System and organization controls (SOC 2)

SOC 2 (System and organization controls 2) report provides Independent assurance to coustomers that organization's data handling , practices are effective  , helping , build trust and demostrate compliance for buinesses that store and process sensitive data.

5 Trust Service Critera

1. Availability : Ensureing that the system is operational and accessible as per agreement.
2. Security : Protection of system against anauthorized access and cyber attack.
3. Processing Integrity : Verifying that data processing is complete , accurate and timely.
4. Confidentiality : Protecting sensitive and confidential information from unauthorized disclosure.
5. Privacy : Ensuring that personal information is collected , used , retained and disposed responsibily.

Two types of SOC 2 Reports:

1. Type 1: Assesses the design of an organization's internal controls at a specific point in time.
2. Type 2: Evaluates the design and operational effectivness of the control over a period of time (Typically 3-6 weeks) 

Key Definations 

• TSC (Trust service Criteria)  : The Five primary principles used to evaluate an organization's internal controls.
• Controls : The specific policies , procedures and technical safeguards on organization's to meet the requirement of the TSC.
• Evidences : The documentation , logs , and screenshots collected to prove that the organization's controls are effective and operating as intended.
• Certified Public Accountant (CPA) : Auditor required for SOC 2 audits who perform independent assessment of a service.
• Independent Service Auditor's Report (Opinion Latter) : The CPA,s formal opinion on the audit.
• Unqualified Opinion : The highest rating , indicating the controls were designed properly and are operating effectively.
• Qualified Opinion : The audit passed but minor exceptions were found that need attention.
• Adverse Opinion : Indicate that company's control are not reliable and significant issue were found.
• Disclamer of Opinion : The auditor could not issue an opinion due to limitation in the audit scope.
• Management Assertion : A statement from the service organization's management that affirms the system's description is accuret and that the control meet the relevent TSC.
• System Descrition : A detailed overview of the service , components , infrastructure , software and personnel.
• Trust Service Criteria , Controls and test result : A section detailing the specific controls tested for the chosen TSC and the result of those , tests including any exceptions found by the auditor.
• Other Information : A optional section provided by the Management to add context , such as response to exceptions found in the audit.

What is Included in SOC 2 report:

1. Auditor's Opinion : A latter from the independent certified public accountant (CPA) offring their conclusion on the effectiveness of the organization.
2. Management Assertion : A statement from organization management affirming that the controls were designed and implemenetd as claimed.
3. System Description : A detailed overview of the system , including the infrastructure , software , and procedures used to provide the service.
4. Test of Controls : A summary of the audit test performed , the result of those tests and any exceptions or failures.

Phases to get SOC 2 compliance :

Phase 1 : Perpration and Planning

1. Define your SOC 2 objective and report type (Type 1 , Type 2)
2. Determine your audit scope : Identify which systems , infrastructure , data and personnel are in scope . You must also select TSC to be audited.
3. Conduct a readiness assessment : Perform an internal audit to identify potential gaps between your SOC 2 requirement . It is also called gap analysis 
4. Perform Risk assessment and remediation : Conduct a formal risk assessment to identify and document security risk assigning them a likelihood and impact score. Implement how new controls and adjust existing ones to mitigaye the identified risk.
5. Develop Policies and Implememt Controls : Establish and document formal policies and procedures that covers areas like access controls , change management , Incident respose and data management. 
6. Train employees on security awareness

Phase 2 : Auditing 

1. Engage an indipendent CPA : SOC 2 audits must be performed by a licensed and independent firm.
2. Go through the audit process :

   Type 1 audit	The auditor reviews your controls and evidence at a single point in time. The process typically take 2-5 weeks after prepration is completed.
   Type 2 audit	There is a 3-12 months observation period during which the auditor collects evidence of your control's operating effectiveness. The audit fieldwork take place after this period and usually lasts a few weeks.

3. Provide evidence : Work with auditor to provide documentation , system configurations and interviews to demonstrate that your controls meet the selected TSC.
4. Received your Reports : The CPA firm compilans their finding and issue SOC 2 report.

Phase 3 : Post-Audit and maintenance :

1. Maintain continuous compliance 
2. Leverage your report for business growth.

Every SOC 2 report should have 5 sections 

Section 1 : Management Assertion 

1. Type of service provided.
2. Components of system like Infrastructure , system , people , procedure and data.
3. Aspect of system
4. How the system capture and address significant events and conditions.
5. Process used to prepare are deliver reports.
6. Any applicable TSC that are not being meet by control and why ?

Section 2 : Independent Service Auditor Report

This section captiure auditor's rating compliance:

1. Unqualified
2. Qualified 
3. Adverse
4. Disclamer

Section 3: System Description 

1. Overview of service provider
2. System Components
3. Control activities 
4. Not applicable Trust Service Criteria 
5. Complementary  user enitity controls (CUEC's) and Complementary Subservice Organization's Controls (SOC's)

Section 4 : Applicable Trust Service Criteria and Related Controls , Test controls , Result of testing

1. Control Criteria
2. Control Number
3. Control discription from organization 
4. Test description from the audior 
5. Test Result.

Section 5 : Other information provided by the management 

This section is optional and this section contains information on the organization's future plans that can have bearing on its control environment and systems.

Importance of SCO 2 Certification 

1. Build Trust : Demonstrate a commitment to data security for customers and partners.
2. Competitve Advantage : Can be a requirement for business deals and a key factor for choosing a service provider.
3. Risk Management : Helps organization's understand and mitigate the risk associated with managing customer data 
4. Regulatory Alignment : Can provide evidance of compliances with regulations such as HIPPA or GDPR