What is SOC 2?

The need for strong security controls has never been greater. In 2024, the average cost of a data breach hit $4.88 million, a 10% increase from the previous year. (Source: IBM)

One of the most trusted security frameworks for data protection is SOC 2. Developed by the American Institute of Certified Public Accountants (AICPA) in the 1990s, it ensures organizations protect sensitive data from unauthorized access, cyber threats, and operational risks. So, what is SOC certification?

Defining SOC

SOC stands for Systems and Organization Controls. SOC is a security framework that specifies how organizations should protect customer data from unauthorized access, security incidents, and other vulnerabilities.

The first version of SOC was SOC 1. This level of auditing and reporting is ideal for organizations that process data or provide services critical to their customer’s financial reporting, such as those subject to Internal Controls over Financial Reporting (ICFR). SOC 1 focuses on the businesses internal controls on data management and maintenance. Say you are a financial organization providing investment analytics to clients on stock performance – you would likely be subject to regulations on security measures to ensure you’re protecting client data.

SOC 2 is a leveled up framework more appropriate for ideal for organizations with clients who need more clarity on internal controls to protect client information and ensure system availability and data integrity. SOC 2 was developed around defined security criteria: availability, processing integrity, confidentiality, and privacy. This level of reporting is geared towards measuring the effectiveness of the controls the business has in place. Of note, SOC 2 reporting can also cover other criteria, such as HITRUST or HIPAA security rules.

Some organizations need additional support to manage their security tools and stance. SOC consulting and auditing services can be a major help for businesses who need that second set of hands. SOC-as-a-Service (SOCaaS) is a comprehensive solution for security support and protection on multiple fronts, including auditing guidance.

What is SOC Certification?

SOC certification isn’t just a checkbox. It’s a third-party validation that your organization has the right security controls in place to protect sensitive data. A CPA firm conducts an independent audit to assess your policies, processes, and systems against industry standards.

SOC 2 compliance helps businesses prove they can securely handle sensitive customer data. Born in 2010, SOC 2 encompasses five SOC 2 trust services principles, which serve as the foundation for protecting and managing data. Below, we break them down in simple terms.

SOC 2 Trust Services Principles

1. Security- Security ensures that systems are protected against unauthorized access, breaches, and cyber threats. It includes safeguards like firewalls, encryption, and multi-factor authentication to keep data safe from hackers.
2. Availability- This covers network uptime, system performance, and disaster recovery planning to prevent downtime from affecting business operations.
3. Processing Integrity- Processing integrity ensures that data is processed accurately, completely, and in a timely manner. It helps prevent errors, unauthorized changes, and delays that could impact business decisions.
4. Confidentiality- Confidentiality protects PII (personally identifiable information) from being accessed by unauthorized parties. Encryption, access controls, and secure storage help keep private data secure.
5. Privacy- Privacy governs how personal data is collected, stored, and shared. Organizations must follow privacy policies and regulations to ensure they handle customer information responsibly.

How is an SOC Certification Obtained?

Earning SOC certification requires a structured approach. Start by identifying what systems, processes, and data will be evaluated. After you’ve defined your scope, implement security controls by aligning security measures with SOC 2 standards to meet compliance requirements. A CPA firm will conduct a formal review, testing your security controls and verifying adherence to best practices.

For many industries, SOC 2 Type II certification is essential.

• Healthcare & Finance: Required for protecting patient records, financial transactions, and personal data.
• Manufacturing: Critical for securing proprietary information and supply chain security.
• Professional Services: Law firms and consulting firms benefit from the trust it builds with clients.

Unlike a one-time certification, SOC 2 compliance requires continuous adherence to security principles. For that reason, it is considered the gold standard for industries handling sensitive data.

SOC 2 Type I vs. Type II

SOC 2 reports come in two forms.

• Type I reports concern policies and procedures that are in operation at a specific moment in time.
• Type II reports concern policies and procedures over a specified time period. For this more rigorous designation, systems and policies are evaluated for a minimum of six months.

SOC 1 vs. SOC 2 vs. SOC 3

SOC concerns the internal controls in place at the third-party service organization. For a company to receive SOC certification, it must have sufficient policies and strategies that satisfactorily protect clients’ data.

SOC 1, SOC 2, and SOC 3 certifications all require a service organization to display controls regulating their interaction with clients and client data.

• SOC 1 reports on the service organization’s controls related to its clients’ financial reporting.
• SOC 2 reports build on the financial reporting basis of SOC 1 and also require standard operating procedures for organizational oversight, vendor management, risk management, and regulatory oversight. A SOC 2-certified service organization is appropriate for businesses whose regulators, auditors, compliance officers, business partners, and executives require documented standards.
• SOC 3 reports are a simplified version of SOC 2 reports, requiring less documentation. SOC 3 reporting is appropriate for businesses with less regulatory oversight concerns.

The SOC 2 protocol is designed for more advanced IT service providers. These can include managed IT service providers (MSPs), cloud computing vendors, data centers, and SaaS (software-as-a-service) companies.

Why is SOC 2 Type II Certification Important?

SOC 2 Type II reports are the most comprehensive certification within the Systems and Organization Controls protocol. Organizations looking to engage with a managed service provider will find SOC 2 Type II is the most useful certification when considering a partner’s security credentials.

When it comes to working with the cloud and related IT services, top-notch cybersecurity and reliability is absolutely essential and increasingly required by regulators, examiners, and auditors. Highly-regulated industries, including financial services and healthcare, are often required to only work with SOC 2 Type II certified MSPs.

Working with a SOC 2 Certified MSP

When selecting a Managed Service Provider (MSP), security should be a top priority. A SOC 2 Type II certification ensures that your IT partner meets rigorous security, availability, and confidentiality standards—critical for protecting sensitive business data.

At NetGain Technologies, our SOC 2 Type II certification means that an independent audit has verified our security controls, ensuring they meet the highest industry benchmarks. Our clients trust us to safeguard their systems, minimize risks, and maintain compliance, so they can focus on business growth with peace of mind.