Myth Busting 5 Common SOC Audit Misconceptions

In the rapidly evolving landscape of technology services, companies are entrusted with handling sensitive client data. To ensure the security, availability, and integrity of this data, many executives consider undergoing a System and Organization Controls (SOC) audit. However, misconceptions surrounding SOC audits often cloud the decision-making process.

So, what exactly is a SOC audit? In essence, it’s an independent assessment, performed by a qualified auditor, of a service organization’s internal controls environment. In a SOC 1 audit, the assessment covers audit objectives defined by the firm as well as Information Technology General Controls (ITGC). In a SOC 2 audit, the Trust Services Criteria of security, availability, processing integrity, confidentiality, and privacy are assessed. Imagine it as a rigorous examination performed by a qualified auditor, like a security superhero, scrutinizing your systems and practices to ensure they meet specific criteria.

As an audit partner, I frequently encounter questions from executives grappling with the complexities of SOC compliance. I have found that most executives research SOC compliance to fulfill contractual obligations or to secure potential clients. In this guide, I’ll list, what I believe are, the top five common misconceptions of SOC audits. I will then provide clarity and guidance surrounding those myths. From understanding the scope of a SOC audit to clarifying compliance requirements. Check out our blog to learn more details about the scope of a SOC 2 audit.

I hope to address the key questions and concerns I often hear from many executives as they begin their journey toward securing their clients’ trust.

Let’s myth-bust the top five myths I often encounter and hear from executives regarding SOC compliance:

1. SOC compliance is a Certification and a One-Time Process.
2. SOC compliance is costly and burdensome.
3. SOC compliance is only about technology and following a checklist.
4. SOC compliance guarantees immunity from data breaches.
5. Any auditor can do a SOC audit.

 

Myth 1: SOC Compliance Is a Certification & a One-Time Process

Let’s make it clear – A SOC audit is not a certification with a result of pass/fail. Nor is a SOC audit a one-and-done effort. Nicole Hemmer, a peer, and Partner, has a great article describing in detail what SOC certifications are and are not. Have a read of her blog “SOC Certifications: Are SOC 1 & SOC 3 Audits Actually Certifications?”

To summarize, a SOC audit is an attestation report issued by an independent auditor. A SOC Audit attestation report provides your clients with insight into your internal control environment and whether your internal controls are implemented, designed, and/or operating effectively to ensure their data is secure, available, and maintains integrity. As such, your clients want to know that their data remains secure throughout the life of their contract with you. Hence, SOC audits are not a one-and-done, but rather an ongoing or continuous effort.

Myth 2: SOC Compliance Is Costly & Burdensome

We regularly perform SOC readiness assessments for organizations becoming SOC compliant and, as auditors, we understand what it takes to become compliant. There is no denying it, choosing the path to become SOC compliant requires investment. Common compliance investment efforts come in the form of time, resources, and expertise. In our experience, we find most organizations already have a foundation of internal controls and processes established.

As such, the investment to become compliant shouldn’t be considered an exaggerated difficult hurdle to overcome. Most commonly, organizations only need to improve documentation and shore up current processes and practices already in place.

Achieving SOC compliance will bring significant business advantages. SOC compliance shows your organization has prioritized establishing and running a robust internal control environment and that you take security seriously. Your organization’s credibility with current and prospective customers can set you apart from competitors. While the initial investment in SOC 2 compliance may seem daunting, the long-term benefits far outweigh the costs, making it a worthwhile investment in your company’s future success.

If you’re interested in learning more about what an audit costs, I recommend Isaac Clarke’s blog post “How Much Does a SOC Audit Cost?”

 

Myth 3: SOC Compliance Is About Technology & Follows a Checklist

When I’m chatting with executives, I am occasionally asked for a checklist of technology controls that need to be in place to be SOC compliant. In reality, there is no checklist. Cross-departmental collaboration including finance, human resources, operations, and legal is necessary as controls extend beyond the IT environment and encompass administrative and operational procedures. For example, SOC compliance includes processes from departments outside of IT, such as vendor management, risk assessment, and personnel administration.

Furthermore, no two companies are alike, and adopting a one-size-fits-all control environment can lead to inadequate protection and a false sense of security. For example, the internal controls for a SOC data center may be different than those of a cloud-based Software as a Service (SaaS) application. The SOC compliance for a data center may have a greater focus on physical access controls such as security checkpoints, biometric access, and man traps. Unlike that of a SaaS application, where the internal controls focus more on logical access controls for identity and access management, multi-factor authentication, and data segregation. SOC compliance allows organizations to establish and operate an internal control environment that is geared toward the organization’s specific services, risks, and controls.

Additionally, based on the type of SOC audit an organization is pursuing, audit objectives differ requiring internal controls to meet those objectives. Here are two great blog posts that go into further detail and explain why checklists don’t exist for SOC 1 and SOC 2 audits.

• There is No SOC 1 Audit Checklist…Only Questions & Considerations
• A SOC 2 Compliance Checklist Doesn’t Exist, But Guidance Does

Myth 4: SOC Compliance Guarantees Immunity from Breaches

SOC audits are not a silver bullet and do not guarantee a security breach will not happen. SOC compliance provides insights into an organization’s internal control environment and should be seen as a part of an organization’s overall security strategy.

While providing valuable benefits, SOC audits have limitations. SOC audits often rely on evidence that reflects how a control is operating at a point in time. For example, configuration controls, such as password configurations, data encryption configurations, and firewall configurations, are evidenced as operating at a point in time. Configurations can be changed leaving an organization vulnerable. Additionally, many internal controls included in a SOC audit are manual. Such controls are subject to human error and may lead to threats materializing.

Security threats are continuously evolving, with some being very sophisticated. Many organizations find it difficult to keep up with the ever-changing threat landscape. A strong internal control environment can help “keep up” with security threats, but never truly eliminate those threats. Could you imagine what would happen if you didn’t have any controls?

 

Myth 5: Any Auditor Can Do a SOC Audit

SOC audits can only be performed by an independent Certified Public Accounting (CPA) firm registered with the American Institute of Certified Public Accountants (AICPA). SOC audits performed by persons or organizations not meeting this criteria are invalid and will not be relied upon by your customers.

Choosing a qualified CPA firm brings the quality and experience necessary to help organizations successfully complete a SOC audit report that can be relied upon by its user organizations. A qualified CPA firm brings the technical know-how and independence to perform the audit while following professional standards.

Beyond the Myths: The Road to Success

Now that we dispelled the top myths and misconceptions of SOC compliance, here are a few things you can do to be successful on your SOC compliance journey:

• Start Early – Like any project, proper audit planning greatly improves the project’s success and provides adequate time to complete the activities necessary for SOC compliance.
• Identify Your Needs – Clearly understanding what your needs are will allow you to properly scope and determine which SOC audit and audit criteria are necessary for your organization.
• Choose An Auditor – Having an experienced qualified independent auditor can greatly improve your success in becoming SOC compliant.
• Focus – In my experience, companies that prioritize and focus on internal controls, their security posture, and have SOC compliance efforts that are value-driven and not because “they have to do it” fly through the SOC compliance process.

Following these steps will significantly increase the likelihood of successfully completing a SOC audit.

Now that you understand the truths of SOC compliance you should have the confidence to start your SOC compliance journey. If you still have questions or would like to learn more, check out our blog. If you are interested in engaging our services for your upcoming audit, please feel free to contact me and the team of audit professionals here at Linford & Co.