Your Go To Guide for Understanding SOC 2
SOC 2 (Service Organization Control 2) is a framework for auditing information security. As data breaches become more common, clients are demanding proof of security, and achieving SOC 2 compliance has become a huge trust signal for any company that handles customer data. It was created by the American Institute of CPAs (AICPA) to help organizations demonstrate how they protect customer data, especially in the cloud. In fact, one survey found that 83% of customers prefer vendors who are SOC 2 compliant, making it a key factor in many business deals.
Let’s break down everything you need to know about the SOC 2 framework, from the basic definitions to the nitty gritty of audits and staying compliant long term.
What is SOC 2?
SOC 2 (Service Organization Control 2) is a framework for auditing information security. It was created by the American Institute of CPAs (AICPA) to help organizations demonstrate how they protect customer data, especially in the cloud. It has become the industry standard for data security controls, moving beyond older financial audit standards to focus squarely on cybersecurity.
The entire framework is built around five core principles called the Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. Unlike a rigid checklist, SOC 2 is flexible. It allows companies to implement controls that make sense for their specific operations, as long as those controls meet the criteria. The end result is an independent audit report that proves to customers and partners that a company has effective security measures in place.
What Does SOC 2 Stand For?
SOC 2 stands for Service Organization Control 2. A “service organization” is any company providing services to other businesses, particularly those that handle or host data. The “control” part refers to the internal safeguards a company uses to protect that data.
The number “2” distinguishes it from other SOC reports.
SOC 1 covers controls related to financial reporting.
SOC 2 is all about security, privacy, and other operational controls.
SOC 3 is a simplified, public version of a SOC 2 report.
So when a company says it has achieved SOC 2 compliance, it means an independent auditor has verified that its security controls meet the AICPA’s trust criteria.
Understanding SOC 2 Compliance
SOC 2 compliance is the act of meeting the framework’s requirements and proving it through a formal audit. To get there, organizations implement strong security policies, detailed procedures for staff, and technical controls like encryption and access management. An auditor then evaluates if these controls are designed well and working effectively.
It is important to know that SOC 2 is voluntary, not required by law. Companies pursue it to build customer trust and meet client demands. The final SOC 2 report is the tangible proof that shows an organization safeguards sensitive data according to industry best practices.
The SOC 2 Audit Explained
A SOC 2 audit is the formal review conducted by an independent CPA firm to check a company’s controls against the Trust Services Criteria. During the audit, the CPA examines evidence like policies, system logs, and access records to confirm security controls are operating as intended.
The Security criterion is mandatory for every SOC 2 audit. A company can then choose to add any of the other four criteria (Availability, Processing Integrity, Confidentiality, and Privacy) based on the services it offers and customer needs. The audit results in a detailed report containing the auditor’s opinion and the results of the tests performed.
SOC 2 Type I vs Type II
There are two kinds of SOC 2 reports, and the main difference is the time frame they cover.
SOC 2 Type I: This report looks at your controls at a single point in time. It is a snapshot that confirms your security controls are properly designed on a specific date. It is quicker to achieve but doesn’t show how well those controls work over time.
SOC 2 Type II: This report evaluates how well your controls have operated over a period, usually 6 to 12 months. The auditor tests to see if your controls have functioned consistently throughout the entire window. A Type II report is more rigorous and provides stronger assurance to customers.
Many companies start with a Type I to quickly build credibility and then move on to a Type II in the following year.
Who Needs a SOC 2 Report?
Any service provider that handles sensitive customer data should consider getting a SOC 2 report. This is especially true for SaaS companies, cloud service providers, and data hosting companies. If your business stores or processes critical client information, a SOC 2 report is one of the best ways to show you take security seriously.
For many enterprise customers, SOC 2 compliance is a non negotiable requirement for their vendors. Since 83% of enterprises prefer vendors with SOC 2 compliance, it has become a baseline for doing business in the tech world. If you want to sell to mid market or enterprise clients, you will likely need a SOC 2 report to meet their security expectations. This typically sits within a broader vendor risk assessment program on the buyer’s side.
The Myth of SOC 2 Certification
You will often hear people talk about “SOC 2 certification,” but that term is technically incorrect. There is no official certification for SOC 2. Instead, it is an attestation, which is a formal opinion from a CPA firm about your security posture.
The AICPA creates the standards for SOC 2, but it does not issue certificates or seals of approval. The correct way to describe it is being “SOC 2 compliant” or having a “SOC 2 attestation.” While frameworks like ISO 27001 do offer a formal certification, SOC 2 results only in an audit report. That detailed report is what you share with clients to prove your compliance.
Meeting SOC 2 Requirements
The requirements for SOC 2 compliance are based on the Trust Services Criteria. To meet them, your organization needs to have documented policies, clear procedures, and effective technical and administrative controls.
This includes things like:
Access controls (least privilege access, unique user IDs)
System monitoring and alerting
Data encryption
Backup and recovery processes
Security awareness training for employees
The Security criterion is always required. You can add the other four criteria (Availability, Processing Integrity, Confidentiality, and Privacy) depending on your business needs and customer commitments. Adding more criteria will increase the number of controls you need to implement and test.
The Five Trust Services Criteria
The Trust Services Criteria (TSC) are the foundation of the SOC 2 framework. Here is what each one covers:
Security: This is the mandatory principle, often called the Common Criteria. It covers the protection of systems and data from unauthorized access.
Availability: This principle ensures your systems are operational and accessible as promised, covering things like uptime and disaster recovery.
Processing Integrity: This focuses on ensuring that system processing is complete, accurate, and authorized. It verifies that your system does what it’s supposed to do without errors.
Confidentiality: This criterion is about protecting sensitive information (like trade secrets or client data) from unauthorized disclosure through controls like encryption and access restrictions.
Privacy: This principle addresses the proper collection, use, retention, and disposal of personal information, aligning with privacy regulations and commitments.
The Importance of SOC 2 Scoping
SOC 2 scoping is the critical first step where you define the boundaries of your audit. You decide which systems, services, locations, and processes will be evaluated. This includes identifying the specific products or services, the underlying infrastructure, and the teams responsible for them.
A well defined scope is essential. It should be broad enough to satisfy customer needs but narrow enough to keep the audit manageable. Getting the scope right is often one of the most challenging parts of the process, as it sets the stage for everything that follows. During scoping, you will also select which of the Trust Services Criteria (beyond Security) to include.
Executing the SOC 2 Framework
Implementing the SOC 2 framework is about putting the necessary controls and processes into practice. Because SOC 2 is flexible, you can tailor your security controls to fit your specific risks and technologies.
The execution process usually involves:
Gap Analysis: A readiness assessment to see where your current controls fall short of SOC 2 requirements.
Remediation: Creating and executing a plan to fix the identified gaps. This could involve writing new policies, implementing technology like multi factor authentication, or formalizing an incident response plan.
Implementation and Documentation: Putting all controls into operation and documenting them thoroughly for the auditors.
The goal is to weave security and compliance into your daily operations so that they become business as usual.
Assessing Against the SOC 2 Framework
Assessing your organization against the SOC 2 framework is about measuring your readiness for the official audit. This is typically done through a readiness assessment or gap analysis, which maps your existing controls to the SOC 2 criteria and identifies any weaknesses.
After the initial assessment, it’s a good practice to perform regular internal audits or self assessments. This could involve testing your controls, such as reviewing system logs or simulating a security incident to test your response plan. These “mock audits” help you find and fix issues before the external auditor does, ensuring there are no surprises during the real thing.
Maintaining Ongoing SOC 2 Compliance
SOC 2 isn’t a one and done project. It requires continuous effort to maintain compliance. A SOC 2 report is generally considered valid for 12 months, so organizations typically undergo an audit every year.
Ongoing compliance involves continuously monitoring your controls, collecting evidence throughout the year, and keeping your documentation updated as your systems and processes evolve. Many organizations use continuous compliance tools (see our roundup of compliance automation tools for 2025) to automate this process. These platforms can automatically track control performance and alert you to any issues, helping streamline the effort required to stay compliant.
The SOC 2 Compliance Flow
Getting to SOC 2 compliance follows a structured path. Here are the typical steps in the process:
Define Scope: Decide what systems and services are in scope and which Trust Services Criteria you will include.
Readiness Assessment: Conduct a gap analysis to find and understand your control weaknesses.
Remediation: Fix the gaps by implementing new controls and improving processes.
Evidence Collection: Document everything and gather evidence that your controls are working.
Engage an Auditor: Select a licensed CPA firm to perform the audit.
Audit Execution: The auditor formally examines your controls and tests them.
Receive the Report: The auditor issues the final SOC 2 report with their professional opinion.
Maintain Compliance: Shift to a continuous monitoring mindset to prepare for your next annual audit.
This process can feel overwhelming, but modern compliance platforms can help. If you’re comparing options, see our top SOC 2 compliance companies guide. For instance, tools from Targhee Security can streamline evidence collection and readiness assessments, saving significant time and effort.
SOC 2 and Other Security Standards
SOC 2 exists within a larger ecosystem of security and privacy frameworks. If you’re new to cybersecurity compliance, start with the basics. It often overlaps with other standards, and achieving compliance with one can help with others.
ISO 27001: This international standard is very similar to SOC 2. Many global companies get both to meet expectations in the U.S. (SOC 2) and internationally (ISO 27001).
HIPAA, GDPR, CCPA: A SOC 2 audit can be tailored to cover the requirements of privacy regulations like HIPAA or GDPR, allowing you to address multiple compliance needs at once. Need a refresher on regulatory compliance? This guide breaks it down in plain English.
SOC 1 and SOC 3: SOC 1 focuses on financial controls, while SOC 3 is a high level, public summary of a SOC 2 report that can be shared freely.
If you are already compliant with a framework like ISO 27001 or follow NIST guidelines, much of that work will give you a head start on your SOC 2 audit. Not sure which approach fits your org? Review the leading risk management frameworks.
How to Manage Your SOC 2 Framework
Effectively managing your SOC 2 framework requires good governance and continuous improvement. Many companies establish a cross functional team to oversee the compliance program and ensure controls are maintained.
Automation is a game changer for managing SOC 2 long term. Teams have reported reducing time spent on repetitive compliance tasks by up to 80% by using AI powered tools (see our overview of AI security questionnaire providers). These platforms can automatically gather evidence, monitor controls, and flag deviations from your policies.
Platforms like Targhee Security are designed to simplify this process. By leveraging AI to automate security questionnaires (including the SIG questionnaire) and providing a centralized Trust Center for all compliance documents, Targhee helps you reduce tedious manual work. A Trust Center allows customers to access security documents on a self service basis, which can reduce inbound compliance questions by up to 50% and speed up sales cycles by as much as 60%.
Ultimately, managing SOC 2 well means making it a part of your company culture. When security becomes everyone’s responsibility, maintaining compliance becomes much easier. Ready to simplify your compliance journey? See how Targhee Security can automate your path to trust.
Frequently Asked Questions (FAQ)
What is the main purpose of a SOC 2 report?
The main purpose of a SOC 2 report is to provide assurance to customers and partners that a service organization has effective controls in place to protect their data. It is an independent validation of a company’s security, availability, confidentiality, processing integrity, and privacy practices.
How long does it take to get SOC 2 compliant?
The timeline varies widely depending on a company’s size, complexity, and initial security maturity. A SOC 2 Type I can take anywhere from 3 to 6 months to prepare for and complete. A SOC 2 Type II requires an additional observation period, typically 6 to 12 months, making the total process longer.
Is SOC 2 a legal requirement?
No, SOC 2 is a voluntary compliance framework, not a law. However, it is often a contractual requirement from enterprise customers, making it a practical necessity for many B2B service providers.
What is the difference between SOC 2 and ISO 27001?
Both are information security frameworks, but they differ in approach and output. SOC 2 is an attestation report based on the AICPA’s Trust Services Criteria and is popular in North America. ISO 27001 is an international standard that provides a formal certification for an Information Security Management System (ISMS).
How much does a SOC 2 audit cost?
The cost of a SOC 2 audit can range from $15,000 to over $100,000. The price depends on the scope of the audit, the size of the organization, which Trust Services Criteria are included, and whether it’s a Type I or Type II report.
Can a company fail a SOC 2 audit?
A company doesn’t “pass” or “fail” a SOC 2 audit in the traditional sense. The auditor provides an opinion. A “clean” or “unqualified” opinion means the controls are effective. An “adverse” or “qualified” opinion indicates significant issues or exceptions were found, which would need to be addressed.
What is a SOC 3 report?
A SOC 3 report is a general use, public facing summary of a SOC 2 audit. It confirms that a company achieved compliance with the Trust Services Criteria but does not contain the detailed descriptions of controls and tests found in a SOC 2 report.
How can I make the SOC 2 process easier?
Using compliance automation platforms can significantly simplify the SOC 2 process. These tools help with readiness assessments, continuous monitoring, and evidence collection. Solutions like the ones offered by Targhee Security can automate repetitive tasks and streamline communication with customers.
