Clients want to place their trust in companies that care about their data and have implemented structured processes to keep it safe. SOC reports are an ideal way to demonstrate your commitment to security \u4e00 even as a small company.<\/p>\n\n\n\n
Many startups tend to put off the SOC 2 audit process because it can cost time and money. But the frameworks and policies required for SOC reports are helpful even if you don\u2019t end up doing an audit right away.<\/p>\n\n\n\n
In this post, we\u2019ll discuss how to determine what type of SOC report you need and offer five easy ways to approach SOC 2 compliance early in your startup journey.<\/p>\n\n\n\n
Do Startups Need a SOC 2 Type 1 or Type 2 Report?<\/h2>\n\n\n\n
Not all startups need SOC reports, but having one or more can confer a significant competitive advantage. Having the proper internal controls in place, confirming that you\u2019ve made (and continue to make) accurate risk assessments, and proving that you have a strong security posture can set you apart.<\/p>\n\n\n\n
In fact, SOC reports are such differentiators that some enterprise-level clients won\u2019t even consider using your startup\u2019s products or services if you don\u2019t have one. But before you start going through a SOC report to-do list, it\u2019s critical to understand the difference between the two most popular reports: SOC 1 and SOC 2.<\/p>\n\n\n\n
Both reports are maintained by the American Institute of Certified Public Accountants (AICPA), but SOC 1 is mainly for service organizations that oversee their clients\u2019 financial reporting, such as custodians of investment companies, payroll processing firms, or healthcare benefits organizations. <\/p>\n\n\n\n
SOC 1 reports result from SOC 1 audits in which CPA firms review a company\u2019s set of financial controls \u4e00 procedures and systems they use to process financial information. Auditors verify that the controls align with industry regulations and result in accurate financial reports.<\/p>\n\n\n\n
SOC 2 is more commonly associated with SaaS companies. SOC 2 auditors evaluate a company\u2019s ability to protect its own data and its clients\u2019 data<\/a>, examining protocols related to accessibility, confidentiality, or privacy gaps. <\/p>\n\n\n\n Enterprise clients are particularly interested in SOC 2 compliance because it establishes credibility, showing that a company has invested heavily in its security program. Since prospects often ask for a SOC 2 report during the vendor evaluation process, SOC 2 is typically the report most startups go for.<\/p>\n\n\n\n \n The IT Manager\u2019s Guide to Data Compliance Hygiene <\/p>\n \n How to ace your audit <\/p>\n <\/div>\n Although it can be time-consuming, getting a headstart on SOC 2 can give you a leg up on your competition. Below, we outline five ways you can set up your business operations to start meeting SOC 2 compliance requirements.<\/p>\n\n\n\n Policies are perhaps the most vital component of your overall security program because they dictate how employees should handle data throughout the company. Your policies should be relatively formal but easy enough for anyone to understand and should be readily available for anyone to read at any point in time.<\/p>\n\n\n\n You should consider crafting policies around:<\/p>\n\n\n\n SOC 2 isn\u2019t just about documenting your controls, it\u2019s also about ensuring everyone knows who is responsible for carrying out the controls<\/a> when needed. So a key component of SOC 2 compliance is assigning each control to a specific owner and outlining that person\u2019s responsibilities. Reviewing these roles every year or quarter is essential to mitigating security risks.<\/p>\n\n\n\n The five AICPA Trust Services Criteria (TSC) are what auditors use to assess a company\u2019s controls across the organization, at an operating unit level, and for a particular type of information. When pursuing a SOC 2 report, the security criteria is the only mandatory TSC, but it\u2019s still a good idea to institute at least a few measures for each one.<\/p>\n\n\n\n As mentioned, security is the minimum requirement for a SOC 2 audit. To hit this milestone, you need to prove that you are adequately protected against data destruction, software misuse, or other kinds of damage to systems that contain sensitive information. Make sure you have controls for firewalls, email encryption, intrusion detection, and other security measures to protect against unauthorized access.<\/p>\n\n\n\n SOC 2 privacy criteria are based on Generally Accepted Privacy Principles (GAPP). Companies abiding by GAPP pay very close attention to the personally identifiable information they collect about their employees and their customers. Auditors will investigate how a company safeguards personal information like name, social security number, address, race, sexuality, religion, and health status.<\/p>\n\n\n\n Confidential data could be anything from receipts, to customer information, to employee records, to financial documents, to SKU lists, etc. To meet confidentiality criteria, auditors will want to see that you have policies in place to defend this data against cyberattacks such as phishing or whaling, and are constantly educating your employees on confidentiality best practices. They\u2019ll also check your legal documents to confirm they reference the treatment of confidential data as well.<\/p>\n\n\n\n All companies process and host data differently, so this criterion checks that your QA and data monitoring policies work the way you say they do. Auditors will follow your policies to see whether they are complete, valid, and work as intended.<\/p>\n\n\n\n Many companies have service-level agreements they are legally bound to uphold for their clients. SOC 2 auditors will validate that you\u2019re meeting those SLAs, that you\u2019ve documented your approach to disaster recovery, and that you have a response plan in place should a security incident occur.<\/p>\n\n\n\n It\u2019s one thing to say your company abides by certain procedures, but it\u2019s another to show they actually exist and are working as designed. Therefore, SOC 2 audits require companies to document and collect evidence of each of their security policies and procedures. Coming into an audit equipped with ample proof speeds up the process. <\/p>\n\n\n\n Examples of what to prepare include:<\/p>\n\n\n\n When you are confident in your policies, have appointed control owners, know which trust service criteria you\u2019re going for, and have the evidence to back up your security program, it\u2019s time to do a dry run. Form an objective internal team \u4e00 using folks with accounting and IT experience is ideal \u4e00 and run through the AICPA SOC 2 standards yourself.<\/p>\n\n\n\n Go through each of your policies and identify what might be missing from an auditor\u2019s perspective. Confirm that you have screenshots or links to all the resources you would present to an auditing firm. Think about questions auditors might ask in an interview and start preparing answers. Be sure to take note of anything you need to update or change along the way.<\/p>\n\n\n\n It\u2019s important to remember that the preparation that goes into SOC 2 compliance isn\u2019t a one-and-done activity. To obtain a SOC 2 Type 2 report, your company will be evaluated on SOC 2 criteria for up to six months. Even then, your company has to be re-evaluated each year to maintain its SOC 2 status.<\/p>\n\n\n\n At the same time, the security community is always coming up with innovative and improved best practices. And every time you adopt a new security measure, you\u2019ll have to add it to your documentation and evidence. So it\u2019s a good idea to revisit a SOC 2 checklist several times a year to update your policies and processes accordingly. Scheduling a biannual internal audit can help you stay on track as well.<\/p>\n\n\n\n Starting the SOC 2 process as a small company allows you to implement and enforce strong controls and processes from the start. Because there are fewer people to educate, changes can be made quickly and best practices can be adopted much faster. <\/p>\n\n\n\n However, we know that startups don\u2019t have ample time or resources at their disposal. That\u2019s why JumpCloud can be an excellent solution for startups looking to amp up and streamline their security program.<\/p>\n\n\n\n In addition to providing easy implementation and management for foundational security controls such as multi-factor authentication (MFA) and single sign-on (SSO), JumpCloud\u2019s open directory platform accelerates the audit process<\/a> by providing visibility across all users, devices, and other IT resources. This consolidates data and enables you to easily share insightful reports with your auditing team.<\/p>\n\n\n\n![\"JumpCloud\"](\"https:\/\/jumpcloud.com\/wp-content\/uploads\/2023\/02\/image-1-1-aspect-ratio-160-110-1.png\")
\n <\/div>\n What\u2019s the Easiest Way to Approach SOC 2 Compliance as a Startup?<\/h2>\n\n\n\n
1. Establish Clear, Documented Policies<\/h3>\n\n\n\n
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2. Designate Control Owners and Responsibilities<\/h3>\n\n\n\n
3. Implement Controls Based on Trust Services Criteria<\/h3>\n\n\n\n
Security<\/h4>\n\n\n\n
Privacy<\/h4>\n\n\n\n
Confidentiality<\/h4>\n\n\n\n
Processing Integrity<\/h4>\n\n\n\n
Availability<\/h4>\n\n\n\n
4. Document and Collect Evidence<\/h3>\n\n\n\n
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5. Consider an Internal Audit<\/h3>\n\n\n\n
How to Maintain SOC 2 Compliance as a Startup<\/h2>\n\n\n\n
Simplify Your IT Environment and Achieve Compliance with JumpCloud<\/h2>\n\n\n\n
SOC 2 Compliance: As Painless As Enforce, Prove, Repeat<\/em>.<\/h2>\n\n\n\n