When should I consider a SOC 3 audit?

The best time to get a SOC 3 audit is…when you get a SOC 2 audit because the audits are the same.

Why, then, are there two kinds of reports? Because there are two kinds of audiences for them: internal and external. The essential difference between SOC 2 and SOC 3 lies not in the audit but in the SOC report and how the findings are used. The same audit can produce either type of report or both, and regulatory compliance with SOC 2 means you also achieve SOC 3 compliance. How efficient is that?

Service organizations generally get a SOC 2/3 audit to ensure that the data they process for their clients—“user entities” by the American Institute of Certified Public Accountants (AICPA)—is secure and private.

What Is A SOC 3 Report?

A SOC 3 report is a shortened version of a SOC 2 Type II report focusing specifically on the confidentiality, privacy, security, and processing integrity of a service organization’s systems that handle customer data. Unlike a SOC 2 report, a SOC 3 general use report does not contain the detailed testing procedures and results of the Certified Public Accountants (CPA). 

Instead, it simply states the auditor’s opinion on whether the service organization’s security controls protect the confidentiality and privacy of information during the period under audit, in alignment with Trust Services Criteria frameworks like the International Organization for Standardization (ISO) or Health Insurance Portability and Accountability Act (HIPAA).

SOC 3 reports allow Saas providers, healthcare organizations, and other service organizations to showcase compliance with security questionnaires and provide external assurance to stakeholders about their cybersecurity, risk management, and data protection without revealing sensitive details. They are popular for marketing purposes and for demonstrating access control and disaster recovery readiness to prospective customers.

Is Mine a Service Organization?

The AICPA established System and Organization Controls for Service Organizations 2 and 3 (formerly known as Service Organization Controls 2 and 3) to provide auditors with criteria for testing controls relevant to data privacy and security at service organizations.

If yours is a service organization, i.e., an organization that performs a service for other organizations or “user entities,” you may need a SOC 2/3 audit. Suppose your organization handles data that belongs to those user entities. In that case, you need this audit: SOC 2/3 is the standard for demonstrating a commitment to data security and privacy, and certification is crucial in the business world today.

Examples of service organizations include:

• Data centers
• Cloud computing services
• Software as a Service providers
• Credit card processors
• Internet service providers 
• IT security management
• Financial processing
• Accounting and auditing
• Customer support
• Sales support
• Medical claims processing
• Legal
• Pharmaceutical
• Insurance claims processing
• Human resources
• Data analysis
• Document and records management
• Workflow management
• Customer Relationship Management (CRM)
• Technology consulting

How Does a Soc 2/3 Audit Differ From a Soc 1 Audit?

A SOC 2 or 3 audit report will address your service organization’s internal controls in five “Trust Services Categories”:

•     “The security, availability, and processing integrity of the systems the service organization uses to process users’ data,” and
•     “The confidentiality and privacy of the information processed by these systems.”

A SOC 1 report uses a different auditing standard: the Statement on Standards for Attestation Engagements No. 18 (SSAE 18, formerly SSAE 16). SOC 1 audits are all about financial reporting, discussing controls that affect your organization’s financial statements. Are the controls well designed? Do they work to help the organization meet its financial goals?

If your service organization processes, stores, or transmits data from an external client, you need a SOC 2 audit to handle that data securely. A breach could devastate your business and your bottom line.

Your use of the SOC 2 report is restricted, however. The AICPA stipulates that it is for internal use only—restricted to service organization managers, the user entities with whom they do business and user-entity auditors.

How Often Do I Need A Soc 3 Audit?

Most service organizations aim to go through the SOC 3 audit process annually to align with the AICPA’s Trust Services Criteria and showcase updated security controls that protect customer data. Conducting the Type 2 audit once a year verifies that confidentiality, privacy, security, and processing integrity controls continue operating effectively. It also demonstrates to stakeholders and prospective customers that you take SOC 2 compliance seriously.

Depending on business needs and service commitments, some organizations may opt for a SOC 3 audit every six months or two years. More frequent auditing improves visibility into control effectiveness, while less frequent may help reduce costs. The key is finding the right balance between assurance and the resources required. Information security readiness assessments can help determine the appropriate cadence.

Overall, an annual SOC 3 audit validates that cybersecurity, risk management, and data protection controls effectively prevented unauthorized access to financial information and other confidential data during the period under review.

Preparing For Your Soc 3 Audit

Preparing for a SOC 3 audit takes significant planning:

• Review the Trust Services Criteria and ensure your controls address relevant areas
• Identify key personnel to help coordinate with auditors
• Gather documentation to show how your controls operate
• Conduct internal testing to uncover any gaps
• Remediate issues identified during the preparation
• Confirm audit scope and agree on the timeline

Proper preparation leads to a smoother audit process and reduces the risk of unexpected findings. Leveraging audit preparation tools can also help streamline readiness activities.

How Companies Use Soc 3 Findings

SOC 3 reports, on the other hand, can be freely distributed. These reports are shorter, without the technical (and usually confidential) descriptions of the auditor’s control testing and the results of those tests. SOC 3 reports are designed for general use: anyone may read them.

Many organizations use their SOC 3 reports for marketing. Some post them on their website or offer them to prospective clients and customers as evidence of their commitment to protecting the security and privacy of the data they handle.

Since the audit for SOC 3 is the same as a SOC 2 audit, organizations wanting a SOC 3 report generally request one when they engage the auditor.

One caveat: SOC 2 reports come in two flavors.

• Type 1, often an organization’s first-ever SOC 2 report, looks at controls governing data security and privacy during the audit. 
• Type 2 reports discuss the effectiveness of your organization’s information security and privacy controls since your last SOC audit, typically one year.

SOC 3 reports, however, are generated only after a Type 2 audit. So, if you want to publish or disseminate your SOC report for general consumption, you will need an audit that generates a Type 2 report.

Maintain Soc 3 Compliance With ZenGRC

ZenGRC provides an integrated platform to help manage SOC 2 and 3 compliance from audit preparation through remediation.

With ZenGRC, organizations can improve audit readiness, quickly respond to findings, and demonstrate continuing compliance. The result is reduced audit fatigue and more time focused on core business goals. Schedule a demo today!