Tuesday, August 23, 2022

How To Get SOC 2 Certification For Software Companies

SOC 2 certification is a way for SaaS businesses like yours to implement and prove their successful implementation of a security program that protects your customer's data, your intellectual property and your reputation as a responsible independent software vendor (ISV).

Table Of Contents

    What is SOC 2 certification?

    System and Organisation Controls 2 (SOC 2) is an audit report that certifies to trustworthiness of services provided by a service organization, particularly software companies. It is the most commonly used framework to manage and minimise the risks associated with your software storing your customers' data in the cloud.

    It is a voluntary standard for service companies (read software/SaaS companies), designed by the American Institute of Certified Public Accountants (AICPA), which defines how certified organisaitons should manage their customers' data.

    The standard is based on the five trust services criteria:

    1. Protection
    2. Availability
    3. Processing integrity
    4. Confidentiality
    5. Privacy

    A SOC 2 report is tailored to the unique needs of your organization. Depending on its specific enterprise practices, your organisation can assemble controls that follows one or more principle of trust - this is because SOC 2 allows you to choose your own scope.

    These internal reports provide regulators, your customers, other business associates and suppliers, with important surety that you have robust systems in place to securely hold and manage their data.

    Why do I need SOC 2 certification?

    Most companies, particularly larger enterprises, want proof from their third party vendors that their sensitive data is protected when it handed over to you and while you store in the cloud.

    We know for a fact that large enterprises in particular view security as a key component of a SaaS company proving itself as enterprise-ready:

    SOC 2 certification for SaaS companies

    You, as a leader in SaaS company, need this certification because it’s so widely accepted and acknowledged as a prerequisite before they will purchase your software.

    If you are interested in selling more SaaS subscriptions to larger enterprise customers then SOC 2 compliance, including detailed SOC 2 penetration testing reports are must-have tools for your sales armoury.

    Is the SOC 2 certification process different for SaaS companies?

    SOC 2 is different from other security certifications because it lets each industry decide how best to execute the framework. Which is why correctly setting the scope is an important part of SOC 2 preparation services.

    Your auditor will consider how well your business has enforced security controls relevant to each Trust Services Criteria as part of the audit process.

    Does a SaaS startup need to be SOC 2 compliant?

    B2B technology startups can use SOC 2 compliance to gain and reach enterprise customers, because typically these customers require security procedures with rigorous monitoring procedures.

    By becoming SOC 2 certified you'll feel confident in the scale and availability of your information security systems and you can use this as a way to sell bigger deals to larger enterprises.

    SOC2 applies to companies and services storing and processing customer data on the cloud. This applies to a lot of startups as well as large businesses.

    SOC 2 certification for software companies

    Gain a competitive advantage

    With a SOC 2 report in your hands before engaging opportunities, you will make it easier for your company prospects to vet you as part of the deals cycle compared to your competition. With a SOC 2 report, businesses will spend less time performing due diligence as part of the sales cycle.

    Streamline processes and controls to ensure scalability

    SOC 2 audits also require several types of entity-level controls to be in place, such as verifiable security programs, security awareness training of your team, performance evaluations, policy reviews and annual security risk assessment.

    Implement SOC 2 after you have foundational software security best practices in place

    I'm sorry to burst your bubble, but SOC 2 is not a panacea to all your software security headaches.

    Think of SOC 2 certification as more of a stamp of approval once all your security for web applications is in place. It's one of the last steps on your journey to building a culture of security within your software development team.

    Your company should only embark on SOC 2 accreditation if your existing application security structure includes all of the following activities:

    Think of SOC 2 accreditation like a building occupancy certificate for your new home. Your home is only issued that cerficate after the builder has proved that the house is safe and well-built to the right standards.

    As Ayush Trivedi, my boss and co-founder of Audacix puts it, "SOC 2 certification is like a building occupancy certificate for your software. It signals to your customers that your software is safe for them to use."

    Want my team to show you how to put a scaleable application security structure in place?

    Which industries need SOC 2?

    Certifications are needed across all sectors. Due to this standard, many purchasing and security departments have required SOC-2 reports before they can approve a purchase.

    Designed by the AICPA, SOC 2 is especially designed for business partners storing customer data in the cloud. That means SOC reports applies to nearly every SaaS company, as well as any company that uses the cloud to store its customers data.

    If your company processes customer data and you sell to medium or large enterprises then a SOC 2 report will help you prove how you protect your customers' sensitive information.

    Healthcare, financial services, SaaS and cloud computing businesses benefit from being able to prove that they have a robust security and compliance program. Becoming SOC 2 certified helps you furnish this proof.

    How long does it take to get SOC 2 certification?

    Successfully completing your SOC 2 accreditation will normally take somewhere between six months to a year for most firms.

    You should note that SOC 2 Type 1 Reports can take up to six months for smaller companies, whereas SOC 2 Type 2 Reports will typically take at least 9-12 months.

    Many factors influence these durations, and these timeframes will be much longer for large enterprises, as compared to smaller scaleups with less than 200 people.

    Why Is Processing Integrity vital for A SOC 2 Audit?

    Any time that a user entity enrolls in the outside sourcing of a service institution, it is necessary to know the key points of the service organization’s processes. In this case, the "service organization" is your company!

    It is extremely important to ensure that your software development workflows, and, in fact, your entire company has appropriate structures in place to securely handle your customers' data. Part of this is to ensure that your systems, including hardware, software and cloud applications are routinely security tested and monitored to ensure your organisation stays compliant.

    What does the SOC 2 audit process look like?

    A SOC 2 audit can be divided into two phases:

    1. Preparation, for which you probably need the help of a SOC 2 preparation services company; and
    2. Execution, for which you will need a CPA.

    Preparing for the audit

    Before you hire a CPA to conduct an audit, you’ll need to take a few steps to ensure that you have the necessary elements in place to give your team the best shot at getting certification with minimal hiccups.

    If you don't have anyone on your team who is experienced at guiding an organisation through the SOC 2 certification process, you should seriously consider working with a SOC 2 preparation services provider.

    You might have heard horror stories about how long or how difficult it is to become accredited. These horror stories usually ring true for teams who refuse outside help, with little or no internal expertise.

    Save yourself the heartache and burned bridges, and get some help.

    Want my team to show you a fast, but realistic & achievable SOC 2 preparation program?

    Define your security principle(s) and internal controls

    The user entity wants to learn from the audit and what controls will be included within that compliance policies. They want to make sure that your Firm can be trusted with sensitive data. 

    Document policies and procedures

    SOC 2 Type 2 audits require thorough documentation of information security policies based on Processing Integrity. 

    Completing the audit

    When you’re prepared for your audit, your CPA will work through the SOC 2 audit checklist. Amont other things your auditor may do these activities: 

    • Review the audit scope
    • Review your project plan
    • Test security risks
    • Document the results
    • Deliver to you the SOC-2 report type for which you are seeking accreditation

    What is the difference between SOC-2 Type 1 and Type 2?

    The SOC 1 Type I notes on the report of access controls supplied by the management of the service organization and attests that the security tools are suitably designed and implemented. 

    The SOC 1 Type II reports on the description of controls provided by the management of the service provider, attests that the controls are suitably designed and implemented, and attests to the data processing effectiveness of the change control.

    A SOC 1 Type I and a SOC 1 Type II both report on the internal controls and processing integrity at your company that may impact the security of your and your customers' sensitive data, including personal identifiable information. 

    The major distinction is that:

    • A SOC 1 Type I report is a control at a service institution at a precise point in time.

    • Whereas a SOC 1 Type II, report is an attestation of controls at a service institution over a minimum six-month period.

    This focus on an extended timeline is what makes SOC-2 Type II reports the only certifications that your customers will want to see.

    What should I look for in SOC 2 preparation solution providers?

    Remember, the company that helps you prepare for SOC 2 certification does not have to be AICPA affiliated.  

    Only SOC 2 auditors must AICPA-affiliated firms, because effectively, only CPAs can perform your SOC-2 audit. 

    Now, you should understand at this point that SOC-2 certification is not a simple "tick-box" exercise. 

    There's a lot of planning and strategy that must be executed and created to help you acheive your SOC-2 certification in the shortest time possible. 

    Not every SOC-2 preparation services company understands this and you will literally burn money if you choose the wrong partner. 

    Luckily you found this page, because you can now use these 6 specific questions and outcomes to find the best SOC-2 preparation services company to help you become SOC-2 certified quickly:

    1. Clear dilienation of responsibilities, what will your team have to do and what will the solution provider do?

    2. Clear articulation of the documents and artefacts that the solution provider will produce.

    3. Clear communication of timelines.

    4. Clearly demonstrating which of your team members will be involved in the project.

    5. Clearly outline the pre-audit support that the solution provider will give you.

    6. How will your solution provider support you if your auditor comes back with improvement recommendations for your security practices.

    7. Ongoing support: how will the SOC-2 preparation firm help you to stay certified and compliant after you receive your first accreditation?

    Want my team to show you a fast, but realistic & achievable SOC 2 preparation program?

    Can SOC 2 compliance automation speed up certification?

    Absolutely, and this is why we recommend to all our clients that they subscribe to either of the tools listed below. 

    Because Audacix partners with all the tools listed below we are able to get them working quickly to help minimise the amount of manual effort you will have to put into your soc2 certification process.

    Nobody gets excited to deal with a SOC 2 audit, and everyone wants to find valuable tool to speed it up. SOC 2 can be complicated, extensive, time-consuming, and that's why you need an expert support team.

    Key elements of SOC 2 compliance automation software

    Automated Evidence Collection

    Eliminating tedious manual tasks is one of the essence advantages of SOC 2 compliance program. The solution you select should automatically collect proof to simplify your audit. 

    Vendor Management

    Select a tool that helps you manage all of your vendor agreements and security certifications in one spot. It will facilitate how you manage SOC 2 report . 

    Policy Library

    Building a set of internal security certifications can be immensely time-consuming. Stores customers data in the cloud, SOC 2 compliance is table stakes.

    Continuous Monitoring

    Continuous monitoring ensures ongoing compliance with active alerting. Often this is a crucial part in helping you stay compliant over time.

    If your SOC-2 preparation firm is not going to set up active, automated continuous monitoring for you, then you will suffer a world of hurt after you pass your first accreditation audit.

    There are many best-practice methods to implement autoamted continuous monitoring and it will also help you successfulyl implement your change management controls.

    If you don't know how to do this, book a discovery call with my team and we'll show you how we can smoothen out your SOC-2 certification process.

    Expert, End-to-End Support

     At Audacix, our team will help you prepare for an audit and be with you throughout the audit to ensure Operating Effectiveness. SOC 2 report auditors will have follow-up queries no matter how well qualified you are for better security. 

    SOC 2 Physical Access Controls

    The first set of controls calculated by the TSC pertains to logical and physical access. These commands contain protection to monitor and restrict access to sensitive data and any appliances or networks on which it is stored, transmitted, or processed. Service institutions need to demonstrate that they’re taking physical and virtual steps to protect data privacy, virtue, and confidentiality.

    What are the best SOC 2 compliance automation tools?

    SOC 2 compliance automation tools are helpful for all SOC 2 accredited companies, but particularly so if you have automated CICD or DevOps pipelines to manage your infrastructure and release new versions of your application.


    Vanta is the ultimate automated security and SOC 2 compliance platform. Vanta helps your business minimize users' complaints about compliance-fatigue and can be installed on all business IT assets (think servers, computers, etc) to continually monitor and collect compliance evidence.

    It can help you stay compliant by continuously monitoring your people, systems, and tools to improve your security posture. 

    Vanta is undoubtedly a popolar compliance automation tool for SOC 2 certification. It's aimed at the enterprise segment and most SaaS startups and scaleups might find more cost-effective alternatives.

    Tugboat Logic

    Despite its quirky name, Tugboat Logic is a very good Vanta alternative.

    Like Vanta, Tugboat logic helps customers plan and implement a security program for their organization. Tugboat can help you get ready for certifications and enable you to prove compliance to their third parties business partners.

    Tugboat is as user-friendly as these compliance automation platforms will ever be and it also has an extensive templates list to reduce the content writing burden that comes with SOC-2 certification for SaaS companies.

    While Tugboat can help you automate data collection and communication for SOC-2, it is not a click-and-forget tool. Experience and know-how about how to set it up efficiently and correctly for initial and ongoing use is critical to maximising your ROI from the tool.

    That's why it's important to partner with a SOC 2 preparation firm that knows how to set up automation compliance toosl like Tugboat, so that you don't have to suffer the pain and can continue to operate (somewhat) normally during and after your SOC 2 accreditation.

    Struggling with choosing the best compliance automation tool for you? Need some help?

    Which is better SOC 2 or ISO 27001?

    There is no, right or wrong answer to this question. It depends on the geographies in which your company operates and the demands of your enterprise customers.

    • ISO 27001 is better recoginized internationally, outside of North America.
    • SOC 2 is managed by the AICPA, which is an American body, and therefore SOC-2 accreditation has better recognition and acceptance in North America.
    • While both want you to prove you have implemented security controls to protect customer data and minimize security incidents, ISO 27001 also requires you to implement a formal ISMS.
    • ISO 27001 certification can sometimes be achieved quicker than SOC-2, because SOC-2 usually requires a 9-12 month preparation time because of the formal "evidence-gathering" phase.

    • Both ISO 27001 and SOC 2 accreditation costs are similar if you work with a reputed SOC 2 preparation company.
    • A licensed CPA firm testifies to SOC 2, while a recognized ISO-accredited firm audits ISO 27001 applications.

    Your compliance with multiple frameworks will both make your customer’s trust and lead to a definite return on investment.

    At Audacix, we support a risk-based approach to implementing a security program regardless of the chosen framework.

    The good news for you is that once you are accredited for one certification, you have done approximately 80-90% of the work required to get the other accreditation.

    What is the cost of a SOC-2 Type 1 audit?

    Because SOC 2 Type 1 reports are simpler and less exhaustive than Type 2 reports, they're also less costly. Estimations to prepare for a SOC 2 Type 1 accrediation usually start around $7,000 to $10,000.

    This figure doesn't include the associated costs of conducting an audit, like readiness assessments, background checks and employee security training.

    It actually doesn't make sense just to get a SOC-2 Type 1 report. Because most of your customers understand that there is little value in a Type 1 accreditation, so they specifically want to see evidence of your SOC-2 Type 2 report.

    Essentially, you may be wasting money, and most importantly, time, by stopping at a SOC-2 Type 1 accreditation.

    What is the cost of a SOC-2 Type 2 audit?

    The key difference between SOC 2 Type 1 and Type 2 is the expansion of the trust services criteria and security principles that you must adhere to for full compliance.

    Type 2 reports evaluate how a company’s controls perform with operational effectiveness over a period of time, generally 3-12 months. There’s more for the third party auditor review, which is one reason for the higher cost.

    Preparing for a SOC 2 Type 2 compliance can cost between $20,000 to $60,000 for your company to become audit ready.

    Larger companies with in excess of 100 employees should prepare for a compliance cost of more than $100,000. These numbers above include associated costs like readiness assessments, internal audits, team training, administrative controls and compliance experts.

    How long is a SOC 2 certification good for?

    Some professional certifications and accreditations last a lifetime. College certifications and trade school grades never have to be renewed. But—SOC 2 certification only lasts for a duration of 12 months.

    After the 12-month term, you must go through the recertification process. But before you become audit ready for recertification, you must validate that your SOC 2 security program is compliant with the then current trust principles - because they do change from time to time.

    Organizations that have yet to obtain SOC 2 certification for the first time will need to pass the time-consuming certification process, which can last for up to 12 months in most cases. Thankfully, the recertification process is a lot shorter.

    However, even during the recertification process you may have to change aspects of your software development lifecycle to comply with updated SOC 2 trust principles.

    After all, the reason you are undertaking the SOC-2 accreditation process is to take your team on a journey where your software security program and software quality assurance standards go through a process of continuous improvement. 

    SaaS Brief