What Is SOC 2? Understanding SOC 2 Compliance, the Framework & Requirements

SOC 2 provides a framework for service organizations to show customers and stakeholders that they take data security seriously. Understanding SOC 2 can help you build trust, win more business, and strengthen your security posture.

What Does SOC 2 Stand For and Why It Matters

SOC 2 stands for System and Organization Controls 2. The American Institute of Certified Public Accountants (AICPA) developed this framework in 2010 to provide auditors with guidance for assessing the effectiveness of a service organization’s security protocols.

For technology companies, particularly those in SaaS, cloud services, and managed IT, SOC 2 has become increasingly important. The framework helps you show customers that you follow best practices for protecting their data. It also provides a competitive advantage when prospects are evaluating multiple vendors.

Unlike some security standards, SOC 2 is not a certification. After an audit, you’ll get a report from a licensed CPA firm that details how well your controls meet the framework’s requirements. These reports remain confidential unless you choose to share them with prospects or customers.

The Five SOC 2 Trust Services Criteria

The SOC 2 framework centers on five Trust Services Criteria that define principles for managing customer data. Not every principle applies to every organization.

• Security forms the foundation of every SOC 2 audit. This common criterion is mandatory and addresses how you protect information from unauthorized access. Security controls cover everything from access management and authentication to network security, vulnerability management, and incident response.
• Availability focuses on whether your systems are accessible for operation and use as committed or agreed upon. This criterion takes in system monitoring, capacity planning, backup procedures, and business continuity planning. Organizations that promise a certain level of uptime or service availability typically include this criterion in their SOC 2 scope.
• Processing Integrity addresses whether your systems achieve their intended purpose. This means system processing is complete, valid, accurate, timely, and authorized. For example, if a customer submits an order through your platform, processing integrity ensures that the order is handled correctly from start to finish.
• Confidentiality protects information designated as confidential. This criterion differs from privacy because confidential information must sometimes be shared with other parties, for example, health data moving between hospitals and specialists.
• Privacy governs how you collect, use, retain, disclose, and dispose of personal information. Multiple regulatory frameworks require organizations to clearly communicate their privacy practices, obtain consent when needed, collect only necessary information, and delete data at the end of defined retention periods. The SOC 2 privacy criterion can help you achieve these goals.

While the security criterion is required for all SOC 2 audits, organizations select which additional criteria apply based on their services and customer commitments. A cloud storage provider might include security, availability, and confidentiality. A payroll processor would likely add privacy to address employee personal information.

SOC 2 Compliance Requirements Explained

Unlike frameworks such as ISO 27001, SOC 2 does not specify precisely which controls you must implement. In other words, there’s no rigid checklist. Instead, the AICPA provides flexible “points of focus” that suggest how organizations might satisfy each criterion.

Your organization defines its own points of focus for meeting the Trust Services Criteria based on your specific circumstances, systems, and risks. Key points of focus typically include access controls (both digital and physical), change management, system operations, and risk mitigation.

For example:

• Digital access controls include permissions for IT networks and software based on job roles, multi-factor authentication, and ongoing reviews of who has access to what.
• Physical access controls could include locked data centers, security guards logging visitors in and out of buildings, and motion sensors in sensitive areas.
• Change management controls help your people adapt to changes in procedures and policies, for example, through documented processes for system updates, version control protocols, and testing.

SOC 2 also emphasizes continuous monitoring and documentation rather than one-off implementations. And you’ll need ongoing evidence that your controls are operating effectively throughout the audit period.

The SOC 2 Audit Process

Licensed CPA firms perform SOC 2 audits. The process begins with a readiness assessment, where you identify gaps between your current state and SOC 2 requirements. Many organizations conduct this internal assessment or work with consultants such as Xantrion before engaging an auditor.
Once ready for the formal audit, you’ll work with a CPA firm to define the scope. This includes selecting which Trust Services Criteria to apply and establishing the audit period.

The auditor evaluates how you designed your controls and whether they operate effectively. They’ll review policies and procedures, interview staff members, examine system configurations, and collect evidence such as screenshots, logs, and documentation.

Audit outcomes fall into four categories:

1. An unqualified opinion means you passed without significant issues.
2. A qualified opinion indicates you generally met requirements, but some areas need attention.
3. An adverse opinion means your controls did not satisfy the requirements.
4. A disclaimer of opinion occurs when the auditor lacks sufficient information to form a conclusion.

The auditor’s final report details the controls they tested, the evidence they examined, and whether the controls operated effectively.

SOC 2 Type 1 vs Type 2 Reports

Unlike certifications, which confirm you meet specific, uniform standards, SOC 2 reports are attestation reports. That means they provide the auditor’s professional opinion about your controls based on their examination.

The reports come in two types:

• Type 1 reports evaluate whether your controls work as intended on a specific date. The advantage: they can be completed faster, sometimes in as little as six to nine months. But your customers and prospects may want more. That’s where Type 2 reports come in.
• Type 2 reports assess whether your controls operated effectively over a given period, typically a few months to a year. These reports take longer to complete due to the observation period. Plan for five to 14 months, depending on your audit period length, plus the time for initial readiness review and implementation.

While Type 1 reports can provide quicker initial results, Type 2 reports offer greater assurance and are increasingly required by customers. Many organizations find they need Type 2 within a year anyway, which means paying for two separate audits.

For organizations with mature security controls already in place, going directly for Type 2 may save time and resources.

How to Achieve and Maintain SOC 2 Compliance

Preparing for SOC 2 begins with a gap analysis or readiness assessment. You need to understand where your current security controls fall short of SOC 2 expectations. Many organizations work with consultants or managed security providers during this phase to identify what needs improvement.

Policy creation and documentation form the foundation of your program. You’ll need written policies covering areas such as information security, access control, risk assessment, change management, incident response, business continuity, and data retention.

Employee training ensures your team understands their security responsibilities. Staff members need to know the policies, how to recognize threats, and follow proper procedures.

Continuous monitoring and evidence collection are essential for Type 2 reports. For best results, set up systems to automatically capture logs and other data. Implement processes for documenting changes and incidents, and maintain organized records throughout the audit period.

Continuous monitoring also helps you demonstrate that you’ve maintained effective controls for annual renewals.

SOC 2 Compliance Tools and Automation Solutions

Compliance automation platforms, such as those offered by Secureframe, Vanta, Drata, and others, help organizations reduce manual effort required to achieve SOC 2 compliance.

SOC 2 compliance software typically integrates with your existing technology stack to automatically collect evidence. Instead of requiring you to manually take screenshots or pull reports, the platform connects to your cloud providers, identity management systems, HR platforms, and security tools to continuously gather the required evidence.

When selecting a SOC 2 compliance automation vendor, take these factors into account:

• Integration capabilities for your existing tools
• Depth and breadth of automated evidence collection
• Support for multiple frameworks, if you plan to pursue additional certifications
• Quality of customer support and guidance
• Total cost, including platform fees and any required professional services

Keep in mind that automation tools complement, not replace, human judgment and effort. You still need to design appropriate controls, make policy decisions, implement security measures, and work with auditors. A trusted partner such as Xantrion can help with this effort.

SOC 1 vs SOC 2 vs SOC 3: Understanding the Differences

SOC reporting includes three report types (including two SOC 2 report types), each serving different purposes and audiences.

• SOC 1 reporting: Focuses on controls relevant to financial reporting. If your services directly impact how your clients record transactions or prepare financial statements, SOC 1 may be more appropriate than SOC 2.
• SOC 2 reporting: Address controls related to security, availability, processing integrity, confidentiality, and privacy. SOC 2 is particularly relevant for technology service providers and other organizations that store, process, or transmit customer data.
• SOC 3 reports: Condensed versions of SOC 2 reports designed for public distribution. They provide high-level, non-confidential summaries suitable for posting on websites or sharing in marketing materials.

FAQs About SOC 2 Compliance

Key Takeaways

SOC 2 compliance gives organizations a framework for demonstrating robust data security practices. The five Trust Services Criteria of Security, Availability, Processing Integrity, Confidentiality, and Privacy guide organizations in designing and implementing appropriate controls.

The SOC 2 framework’s flexibility allows organizations to tailor their approach based on specific services and risks. Rather than following a rigid checklist, you design controls that make sense for your business. The process also helps you strengthen your organization’s security posture and create a culture of security awareness.

Whether you’re pursuing SOC 2 for the first time or maintaining ongoing compliance, remember that it represents a continuous journey, not a one-off project. The framework helps you build security into your operations, strengthen your cyber defenses, and give customers the assurance they need to trust you with their most sensitive data.

Contact us to learn more.