SOC 2 Audit Tips for Small Businesses

For every business, large and small, data security and cybersecurity vulnerabilities should be a paramount concern.

Not only does attention to security safeguard your customers’ private information but it also demonstrates your company’s ability to handle sensitive data and information security with professional care. That ability will give you a competitive edge in the market – and for a small business, every edge matters.

To demonstrate that commitment, organizations can seek to comply with the SOC 2 assurance standard for cybersecurity and privacy.

SOC 2 compliance isn’t required by law. However, many enterprises won’t do business with technology vendors and other service providers that haven’t achieved the SOC 2 attestation of compliance from an independent certified public accountant (CPA) or a CPA firm.

For startups and small businesses, SOC 2 compliance might seem daunting but it doesn’t need to be. While SOC 2 audits are a lengthy process, this guide to SOC 2 compliance can dispel any confusion and help you prepare for the journey.

What Does a SOC 2 Audit Include?

The SOC 2 audit assesses your organization’s ability to protect confidential information and customer data. The primary purpose of a SOC 2 audit is to provide assurance to customers, partners, and stakeholders that the service organization has implemented adequate controls to protect the security, availability, processing integrity, confidentiality, and privacy of their systems and data. The criteria for assessing this ability are guided by five Trust Service Categories developed by the American Institute of Certified Public Accountants (AICPA).

• Security
• Availability
• Confidentiality
• Processing integrity
• Privacy

These criteria serve as the foundation for evaluating the organization’s controls and processes. During the SOC 2 audit, the auditors assess the organization’s policies, procedures, and technical measures to ensure they align with the Trust Services Criteria. They examine how the organization manages security risks, safeguards sensitive information, maintains system availability, ensures data accuracy, and respects privacy regulations. The audit process typically involves a combination of document reviews, interviews with key personnel, and testing of controls in action.

What Are the Two Types of SOC 2 Audits?

SOC 2 audits are grouped into one of two types. A SOC 2 Type I audit assesses whether the vendor’s controls are appropriately designed based on the described rules of the service organization’s management. A SOC 2 Type II audit tests whether those controls actually work as intended over a period of time (usually six months or a year).

Put more simply: Type I audits only provide a snapshot of your security controls at one moment in time; Type II audits provide assurance across a long period of time. So most companies start by undertaking a Type I audit, which provides a baseline understanding of your security controls. You can then proceed to the longer, more substantial Type II audit sometime after that, to provide ongoing assurance.

What Is a SOC 2 Report?

All SOC 2 audits culminate in a report, and this is an important point to understand. A company is not “certified” as SOC 2-compliant. Rather, the company undergoes an audit of its security controls by an independent, competent auditor; and that auditor then writes an opinion about the strength of the company’s security controls. In theory, if your security controls are poor, the auditor could give you a failing report.

Since SOC 2 audits aren’t required by law (as mentioned above), companies have no incentive to undertake a SOC 2 audit until they’re confident that they can pass the audit. Hence preparing for your first SOC 2 audit is so important.

How Should a Business Prepare for a SOC 2 Audit?

All businesses preparing for a SOC audit should plan their approach methodically; a failed audit can be worse than not seeking SOC 2 compliance in the first place.

Small business owners should look at the internal controls they have that satisfy risk management objectives. You’ll want to ensure you have policies in place to control unauthorized access, conduct regular penetration tests to determine vulnerabilities, and ensure adequate IT security procedures to mitigate potential threats.

For guidance, look to the internal control framework developed by COSO, the Committee of Sponsoring Organizations.

COSO’s controls are grouped into five major components: control environment, risk assessment, control activities, information and communication, and monitoring. Using the internal control framework will help to protect your business from the risks that can compromise your information technology.

Along with assessing your security controls, several steps will help your business prepare and carry out its SOC 2 audit.

First, assemble a team within your company to prepare for the audit. The team should include your organization’s chief technology officer (CTO), chief information officer (CIO), and chief security officer (CSO), or whomever else has similar responsibility for IT and cybersecurity.

Consider which of the trust service principles apply to your organization, and determine whether there are any gaps within your current system. Then, organize and collect evidence to support the five trust categories.

Before bringing in the auditor:

1. Self-assess your documentation and assure your organization is ready. It’s far better to delay your audit than to rush into it and fail.
2. Monitor your company’s compliance by setting up security alerts.
3. When ready, schedule an audit with a certified public accountant; the AICPA stipulates that only CPAs are qualified to perform a SOC 2 audit.

Is SOC 2 Required for Startups?

SOC 2 audits are not required by law. Rather, vendors that want to win business from large enterprise customers have a strong incentive to comply with SOC 2 standards because otherwise, those potential customers won’t trust that you can handle their confidential data.

Justifications for obtaining SOC 2 compliance include:

• Market competition. Concerns over security and privacy breaches are growing among consumers of cloud-based solutions. Whether you’re a tiny startup or a major corporation, a SOC 2 compliance report boosts the competitiveness and appeal of your product. It demonstrates your dedication to information security and might assist you in moving your company upmarket.
• Uniform compliance procedures. Getting SOC 2 compliance early on will help you stay compliant with defined security, privacy, and quality assurance standards without having to make more significant modifications after your procedures are established. This might offer you confidence that you’re scaling your startup correctly and avoiding substantial errors.

What Kinds of Companies Need a SOC 2?

Achieving compliance with SOC 2 standards is voluntary. That said, certain vendors will feel more pressure to undertake a SOC 2 audit than others. The service companies most likely to need a SOC 2 audit include:

• Service-based software (SaaS) businesses that offer software, applications, and websites
• Businesses that offer management, analytics, and business intelligence services
• Organizations that manage, support, or offer advice on accounting or financial procedures
• Organizations that offer client-facing services like customer service management
• Providers of managed IT and security services, including those that support SOC 2

You might feel compelled to comply with SOC 2 if your business fits into any of these categories or roughly corresponds to one of these service organizations.

SOC 2 Security Audits for Small Businesses

Do Small Businesses Benefit from Security Audits?

Yes, small businesses can benefit significantly from security audits. Security audits are assessments conducted to evaluate an organization’s security measures, policies, and practices to identify vulnerabilities and weaknesses. Here’s how small businesses can benefit from security audits:

1. Identify Vulnerabilities: Security audits can uncover vulnerabilities in your small business‘s systems, networks, and processes that you may not be aware of. This allows you to proactively address security risks before they are exploited by cybercriminals.
2. Protect Sensitive Data: Small businesses often handle sensitive customer and financial data. A security audit can help ensure that this data is adequately protected, reducing the risk of data breaches and the associated legal and financial consequences.
3. Compliance: Depending on your industry and location, there may be legal and regulatory requirements for data security and privacy. Security audits can help ensure that your small business is compliant with these regulations, reducing the risk of fines and legal issues.
4. Improve Security Policies: Security audits can assess your organization’s security policies and procedures. This can lead to improvements in security awareness, employee training, and incident response plans, making your business more resilient to security threats.
5. Build Customer Trust: Demonstrating a commitment to security through regular audits can help build trust with your customers. They are more likely to do business with you if they believe their data is safe in your hands as information security is very important.
6. Competitive Advantage: In some industries, having strong security measures in place can be a competitive advantage. Customers may choose your small business over competitors if they perceive your security practices as superior.
7. Cost Savings: Detecting security vulnerabilities early through audits can save your small business money in the long run. It’s typically less expensive to prevent a security breach than to deal with the aftermath of one.
8. Incident Preparedness: Security audits can help you identify areas where your small business may be vulnerable to cyberattacks. This knowledge can assist you in developing an incident response plan to minimize the impact of security incidents.
9. Scalability: As your small business grows, security becomes increasingly important. Regular security audits can help ensure that your security measures scale with your business and adapt to new challenges.
10. Peace of Mind: Knowing that you have undergone a security audit and taken steps to address any identified issues can provide peace of mind for you and your stakeholders. Ensure you are following all compliance requirements.

Security audits are a valuable investment for small businesses to protect their assets, data, and reputation. They can help identify weaknesses, improve security measures, and demonstrate a commitment to protecting sensitive information, ultimately contributing to the long-term success of the business.

Steps to a Successful Small Business Security Audit 

A successful small business security audit involves several key steps to ensure that your organization’s assets, data, and systems are adequately protected. Here are the essential steps to conducting a successful security audit for a small business:

1. Define Objectives and Scope: Begin by clearly defining the objectives of your security audit. Determine what you want to achieve with the audit and establish its scope. Consider what aspects of your business you want to assess, such as network security, data protection, employee training, or compliance with industry standards and regulations.
2. Select an Audit Team: Assemble a team responsible for conducting the audit. This team may include internal IT staff, security experts, or external consultants with expertise in cybersecurity. Ensure that team members have the necessary skills and knowledge to assess your business’s security effectively.
3. Identify Assets and Data: Create an inventory of your business’s assets and data. This includes hardware, software, sensitive information, and intellectual property. Knowing what you need to protect is crucial for the audit’s success.
4. Risk Assessment: Perform a thorough risk assessment to identify potential security threats and vulnerabilities. Consider both internal and external risks, such as malware, phishing attacks, physical security breaches, and human errors. Assess the potential impact of these risks on your business.
5. Review Existing Policies and Practices: Evaluate your existing security policies and practices. This includes reviewing password policies, access controls, data backup procedures, and incident response plans. Identify any gaps or weaknesses in your current security measures.
6. Conduct Vulnerability Scanning: Use vulnerability scanning tools to identify vulnerabilities in your network and systems. These tools can help you discover weaknesses that could be exploited by cybercriminals. Address these vulnerabilities promptly to mitigate risks.
7. Compliance Assessment: If your business is subject to industry regulations or legal requirements, assess your compliance with these standards. Ensure that your security practices align with the necessary regulatory requirements.
8. Employee Training and Awareness: Evaluate the level of security awareness among your employees. Ensure that your workforce is well-trained in security best practices, such as recognizing phishing attempts and following secure password practices.
9. Data Protection and Privacy: Examine how your business handles and protects sensitive customer and employee data. Ensure that data encryption, access controls, and data retention policies are in place and effective.
10. Documentation and Reporting: Document the findings of your security audit comprehensively. Create a report that highlights identified vulnerabilities, recommended improvements, and an action plan for addressing the issues. This report will serve as a roadmap for enhancing your security measures.
11. Implement Remediation: Take immediate action to address the vulnerabilities and weaknesses identified during the audit. This may involve implementing new security measures for information systems, updating policies, and conducting employee training in response to internal audits.
12. Regular Monitoring and Updates: Security is an ongoing process. Continuously monitor your security measures and update them as needed to adapt to evolving threats and technologies.
13. Audit Follow-Up: Conduct follow-up audits at regular intervals to assess the effectiveness of your security improvements and ensure that your small business remains secure.

A successful small business security audit involves careful planning, thorough assessment, and proactive measures to enhance security. By following these steps and maintaining a strong commitment to cybersecurity, your small business can better protect itself from threats and vulnerabilities, ultimately safeguarding its reputation and success.

How Can Small Businesses Save Money on SOC 2 Audits?

Small businesses looking to save money on SOC 2 audits can seek guidance from the Small Business Administration. The Small Business Administration (SBA) partners with AICPA and can offer compliance tips and cyber-hygiene guidance for companies preparing to undergo an audit.

While not all that advice might be SOC 2-specific, the tips may help your company identify existing gaps in data security, so you’re not caught off guard when your auditor comes.

Although not mandated, becoming SOC 2 compliant through a cybersecurity audit is highly recommended by industry professionals. It’s also a stamp of approval that your cybersecurity system is intact and shows that your business will protect its customers’ private information and safeguard against costly data breaches that could be devastating for a company.

Conduct Your SOC 2 Journey with ZenGRC

Need help preparing for your SOC 2 audit? ZenGRC from RiskOptics can help.
ZenGRC delivers a faster, easier, more efficient path to compliance. It automates tedious manual processes, accelerates onboarding, and keeps you up to date on the progress and effectiveness of your programs.

You can gain a unified, real-time view of risk and compliance, providing the contextual insight needed to make intelligent, strategic decisions that keep your organization secure and earn the trust of your customers, partners, and employees.

Schedule a demo to learn more!