SOC 2 vs SOC 3: Negotiating the Territory of Service Organization Controls
For companies and their employees today, security and trust have become first priorities. Standardized assurance systems become even more important when companies depend more on outside service providers to manage sensitive information and important activities. Here is where Service Organization Control (SOC) reports find application; two of the most often used models are SOC 2 and SOC 3. Although they both help to reassure one about the controls of a company, their breadth, audience, and degree of information vary greatly. This post seeks to demystify SOC 2 and SOC 3 reports by looking at their parallels, contrasts, and when best to use each.
Designed by the American Institute of Certified Public Accountants (AICPA), SOC 2 is a thorough auditing process guaranteed to securely handle data by service providers thus safeguarding their organization’s interests and customer privacy. Based on five Trust Services Criteria—security, availability, processing integrity, confidentiality, and privacy—it is Designed to handle the many hazards connected with storing and processing consumer data in the cloud, these criteria constitute the foundation of SOC 2 compliance.
Conversely, SOC 3 is a condensed form of SOC 2 that offers a high-level perspective on an organization’s controls devoid of the technical information included in a SOC 2 report. SOC 2 is meant for a small audience with a thorough awareness of the systems of the company; SOC 3 is meant for wide public consumption and provides a stamp of approval that one may freely share.
SOC 2 and SOC 3 vary most significantly in their degree of detail. Extensive records called SOC 2 reports include in-depth information on an organization’s systems, the fit of the control design, and in the case of Type II reports, the running efficacy of those controls over an extended period of time. These hundreds of page reports fit only for release under a non-disclosure agreement because they include sensitive information regarding the security policies of the company.
By comparison, SOC 3 reports are brief, usually no more than a few pages. Without getting into the details of how this was accomplished, they provide a synopsis of the auditor’s view on whether the company satisfies the Trust Services Criteria. For marketing reasons, this makes SOC 3 reports perfect because they can be published openly without running sensitive data exposure risk.
The audience for every report represents yet another important distinction. Mostly meant for current clients, potential clients with a particular need for comprehensive information, and auditors who need a thorough knowledge of the controls of the company, SOC 2 reports are Many times, these stakeholders have the technical ability to understand the complicated material in a SOC 2 report.
SOC 3 reports, yet they appeal to a much larger audience. They are meant to be understood by those without specific IT system or audit process expertise. For prospective consumers who seek confidence in an organization’s operations but do not require (or cannot access) the technical specifics, this makes them desirable. Socially conscious reports from SOC 3 may be shared with anybody interested in the organization’s security and privacy, posted on websites, or integrated into marketing materials.
One more area where SOC 2 and SOC 3 differ is the extent of the audit. Although both rely on the Trust Services Criteria, SOC 2 lets companies choose which criteria apply to their business processes and be audited against those particular criteria. This adaptability allows a SOC 2 report to be specifically addressed to the individual risks and controls of a certain service or sector.
Conversely, SOC 3 usually spans all five Trust Services Criteria. Though lacking the precision of a SOC 2 report, this all-encompassing approach offers a general picture of the controls of the company in every sphere. SOC 3’s all-encompassing character helps non-technical stakeholders to quickly grasp the whole control environment of a company.
Regarding audit frequency, Type I or Type II reporting may be given from both SOC 2 and SOC 3. While Type II reports examine the operational efficacy of those controls over a period of time (typically 6–12 months), Type I reports review the appropriateness of the design of controls at a given moment. But because SOC 3 reports are less thorough, many companies decide to do SOC 2 audits more often in order to provide their partners and customers continuous confidence.
The particular demands and objectives of a company will determine whether of SOC 2 or SOC 3 best fits them. A SOC 2 report is usually required for businesses handling sensitive customer data or offering vital services in order to satisfy contractual requirements and provide the degree of confidence needed by consumers and authorities. SOC 2 reports’ thorough character also makes them useful for internal usage as they enable companies to spot areas needing work on their control environment.
Although less thorough, SOC 3 reports have great value in fostering confidence with the general public and potential consumers. They provide companies a means of proving their dedication to privacy and security without disclosing private data. This makes SOC 3 especially helpful for businesses trying to stand out from the competitors or establish trust with a large audience.
In essence, SOC 2 and SOC 3 serve different functions in the field of service organization controls even if their basis in the Trust Services Criteria is same. For those that need thorough assurance, SOC 2 provides a comprehensive, technical evaluation of the control environment of an entity. Conversely, SOC 3 offers a publicly shared mark of approval that, with a broad audience, may help to increase the reputation and confidence of a company. Understanding the variations between these two models will help companies decide which kind of report will fit their requirements as well as those of their stakeholders.