What Is SOC 3 Compliance? A Complete Guide

In today’s digital landscape, ensuring the security and integrity of customer data is of paramount importance. SOC 3 compliance provides organizations with a way to demonstrate their commitment to protecting sensitive information. In this blog, we will explore the significance of SOC 3 compliance, the controls audited during the process, and best practices to achieve and maintain compliance. Join us as we delve into the world of SOC 3 and uncover the key considerations for organizations seeking to attain this important certification.

What Is SOC 3 Compliance?

SOC 3 compliance refers to the third-level assurance report under the Service Organization Control (SOC) framework. SOC reports evaluate the internal controls and processes of service organizations. These reports assure customers and stakeholders about the security, availability, processing integrity, confidentiality, and privacy of the organization’s systems.

Why Was SOC 3 Needed After SOC 1 And 2?

The SOC framework was developed by the American Institute of Certified Public Accountants (AICPA) to standardize the evaluation and reporting of controls at service organizations. There are three types of SOC reports: SOC 1, SOC 2, and SOC 3.

SOC 1 reports, also known as SSAE 18 reports, focus on the internal controls over financial reporting (ICFR) of service organizations. These reports are primarily for users who need to understand the impact of the service organization’s controls on their financial statements. Customers’ auditors often request SOC 1 reports during financial audits.

On the other hand, SOC 2 reports assess controls related to security, availability, processing integrity, confidentiality, and privacy. They provide a more comprehensive evaluation of the service organization’s systems and controls than SOC 1 reports. SOC 2 reports are restricted-use reports and are typically shared only with specific stakeholders who have a direct contractual relationship with the service organization.

SOC 3 was developed to address the demand for a publicly available report that could be used as a marketing tool by service organizations. It provides a high-level overview of the organization’s controls and attests to their effectiveness without disclosing detailed information about specific controls or potential vulnerabilities. SOC 3 reports are for a broader audience, including prospective customers, regulators, business partners, and the general public.

What Controls Are Audited In SOC 3 Compliance?

SOC 3 compliance reports provide a high-level overview of the controls implemented by a service organization. While SOC 3 reports do not provide detailed information on specific controls like SOC 2 reports, they still assess a range of controls related to security, availability, processing integrity, confidentiality, and privacy. These controls are based on the Trust Services Criteria (TSC) established by the American Institute of Certified Public Accountants (AICPA). Here are the general categories of controls audited in SOC 3 compliance:

• Security: Controls related to the protection of systems and data from unauthorized access, both physical and logical. This may include measures such as access controls, network security, firewalls, encryption, intrusion detection, and incident response.
• Availability: Controls aimed at ensuring the availability of the service organization’s systems and services. These focus on minimizing downtime and responding effectively to service disruptions. This may include redundancy and failover mechanisms, backup and recovery procedures, and monitoring of system availability.
• Processing Integrity: Controls focused on ensuring that data processing is complete, accurate, timely, and by the service organization’s policies and procedures. This includes controls related to data input, processing, and output, as well as system and application controls.
• Confidentiality: Controls are designed to protect sensitive and confidential information from unauthorized disclosure. This may involve encryption, access controls, data classification, data handling procedures, and confidentiality agreements.
• Privacy: Controls related to the collection, use, retention, disclosure, and disposal of personal information by applicable privacy laws and regulations. This may include privacy policies, consent mechanisms, data retention and deletion procedures, and training on privacy practices.