Dive Into SOC Report Essentials: A Comprehensive Guide for Business Owners
If you’re a business owner working with third-party vendors, specifically those handling data or financial transactions, you’ve probably experienced requests for or received a SOC report. Short for “System and Organization Controls reports,” these are essential for verifying that service providers maintain secure and reliable systems.
But understanding the answer to the question “What is a SOC report?” is only the start. While many companies know they need a SOC 1 or SOC 2 report, few understand how to review them properly or what to do once they receive them.
Becoming more informed is a vital part of managing your risk and building trust. In our latest article, we explore SOC reports in-depth, covering the differences between SOC 1 and SOC 2, what to look for in an audit, and how to interpret the findings to protect your organization.
What Is a SOC Report?
A SOC report is a confirmation from an independent auditor that a service organization has established internal controls to safeguard its systems and data. Issued by licensed CPA firms and governed by the American Institute of Certified Public Accountants (AICPA), these reports assess whether a company’s controls are appropriately designed and functioning effectively
Broadly, SOC reports are requested by businesses, known as user entities, that rely on external vendors for services such as payroll, IT infrastructure, or cloud storage. The goal? To understand whether those services can be trusted, especially when it comes to data security, financial reporting, or system availability.
A well-reviewed SOC report can help prevent costly errors, protect customer trust, and satisfy regulatory scrutiny. But understanding what’s actually inside these reports, and how to interpret them, is key.
Categorizing SOC Reports
SOC 1 vs. SOC 2: Key Differences
Two of the most commonly requested reports are SOC 1 and SOC 2, but they serve two distinct purposes.
A SOC 1 report focuses on controls affecting internal controls over financial reporting (ICFR). This is particularly pertinent if your business offers services such as billing, claims processing, or payroll—essentially anything that may directly influence your company’s financial statements.
In contrast, a SOC 2 report is more suitable if you are a technology and cloud-based service provider. It evaluates controls based on five Trust Services Criteria:
- Security (mandatory)
- Availability
- Confidentiality
- Processing Integrity
- Privacy
Organizations that handle customer data, including Saas platforms and managed IT services, often need to present a SOC 2 report to demonstrate their ability to effectively safeguard that information.
Type I vs. Type II Reports
Both SOC 1 and SOC 2 reports come in two types:
- Type I reports evaluate the design of controls at a specific moment in time.
- Type II reports assess both the design and operating effectiveness of those controls over a period, typically ranging from 6 to 12 months.
Type II reports offer more value, especially for ongoing vendor management or long-term partnerships, because they reveal how consistently your company actually applies the appropriate controls.
What About a SOC 3 Report?
While companies get SOC 1 and SOC 2 reports for detailed internal reviews and are typically restricted to clients or auditors, SOC 3 reports serve a different purpose.
A SOC 3 report is meant for public distribution. It covers the same Trust Services Criteria as a SOC 2 (such as security, availability, and confidentiality), but it omits sensitive details, including control testing procedures and specific exceptions.
This makes SOC 3 ideal for marketing or building trust on your company’s website, where prospective customers can see that an independent audit has been completed without exposing operational specifics.
If you're looking to demonstrate security compliance to a broader audience without revealing too much, a SOC 3 is a valuable complement to your SOC 2 report.
Understanding What’s Included in a SOC Report
Understanding the contents of a SOC report helps you to read it with confidence. Most reports contain the following core components:
Auditor’s Opinion
Found in Section I, this outlines whether your company’s controls are suitably designed and/or effective. In this section, you want to see “unqualified opinion” in your report. And if your auditor indicates “adverse” or “disclaimer of opinion”, this indicates issues that require closer scrutiny.
Management Assertion
In Section II, the service organization asserts that your business has an accurate system description and that your team correctly implements the outlined controls. If this is missing or doesn’t align with the auditor’s findings, that’s a red flag.
System Description
Section III outlines the systems and services in scope, the locations where controls were tested, and descriptions of relevant processes. Pay close attention to ensure that the systems your company uses are indeed covered.
Testing and Results
In the final section, the auditor outlines each control, how it was tested, and whether it passed. It’s not uncommon to find exceptions, but understanding their significance and whether they were addressed is vital.
Reviewing Your Company’s SOC Report Effectively
Who Should Review
Typically, both internal and external auditors are the first to review SOC reports, particularly during audits or vendor due diligence. However, management teams, compliance officers, and IT leaders also have a vested interest in the review.
Remember, if a vendor is part of your core infrastructure, you need to assess whether their operations fulfill your security and compliance expectations.
Business leaders should also ensure that their teams review these reports regularly, not just once and then forget about them. SOC reports should become part of your vendor management and third-party risk program.
How To Review
Reading a SOC report without a clear review strategy can feel overwhelming. Here’s what business leaders and compliance teams should focus on:
Start with the Scope and Period
Ensure the report addresses the appropriate systems and services, particularly if a vendor offers multiple products. Verify the audit period since an outdated report may not accurately reflect current practices. If necessary, request a bridge letter to cover any gaps between audit periods.
Verify the Subservice Organization Treatment
Many service organizations rely on other providers. For example, a SaaS company may use AWS for hosting. The SOC report will indicate whether these subservice organizations are included (inclusive method) or excluded (carve-out method) from the SOC audit. If critical services are carved out, your business may need to request their SOC reports separately.
Evaluate Complementary User Entity Controls (CUECs)
SOC reports often include a list of controls for which your company is responsible. These may include measures such as restricting admin access or enabling multi-factor authentication. If these are not implemented on your side, the overall control environment might not function as intended, even if the vendor’s controls are robust.
Assess the Exceptions and Responses
Not every test will pass, and that’s okay. As long as the vendor has documented the issue, explained the root cause, and described a remediation plan, it’s OK that you don’t pass every single test.
Consider how each exception might impact your business. Was the affected control critical? Is the issue ongoing or resolved?
When to Ask Questions (and What to Ask)
Once you’ve received your SOC report back, it’s crucial you ask any questions or bring up concerns if the audit is unclear. Whether it's a vague exception, a missing service, or an outdated audit period, ask your vendor.
A reputable and reliable SOC 2 auditor will want to help answer all your questions and support you in closing your company’s gaps. SOC reports are complex documents, and even experienced auditors may need clarification from time to time. Be proactive and maintain open communication. Questions to consider include:
- Why is a key system not covered in this SOC report?
- Can you provide a bridge letter for the gap in coverage?
- Has the issue noted in the exception been remediated?
- Are your sub-service providers SOC compliant?
Turn SOC Reports Into Strategic Assets
SOC reports aren’t just technical documents; they’re strategic tools!
Whether you need a SOC 1 or SOC 2, they help you determine whether a service provider is trustworthy, resilient, and aligned with your own compliance and risk goals. And when correctly reviewed, they offer insight not just into the vendor’s systems, but into how your internal controls interact with theirs.
By learning the essentials of SOC reporting and how to read and evaluate the different audit reports, you’re protecting your business. Furthermore, you’re building a more secure and trustworthy outlook for your company.
Use these reports to ask better questions, improve your internal policies, and ensure that the vendors you depend on are truly up to the task.
At Securisea, we help organizations like yours prepare for and navigate SOC 1, SOC 2, and other compliance audits. With over 20 years of SOC auditing expertise, we offer professional guidance, gap assessments, and full-scope assurance services to each client.
Whether you're reviewing a vendor's report or preparing your own, our team ensures all the security frameworks meet today’s most rigorous standards. Talk to a Securisea Expert and take the next step toward a more innovative strategy and stronger compliance to grow your business efficiently.
The Importance of DNSSEC for FedRAMP Compliance: How Securisea Can Help
DNSSEC (Domain Name System Security Extensions) is a feature of the Domain Name System (DNS) that verifies the authenticity of data in responses from authoritative DNS servers. It's a key requirement for cloud service providers (CSPs) to achieve and maintain Authority to Operate (ATO) for FedRAMP.
The DNS is essentially the phonebook of the internet, translating human-readable domain names (like securisea.com) into IP addresses that computers use to access websites. However, traditional DNS is inherently vulnerable to attacks like DNS spoofing and cache poisoning, where attackers can redirect users to malicious sites without their knowledge. DNSSEC adds a layer of cryptographic protection to DNS lookups, ensuring that the information returned by a DNS query is authentic and has not been tampered with. For organizations seeking FedRAMP compliance, implementing DNSSEC is essential to protect against these threats and maintain the integrity of their online services.
DNSSEC Requirements for FedRAMP certification
The FedRAMP Readiness Assessment Report includes the following questions in relation to your organization's DNSSEC configuration:
- Does the system’s external DNS solution support DNS Security (DNSSEC) to provide origin authentication and integrity verification assurances? This applies to the controls SC-20, SC-21, and SC-22 in the SSP." (section 4.1)
- Did the 3PAO [third-party assessment organization] verify that the external DNS server replies with valid DNSSEC responses and that the recursive server is within a FedRAMP Authorized boundary, makes DNSSEC requests for domains outside the boundary, and that DNS calls maintain DNSSEC authentication and integrity? [SC-20, SC-21]" (section 4.2)
Here's how DNSSEC helps:
Prevents DNS Spoofing and Cache Poisoning: DNSSEC adds a layer of security to the DNS by enabling the authentication of DNS responses. This prevents attackers from injecting false DNS data into the resolver's cache (cache poisoning) or redirecting traffic through DNS spoofing, which could lead to man-in-the-middle attacks.
Data Integrity Through Digital Signatures: DNSSEC ensures that the data returned by the DNS server is authentic and has not been altered in transit. It does this by using public-key cryptography to sign DNS data. When a DNS resolver receives a response, it checks the signature with the public key published in the DNS. If the signature is valid, the resolver knows the data has not been tampered with.
Enhanced Trustworthiness: For cloud service providers, ensuring the integrity of DNS data is crucial because any tampering could lead to users being redirected to malicious sites or services. DNSSEC helps maintain the trustworthiness of the DNS infrastructure by ensuring that users are directed to the correct IP addresses for cloud services.
Protection Against Downtime and Data Breaches: By securing the DNS infrastructure, DNSSEC helps cloud service providers protect against potential downtime caused by DNS attacks and prevents unauthorized access to sensitive data that could result from DNS hijacking.
Support for Secure Authentication Mechanisms: DNSSEC lays the foundation for additional security mechanisms, such as DANE (DNS-based Authentication of Named Entities), which can be used to ensure secure connections to cloud services by verifying the authenticity of SSL/TLS certificates.
How Securisea Can Help with DNSSEC and FedRAMP certification
Achieving and maintaining FedRAMP compliance is no small task, and DNSSEC is just one piece of the puzzle. As cybersecurity and compliance experts, Securisea provides comprehensive services to help your organization navigate the complexities of FedRAMP, including the implementation and management of DNSSEC.
FedRAMP Advisory. Considered by many to be the most comprehensive and challenging security program in the world, many firms seeking a FedRAMP ATO chose to retain a 3PAO company to assist with building their compliance program. At Securisea, we have the experience and expertise to build out an efficient and cost effective compliance program that enhances overall security posture while de-risking the ATO application.
FedRAMP Readiness Assessment. For most cloud service providers, the FedRAMP Readiness Assessment is the fastest route to being listed in the Federal Marketplace. This engagement is especially beneficial for companies seeking an agency sponsor to obtain their first ATO and is seen by many as a requirement for unlisted services that wish to apply for a P-ATO.
FedRAMP Assessment. Undergoing a FedRAMP Assessment is the final step in achieving your Agency or Provisional Authorization to Operate (ATO). As a 3PAO, Securisea is one of a select number of firms qualified to represent your compliance program to your Agency or Joint Authorization Board contact.
Ready to tackle FedRAMP?Contact Securisea today to learn more about how we can help get the ball rolling with our FedRAMP Advisory Services.
SOC2 + HITRUST: Combining Controls for Maximum Security
When it comes to ensuring the security and compliance of sensitive data, particularly in industries like healthcare, achieving both SOC 2 and HITRUST certifications can offer substantial advantages. SOC 2 focuses on the Trust Services Criteria, which are essential for safeguarding customer data across any industry, while HITRUST is tailored specifically to the healthcare sector, incorporating a comprehensive set of controls based on various regulations, including HIPAA.
Compliance with both SOC 2 and HITRUST not only shields organizations from potential data breaches but also demonstrates a strong commitment to information security and privacy, fostering trust. The combined assurance provided by these certifications can help build confidence with clients, reduce the complexity of managing multiple compliance requirements, and ultimately streamline the audit process.
Understanding SOC2
SOC 2, which stands for Service Organization Control 2, outlines standards for companies to securely manage customer data. Created by the American Institute of CPAs (AICPA), SOC 2 is crucial for organizations providing SaaS (Software as a Service) and cloud services.
The framework is built around five Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.
- Security ensures data protection against unauthorized access.
- Availability ensures that systems are operational and accessible when needed.
- Processing Integrity ensures data processing is complete, accurate, and authorized.
- Confidentiality protects sensitive information.
- Privacy governs the collection, use, retention, and disposal of personal information according to an organization's privacy policy and applicable laws.
SOC2 has two types of audit reports:
- Type I assesses the design of internal controls at a specific point in time.
- Type II evaluates both the design and the operational effectiveness of controls over a period of time.
Understanding HITRUST
HITRUST, which stands for Health Information Trust Alliance, is a comprehensive cybersecurity framework that is used by any organization that collects, stores, processes, or transmits sensitive data. Created by the American Institute of CPAs (AICPA), HITRUST is used to demonstrate compliance with various industry regulations, such as HIPAA, GDPR, and SOC 2.
The HITRUST CSF is the leading security framework in the healthcare sector, with 81 percent of hospitals and 80 percent of health plans integrating it into their operations. Whether used as a foundational resource for best practices or as the core of their information protection strategies, the HITRUST CSF has become a key component for ensuring security across the industry.
There are three types of HITRUST assessments:
- e1 Assessment (Enhanced Assessment) is a one-year assessment that focuses on cybersecurity essentials and is intended for organizations with low risk profiles or limited complexity. It has 44 control requirements and is good for startups.
- i1 Assessment (Initial Assessment) is a one-year assessment that focuses on leading security practices and is intended for organizations with established information security programs. It's considered easier than the r2 assessment.
- r2 Assessment (Repeatable Assessment) is a two-year assessment that focuses on expanded practices and is risk-based. It can have up to 1,000 requirements based on an organization's risk factors, which can include general, organizational, geographic, technical, and regulatory factors. The r2 assessment is considered more work than the i1 assessment, but it can help organizations achieve a higher level of risk management maturity.
How is HITRUST different from HIPAA?
The main difference between HITRUST and HIPAA is that HIPAA is a U.S. law that sets standards for protecting patient health information in the health industry. HITRUST is a global framework for managing security and risk, and includes a Common Security Framework (CSF) that helps organizations comply with regulations such as HIPAA.
Benefits of SOC2 + HITRUST
In the past, organizations requiring both SOC 2 and HITRUST certification reports had no choice but to undergo two separate assessments. This approach led to increased costs for businesses striving to comply with both the Trust Services Criteria and HITRUST CSF standards. Recognizing the inefficiency, the American Institute of Certified Public Accountants (AICPA) collaborated with HITRUST Alliance to streamline the process. The result is the SOC 2 + HITRUST program, a unified reporting framework that allows service organizations to demonstrate compliance with both sets of requirements in a single, consolidated report.
Securisea Simplifies SOC2 + HITRUST Compliance
The complementary nature of SOC 2 + HITRUST allows for a unified approach to compliance, benefiting organizations in the healthcare sector or those working with healthcare data. Securisea’s integrated approach to security and compliance translates into real savings of both time and money for our clients, helping them reach their goal of achieving and maintaining SOC 2 and HITRUST compliance more quickly. As a trusted advisor, Securisea will work alongside you to understand your business, and help you meet your security and compliance objectives.
Securisea is one of only a handful of audit firms in the world certified to provide PCI DSS, FedRamp/StateRAMP 3PAO, HITRUST & HIPAA, ISO27001 and 27701, SOC2, SOC1, and CSA STAR assessments all under one roof.
Success Story: Conquer + Securisea
Securisea has worked with Conquer on several audits over the years, starting with a SOC2 Type 1 Audit followed by a SOC2 Type 2 audit.
Like many first time SOC clients, Conquer had several large new business prospects that were close to closing, but required a SOC 2 report as part of their due diligence. Conquer initially selected Securisea after building an internal short list of 6 security vendors they wanted to interview to see which company was the right fit. According to Ian Skebba, Chief Technology Officer at Conquer, “We were looking for that partner that would make us a priority and could help us accomplish our goals quickly, but also was cost-effective for us based on who we are as a company, and our size at the time.” Since this was Conquer’s first foray into a SOC 2 engagement, they needed a company that could do more than just execute a set of control tests but also look at the controls they had designed within their specific technical context.
Securisea Announces Re-election to PCI Security Standards Council’s Global Executive Assessor Roundtable
(Annapolis, MD, August 5, 2024) Securisea, a leading provider of security and compliance services, announced today that they have been re-elected to serve on the PCI Security Standards Council’s Global Executive Assessor Roundtable (GEAR).
Securisea is one of 33 organizations to join the PCI Security Standards Council’s Global Executive Assessor Roundtable in its efforts to secure payment data globally. As strategic partners, Roundtable members bring industry, geographical and technical insight to PCI SSC plans and projects on behalf of the assessor community.
“We’re proud to have our contributions recognized and to continue our service on the GEAR Roundtable,” said Josh Daymont, CEO of Securisea. “The threats to payment security continue to evolve at a rapid pace, and as a global assessor on the front lines, we appreciate the opportunity to use our experience and expertise to shape the future of PCI compliance standards.”
“We need voices from across the assessor community to help ensure we are providing the best standards and programs to support the industry in protecting against today’s modern cybercriminal”, said Gina Gobeyn, Executive Director of PCI SSC. “We’re pleased to have Securisea on the PCI SSC Global Executive Roundtable to provide critical insights and help us build on the great efforts that are already being done to increase payment security globally.”
Securisea is one of only a handful of audit firms in the world certified to provide PCI DSS, FedRamp/StateRAMP 3PAO, HITRUST & HIPAA, ISO27001 and 27701, SOC2, SOC1, and CSA STAR assessments all under one roof. Their integrated compliance approach allows clients to leverage existing security controls from other frameworks directly into each engagement, reducing overhead and work duplication.
Founded in 2006, Securisea provides audit support for organizations of all sizes, from startups to some of the world’s most security-minded technology companies. Their customers rely on them to continue to evolve to meet an ever-changing security and compliance landscape, while maintaining a high level of expertise, responsiveness, and customer service to every unique engagement.
About Securisea
Securisea is a leading provider of security and compliance services, helping companies secure their sensitive data and systems. With a personalized approach to customer service and a deep understanding of the unique needs of large enterprise companies, Securisea has built a reputation for delivering reliable, effective, and efficient security and compliance solutions. For more information, please visit http://www.securisea.com.
About the PCI Security Standards Council
The PCI Security Standards Council (PCI SSC) leads a global, cross-industry effort to increase payment security by providing industry-driven, flexible, and effective data security standards and programs that help businesses detect, mitigate, and prevent cyberattacks and breaches.
Contact Information:
Josh Daymont, CEO
sales@securisea.com
1 877-563-4230
Getting Started with ISO 27001 Certification: Why Does My Company Need It?
The primary reason an organization decides it’s necessary to start the ISO 27001 process is simple: their customers are asking for it, and refuse to do business without it.
Having an ISO27001 certification demonstrates to your customers that your organization is committed to maintaining high standards of information security. Here are some key points it conveys:
- Trust and Confidence: It reassures customers that their data is handled securely and is protected against breaches, unauthorized access, and other security threats.
- Compliance: It indicates that your organization meets international standards for information security management, which can be crucial for regulatory compliance and contractual obligations.
- Risk Management: It shows that your organization has a systematic approach to managing sensitive company and customer information, including risk assessment and mitigation strategies.
- Operational Excellence: It highlights that your organization follows best practices in information security, which can improve efficiency and reduce the risk of data-related incidents.
- Competitive Advantage: It sets your organization apart from competitors who may not have such certifications, potentially attracting more security-conscious customers.
- Continuous Improvement: It signifies that your organization is committed to continuous improvement in information security practices, as ISO27001 requires regular reviews and updates to the security management system.
Overall, having an ISO27001 certification can enhance your organization's reputation, build customer trust, and open up new business opportunities.
Preparing for An Internal ISO 27001 Audit
An internal ISO 27001 audit is a process that evaluates an organization’s information security management system (ISMS) against the requirements of the ISO 27001 standard. This audit is conducted by internal staff with the assistance of an external auditor like Securisea to ensure compliance, identify areas for improvement, and prepare for external certification audits.
Steps Involved in an Internal ISO 27001 Audit:
- Planning: Define the scope, objectives, and criteria of the audit. Develop an audit plan and schedule.
- Documentation Review: Examine the ISMS documentation to ensure it meets ISO 27001 requirements.
- Conducting the Audit: Perform the audit through interviews, observations, and reviewing records and processes.
- Reporting: Document the findings, including non-conformities, observations, and opportunities for improvement.
- Corrective Actions: Implement corrective actions to address non-conformities and improve the ISMS.
- Follow-Up: Verify the effectiveness of corrective actions and ensure ongoing compliance.
How Securisea Can Help
Navigating the intricacies of an ISO 27001 internal audit can be challenging. This is where Securisea comes in. Our team of experienced professionals is dedicated to helping organizations achieve and maintain ISO 27001 certification with ease and confidence.
Here’s how Securisea can assist:
- Expert Guidance: Our consultants have extensive experience with ISO 27001 standards and can provide expert guidance throughout the internal audit process. From planning to execution, we ensure that every step is conducted thoroughly and efficiently.
- Comprehensive Audit Services: Securisea offers comprehensive internal audit services tailored to your organization’s specific needs. We assess your ISMS against ISO 27001 standards, identify areas of non-conformity, and provide actionable recommendations for improvement.
- Training and Education: We believe in empowering your team with the knowledge and skills necessary to maintain ISO 27001 compliance. Securisea provides training sessions and workshops to educate staff on information security management best practices.
- Continuous Support: Achieving ISO 27001 certification is just the beginning. Securisea offers ongoing support to help you maintain compliance and continuously improve your ISMS. Our team is always available to answer questions, provide guidance, and assist with any challenges that arise.
- Tailored Solutions: Every organization is unique, as are its information security needs. Securisea takes a personalized approach, tailoring our services to align with your specific requirements and business objectives.
Final Thoughts:
An ISO 27001 internal audit is a critical component of maintaining a robust and compliant information security management system. With Securisea's expert assistance, your organization can navigate the complexities of this process with confidence. Our comprehensive audit services, expert guidance, and continuous support ensure that your ISMS not only meets ISO 27001 standards but also evolves to address emerging security threats and challenges.
Ready to take the next step in securing your organization’s information assets? Contact Securisea today and let us help you achieve ISO 27001 certification and maintain the highest standards of information security.
Success Story: Systems East + Securisea
Systems East Inc. reached out to Securisea based on a referral from their hosting provider. Although Systems East had an exceptionally mature PCI compliance program, their existing assessor company had become disorganized as it had grown, leading to their auditors repeatedly asking for the same evidence multiple times which in turn delays completion of the entire engagement. Systems East was working with one of the largest PCI compliance advisors in the country, had gone through the entire process for PCI, submitted evidence, and were left waiting in the cold for weeks. After multiple calls, inquiries, with no reply - Systems East learned that their QSA had been pulled from the project, assigned to a much larger client where they were needed, and there was no timeline for completing their certification.
Systems East selected Securisea as their PCI compliance partner in response to their existing hosting provider’s strong recommendation. According to Peter Rogati, “Securisea came in right away and understood our business, our past experiences, our needs, and helped us move forward.”
According to Rogati, other firms in the past had presented a menu of a la carte services for them to choose from, and everything had a cost. There was little guidance, it was “tell us what you want and we’ll sell it to you”. With Securisea, Systems East found a partner that took the time to listen to their wants, their motivations, and then advise them on the best path forward. Securisea was able to guide Systems East through the audit process, while also keeping them from doing things they really didn’t need to do.
