

What Does SOC 2 Stand For?

SOC stands for System and Organization Controls.

SOC 2 is part of the AICPA’s broader SOC reporting family and focuses on controls relevant to security, availability, processing integrity, confidentiality, and privacy.

Is SOC 2 a Framework, Audit, or Report?

SOC 2 includes elements of all three.

The Trust Services Criteria provide the criteria used to evaluate controls. An independent CPA performs the examination, and the final outcome is a SOC 2 report.

This is different from simply completing a security checklist. The auditor evaluates whether the organization’s controls meet the criteria included in the engagement.

Is SOC 2 Legally Required?

SOC 2 is generally not required by law.

Instead, it is often driven by customers, contracts, procurement teams, investors, or business partners that want evidence that a service provider manages security risks properly.

For many growing technology companies, SOC 2 becomes commercially important even when no regulation specifically requires it.

Who Needs SOC 2 Compliance?

SOC 2 is mainly used by service organizations that handle customer information or provide technology that customers depend on.

Why Do SaaS Companies Pursue SOC 2?

SaaS companies often pursue SOC 2 because customers want assurance that their data and systems are being protected.

A SOC 2 report can help answer security questions during procurement and show that controls around areas such as access, monitoring, changes, incidents, and vendors have been independently reviewed.

AICPA guidance notes that customers and business partners often request SOC 2 reports to understand the controls and risks associated with outsourced services.

Do Cloud Providers, MSPs, and Other Service Organizations Need SOC 2?

SOC 2 can also be useful for:

• Cloud hosting providers
• Managed service providers
• Managed security providers
• Data processors
• Software platforms
• IT service companies
• Financial technology companies
• Business process outsourcing firms

The main question is whether customers rely on the organization’s systems and controls to protect information or maintain important services.

What Are the Five SOC 2 Trust Services Criteria?

SOC 2 uses five Trust Services Criteria established by the AICPA.

Security

Security focuses on protecting information and systems against unauthorized access, damage, misuse, or disclosure.

Controls may cover authentication, access management, monitoring, vulnerability management, incident response, and security governance.

Availability

Availability looks at whether systems and services are available for operation and use as agreed or committed.

Relevant controls may include uptime monitoring, backups, disaster recovery, capacity management, and business continuity.

Processing Integrity

Processing integrity addresses whether system processing is complete, valid, accurate, timely, and authorized.

This criterion may be particularly important for platforms that perform transactions, calculations, or automated processing for customers.

Confidentiality

Confidentiality focuses on information that an organization has agreed to protect as confidential.

Controls may address access restrictions, encryption, data handling, retention, and secure disposal.

Privacy

Privacy deals with personal information and how it is collected, used, retained, disclosed, and disposed of.

It is broader than confidentiality because it considers the organization’s privacy commitments and handling of personal data.

Which Trust Services Criteria Are Required?

Security is the foundation of a SOC 2 examination.

Organizations can then include Availability, Processing Integrity, Confidentiality, or Privacy depending on their services, customer requirements, and risks.

The correct scope should reflect what customers depend on rather than adding criteria simply to make the report look broader.

What Are the Main SOC 2 Compliance Requirements?

SOC 2 does not give every company the same fixed list of controls. Controls should fit the organization’s environment, services, risks, and selected Trust Services Criteria.

However, several areas appear frequently in SOC 2 programs.

Access Control and Authentication

Organizations need controls that limit system and data access to authorized users.

This commonly includes:

• Unique user accounts
• Role-based access
• Multi-factor authentication
• User provisioning
• Access reviews
• Timely removal of access

Auditors will want evidence that these processes are actually followed.

Risk Assessment and Security Monitoring

Organizations should identify security risks and decide how those risks will be managed.

A formal risk assessment can help identify threats, vulnerabilities, control weaknesses, and areas that need additional protection.

Monitoring is also important so unusual activity, security events, and control failures can be detected.

Change Management and System Operations

Changes to applications, infrastructure, and production environments should follow a controlled process.

Organizations may need documented procedures for approvals, testing, deployments, emergency changes, backups, and operational monitoring.

Incident Response

SOC 2 programs should include a clear process for detecting, reporting, investigating, and responding to security incidents.

Documented incident response planning helps teams know who is responsible, what actions should be taken, and how incidents should be recorded.

Vendor and Third-Party Risk Management

Third parties can create security risks when they host systems, process information, or support important business functions.

Regular vendor security assessments can help determine whether important vendors have appropriate safeguards.

Policies, Documentation, and Evidence Collection

SOC 2 depends heavily on evidence.

Organizations commonly need policies covering security, access, incidents, vendors, changes, risk management, and other controls.

They also need proof that the documented processes were followed, such as access reviews, tickets, logs, training records, approvals, and monitoring reports.

What Is a SOC 2 Audit?

A SOC 2 audit, more accurately called an examination, is an independent review of a service organization’s controls against the applicable Trust Services Criteria.

Who Can Perform a SOC 2 Audit?

A SOC 2 examination must be performed by an independent licensed CPA firm qualified to perform attestation engagements.

A compliance consultant can help prepare an organization for the audit, but the consultant does not issue the SOC 2 report.

What Does the Auditor Review?

The auditor reviews areas such as:

• System scope
• Policies and procedures
• Control design
• Security processes
• Employee practices
• Vendor controls
• Technical safeguards
• Management's description of the system

For a Type II examination, the auditor also evaluates whether relevant controls operated effectively during the review period.

What Evidence Is Used During the Audit?

Evidence varies based on the control but may include:

• Screenshots
• System configurations
• Access review records
• Change tickets
• Security logs
• Training records
• Vendor reviews
• Incident records
• Policy approvals
• Backup reports

The evidence should support what the organization says its controls are doing.

What Is the Difference Between SOC 2 Type I and Type II?

The main difference is that Type I evaluates whether controls are suitably designed at a single point in time, while Type II also tests whether those controls operated effectively over a period of time.

What Does a SOC 2 Type I Report Cover?

A Type I report evaluates the design of controls at a specific point in time.

It answers whether the relevant controls were suitably designed on the stated date.

What Does a SOC 2 Type II Report Cover?

A Type II report goes further.

It covers the design of controls and whether they operated effectively over a defined period. AICPA guidance also notes that Type II reports include the auditor’s tests of controls and the results of those tests.

Which SOC 2 Report Do Customers Usually Request?

Type II is often requested by mature enterprise procurement and security teams because it provides evidence about how controls operated over time.

A Type I report can still be useful for organizations completing SOC 2 for the first time or working toward a customer deadline.

What Is Included in a SOC 2 Report?

A SOC 2 report contains much more than a simple pass or fail statement.

Independent Auditor's Opinion

The report includes the auditor’s opinion on whether the system description is fairly presented and whether the relevant controls meet the applicable criteria.

Management's Assertion

Management provides an assertion covering the organization’s system description and controls.

Description of the Service Organization's System

The report describes the system being examined, which may include infrastructure, software, people, procedures, and data involved in delivering the service.

Trust Services Criteria and Related Controls

The report maps the organization’s controls to the Trust Services Criteria included in scope.

Tests of Controls, Results, and Exceptions

In a Type II report, the auditor describes testing performed and reports the results.

If a control did not operate as expected, the report may identify an exception.

Complementary User Entity Controls and Subservice Organizations

The report may also describe controls that customers are expected to maintain themselves, known as complementary user entity controls.

It can also address important subservice organizations that support the service being examined.

What Do SOC 2 Audit Opinions Mean?

The auditor’s opinion is one of the most important parts of the report.

Unmodified or Unqualified Opinion

An unmodified opinion generally means the auditor concluded that the applicable reporting criteria were met without a qualification affecting the opinion.

This is normally the result organizations aim for.

Qualified Opinion

A qualified opinion means the auditor found a specific issue significant enough to modify the opinion but not broad enough to affect the entire report.

Adverse Opinion or Disclaimer of Opinion

An adverse opinion indicates significant problems with the subject matter being examined.

A disclaimer means the auditor could not obtain enough appropriate evidence to form an opinion.

Both are more serious than a qualified opinion.

How Do You Become SOC 2 Compliant?

The process usually begins well before the CPA firm starts the examination.

Step 1: Define the Scope and Select the Trust Services Criteria

Identify which services, systems, locations, people, and data should be included.

Then decide which Trust Services Criteria are relevant.

Step 2: Conduct a Readiness or Gap Assessment

Review existing controls against the expected SOC 2 criteria.

The goal is to identify missing or weak controls before the auditor does.

Step 3: Implement and Document Required Controls

Close the identified gaps and document how controls are supposed to work.

Responsibilities should also be clearly assigned.

Step 4: Collect and Validate Audit Evidence

Make sure controls produce reliable evidence.

Test evidence internally so missing records or inconsistent processes can be corrected before the audit.

Step 5: Select an Independent CPA Firm

Choose a qualified CPA firm to conduct the formal SOC 2 examination.

The preparation consultant and audit firm should have clearly separated roles.

Step 6: Complete the Audit and Receive the SOC 2 Report

The auditor completes testing, reviews findings, and issues the final report.

A SOC 2 consultant can help with scoping, control implementation, documentation, evidence preparation, and readiness before the independent audit begins.

How Long Does SOC 2 Compliance Take and How Often Is It Renewed?

There is no single timeline that applies to every organization.

How Long Does a SOC 2 Type I Audit Take?

A Type I engagement is usually faster because it looks at controls at a point in time.

The total timeline still depends on how much preparation, remediation, documentation, and auditor review is needed.

How Long Is the Type II Observation Period?

A Type II report covers a defined period rather than a single date.

Observation periods for SOC 2 Type II reports commonly range from 3 to 12 months. First-time reports often cover a shorter period, while subsequent reports typically cover 12 months. The observation period should be agreed upon with the audit firm and aligned with customer expectations.

How Often Should Organizations Complete a SOC 2 Audit?

Many organizations complete a SOC 2 Type II examination annually so customers receive current assurance over their controls.

The exact schedule may depend on contracts and customer expectations.

What Is a SOC 2 Bridge Letter?

A bridge letter is commonly used when there is a gap between the end of a SOC 2 reporting period and the date a customer needs assurance.

It is typically provided by management and addresses whether material changes have occurred since the report period ended.

A bridge letter is not a replacement for a new SOC 2 examination.

Is SOC 2 a Certification or an Attestation?

SOC 2 is an attestation examination, not a certification.

Can an Organization Claim to Be SOC 2 Certified?

“SOC 2 certified” is widely used in informal marketing, but it is not technically the correct description.

More accurate wording is that the organization has completed a SOC 2 examination or has received a SOC 2 report.

How Is SOC 2 Different From ISO 27001 Certification?

SOC 2 results in an independent attestation report based on selected Trust Services Criteria.

ISO 27001, by comparison, is an international standard for an information security management system and can result in formal certification by an accredited certification body.

The two overlap in many areas, including risk management, access control, security policies, incident management, and vendor oversight.

What Is the Difference Between SOC 1, SOC 2, and SOC 3?

The SOC reports serve different purposes.

When Is SOC 1 Used?

SOC 1 focuses on controls at a service organization that may affect customers’ internal control over financial reporting.

It is commonly relevant to service providers such as payroll processors or financial transaction providers.

When Is SOC 2 Used?

SOC 2 focuses on controls related to security, availability, processing integrity, confidentiality, and privacy.

It is commonly used by SaaS businesses and technology service providers.

When Is SOC 3 Used?

SOC 3 covers similar Trust Services Criteria but provides less detail than a SOC 2 report.

Unlike a SOC 2 report, a SOC 3 report is designed for general use and can be distributed publicly. A SOC 2 report, by contrast, is a restricted-use report intended for customers, prospects, and other parties with sufficient knowledge to understand it, and it is commonly shared under a nondisclosure agreement.

How Nexeris Helps Organizations Prepare for SOC 2

SOC 2 readiness can become difficult when controls, policies, evidence, and audit deadlines are handled separately.

Nexeris helps organizations organize the work before the CPA firm begins its examination.

SOC 2 Scoping and Readiness Assessment

Nexeris helps define the right scope, select appropriate Trust Services Criteria, review current controls, and identify gaps that may create problems during the audit.

Control Implementation and Documentation

Teams receive support with implementing practical controls and documenting them in a way that reflects how the organization actually operates.

Evidence Preparation and Audit Readiness

Nexeris helps organize evidence, identify missing artifacts, and prepare teams for auditor requests before the examination starts.

Its SOC 2 compliance consulting services are designed to help organizations build a practical compliance program while preparing for an independent CPA examination.

FAQs

What Is SOC 2 Compliance in Simple Terms?

SOC 2 compliance means having controls in place to protect customer systems and information and having those controls independently examined against applicable AICPA Trust Services Criteria.

What Does SOC 2 Stand For?

SOC stands for System and Organization Controls.

What Are the Five SOC 2 Trust Services Criteria?

The five criteria are Security, Availability, Processing Integrity, Confidentiality, and Privacy.

Is Security the Only Required SOC 2 Criterion?

Security forms the core of a SOC 2 examination. Availability, Processing Integrity, Confidentiality, and Privacy can be added when they are relevant to the organization’s services and customer requirements.

What Is the Difference Between SOC 2 Type I and Type II?

Type I evaluates control design at a specific point in time. Type II evaluates control design and operating effectiveness over a defined period.

What Is Included in a SOC 2 Report?

A SOC 2 report generally includes the auditor’s opinion, management’s assertion, a description of the system, applicable controls and criteria, and other reporting details. Type II reports also include tests of controls and their results.

Who Can Perform a SOC 2 Audit?

An independent licensed CPA firm performs the formal SOC 2 examination and issues the report.

Is SOC 2 Compliance Mandatory?

SOC 2 is generally not legally mandatory. However, customers, contracts, and procurement teams may require a SOC 2 report before doing business with a service provider.