The reason this is so important is that, ultimately, it is what your SOC report opinion is on. Because you have utilized AWS, the number of applicable SOC 2 controls covered in your report will be less than . 1.34 of the SOC 2 guide. Azure publishes a combined attestation report (C5:2020, SOC 2 Type 2, CSA STAR Attestation) based on the audit assessment performed by an independent auditor, which demonstrates proof of compliance with . Using AWS or another provider for your IaaS is a great way to leverage another service organization's controls to build a SOC 2 compliant application. They include a description of the system as well as tests to determine whether those system controls are designed appropriately to . SOC 2 reports are thus intended to meet the needs of a broad range of users requiring detailed information and assurance about the controls at a service organization relevant to security, availability, and processing integrity of the systems the service organization uses to process users' data and the confidentiality and privacy of the information processed by these . System and Organization Controls (SOC), (also sometimes referred to as service organizations controls) as defined by the American Institute of Certified Public Accountants (AICPA), is the name of a suite of reports produced during an audit. The system description includes all of the internal controls with sufficient contextual information. Components of a SOC 2 report PwC 13 Type 1 report Type 2 report A description of the service organization's system. It's important to put some thought into your system description. The SOC 2 report example states, "The system is protected against unauthorized access (both physical and logical). This is no different in the SOC for Supply Chain report. 1. Identify the specific products or services used by your customers, which are included in the scope of the SOC report. Sections of a SOC 2 Report. 2. An example of service provider requiring a SOC 2 reporting would be a provider providing medical transcription services. It is intended for use in response to governance, risk and compliance inquiries, executive management oversight, and demonstrative due diligence. When thinking of SOC 2 or other SOC reports, most people think about the auditor's opinion and the controls (in section 4).But there is another vitally important section of SOC reports, and that is the System Description (section 3). At its most basic, SOC 2 (System and Organizational Control) is an auditing process targeting inter-business relationships, not business-to-consumer relationships. The AICPA recommends including the following in your SOC 2 system description: Types of services provided. We recommend including a short company boilerplate description, along with a description of the system being audited. These description criteria are to be used when preparing and evaluating the description of the service organization's system (description) in an examination of a service organization's controls over security, availability, processing integrity, confidentiality, and privacy (SOC 2 examination). .12 Ordinarily, a description of a service organization's system in a SOC 2 . In a SOC 2 report, there are five sections to be aware of. Service Organization Control 2 (SOC 2) is an auditing standard developed by the American Institute of Certified Public Accountants (AICPA). Updated over a week ago. The first section of a SOC 2 report is a summary of the audit provided by the auditor. This is one of the most comprehensive and detailed sections in the report, written by your company as the service organization. Key elements of system - Management must develop a description of each key element of the system, including how it was designed and implemented. The SOC 2 or 'SOC for Service Organizations' report evaluates controls relevant to maintaining the data management system's security, privacy, confidentiality, availability, and processing integrity. When thinking of SOC 2 reports, most people think about the auditor's opinion and the controls (in section 4). A SOC 2 report must provide detailed information about the audit itself, the system, and the perspectives of management. Report from the auditor. Alternatively, it may be orga- . Define the system description - Write up a description of your system to the auditor. MarkLogic Corporation. Sample of Management Assertion (Excerpt) We have prepared the description of XYZ Service Organization's [type or name of] system (description) for user entities of the system during some or all of the period [date] to [date], and I'd like to focus on common criteria 6.3 for SOC 2 compliance on a few key words in this particular criterion: roles and responsibilities, least privilege, and separation of duties. The AICPA shares some helpful guidance for creating your system description. The report outputs: Observations and recommendations; Control descriptions and characteristics; Review areas for quality checks; and Audit-ready documentation Everyone shouldn't be an administrator. As you can see, the key difference between SOC 2 Type I and SOC 2 Type II reports is that Type II reports are conducted over a significantly longer period. Your system description details which aspects of your infrastructure are included in your SOC 2 audit. It is intended for use by service organizations (organizations that provide information systems as a service to other organizations) to issue validated . Procedures, both automated and manual, by which services are provided. This . SOC 2 reports are performed by independent auditors who issue a report on their findings. provides examples of service organizations, offers the criteria to be used to prepare the description of the service organization's system, identifies the trust services criteria to be used to evaluate the design and operating effectiveness of controls, and explains . The description coverage varies depending upon the size of the . The AICPA has updated its System and Organization Controls(SOC) 2 guide. 1. Your system description details which aspects of your infrastructure are included in your SOC 2 audit. The SOC 2 Type 1 may be beneficial for organizations that have never completed an examination, since it assesses the design of controls at a specified date. Below is an overview of these sections and their components: Section 1: Independent Service Auditor's Report: Section 2: Management's Assertion. Define the system description - Write up a description of your system to the auditor. It includes many different controls, such as physical . The service organization determines the areas that will be evaluated based . Examples of system requirements . SOC 2 is achieved by the issuing of an attestation in a SOC 2 report (not certification) which must be completed by a Certified Public Accountant (CPA) who is a member of the American Institute of Certified Public Accountants (AICPA). Developed by the American Institute of CPAs ( AICPA ), SOC 2 defines criteria for managing customer data based on five "trust service principles"security, availability, processing integrity, confidentiality and privacy. SOC 2 Type 1 is different from Type 2 in that a Type 1 assesses the design of security processes at a specific point in time, while a Type 2 report (also commonly written as "Type ii") assesses how effective those controls are over time by observing operations for six months. Related accounting records and supporting . SOC 2 Type 1 and SOC 2 Type 2 reports can be issued depending on the specific requirements and objectives of the service organization. The system is available for operation and use as committed or agreed." The statement reaffirms the auditor's unqualified opinion from section two before breaking everything down into a detailed chart of tests and . For description criteria that are not pertinent to a particular service organization or system, report users generally find it useful if management presents all of the description criteria and indicates . (Think of this as a movie.) SOC 2 reports include a system description, and this should focus on the cloud service being delivered. The structure of a SOC 2 report is similar to that of a SOC 1 report. This de-scription should provide a high-level overview of the system, e.g., suitable for managers, that complements the more technical description that follows. The reason this is so important is that, ultimately, it is what your SOC report opinion is on. But there is another vitally important section of a SOC 2 report, and that is the System Description (section 3). SOC 1. Both SOC 1 and SOC 2 reports can be performed as either Type 1 or Type 2 reports: Type 1 - report on the fairness of the presentation of management's description of the service organization's system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date . These are really the operative terms in this requirement. organization's system in DC section 200, 2018 Description Criteria for a Description of a Service Organization's System in a SOC 2 Report (AICPA, Description Criteria).The description is intended to provide report users with information about the hosted customer services system (consisting of The SOC 2 report focuses on a business's non-financial reporting controls as they . Section 4 - Trust Services Criteria and Related Controls. A C5:2020 audit can be combined with a SOC 2 audit to leverage parts of the system description and audit results for overlapping controls. A SOC2 Description is typically organized into the following sections: 1. For example, a . SOC 3 Report | Proprietary and Confidential 2 08-07-2020 . Type 2 - reports on fairness of the presentation of management's description of the service organization's system and the suitability of the design and operating effectiveness of the . The AICPA Trust Services Criteria can be downloaded from the AICPA here (PDF). An audit exception on a SOC 2 report is any instance where a control was not designed appropriately or did not operate as intended. SOC 2 (System and Organization Controls 2) is a type of audit report that attests to the trustworthiness of services provided by a service organization. The SOC 2 report example states, "The system is protected against unauthorized access (both physical and logical). In this case, the financial reporting . A SOC 2 Type 2 attestation is performed under: SSAE No. New system description criteria (DC section 200, 2018 Description Criteria) Embedded within previous SOC 2 guidance but not an area of focus Now formalized and structured as own section and titled Description Criteria . The description should include: Personnel involved in operation and use of a system. ; Tier 2 SOC analysts . A SOC 2 report includes various information such as the business and organizational aspects used by the service provider to provide IT services and an assessment and opinion on their effectiveness. Type I - This type of report focuses on a particular . Section 1. For example, if the company provides a payroll processing service to clients, describe its components, boundaries . Section 3 - Description of the system. A SOC 2 System Description describes an information system that is managed by a Service Organization. SOC 2 Section 3: Description of Your System. Description of service organization's system. It is designed to ensure service providers and third-party vendors are protecting sensitive data and personal information from unauthorized access.. SOC 2 reports cover a period of time (generally 12 months) and include a description of the service . Since SOC 2 is primarily about the cloud environment, properly segmenting the environment and limiting access to only systems and people who need it provides a clear, well-defined boundary for auditors. Describe the services your company provides using the system. The AICPA defines these criteria in DC-200. The AICPA shares some helpful guidance for creating your system description. The format of the SOC 2 Report is determined by the AICPA and is structured as follows: Opinion letter As a reminder, the SOC framework stands for System and Organization Controls. In addition to SOC 1, SOC 2 and SOC 3 compliance, there are also Type 1 and Type 2 reports. It is intended for use in response to governance, risk and compliance inquiries, executive management oversight, and demonstrative due diligence. A description of the service organization's system. Unlike PCI DSS, which has very rigid requirements, SOC 2 reports are unique to each organization. The difference between the different types of SOC audits lies in the scope and duration of the assessment: When thinking of SOC 2 or other SOC reports, most people think about the auditor's opinion and the controls (in section 4).But there is another vitally important section of SOC reports, and that is the System Description (section 3). This is no different in the SOC for Supply Chain report. Identify auditors - Identify and contact the certified and experienced auditors who have built a reputation for proper SOC 2 audits. SOC 2 principles focus on service organizations. Let's start with roles and responsibilities. For example, if the company provides a payroll processing service to clients, describe its components, boundaries . . Principal service commitments and system requirements . 1.1 System Overview Describe the system's mission, the system boundaries, and the overall system architecture, including the main subsystems and their relationships. The System and Organization Controls (SOC) 2 Report will be performed in accordance with AT-C 205 and based upon the Trust Services Criteria, with the ability to test and report on the design (Type I) and operating (Type II) effectiveness of a service organization's controls (just like SOC 1 / SSAE 18). The system is available for operation and use as . Short, sweet, and to the point, this section should provide a brief summary of the entire SOC examination . 18, Attestation Standards: Clarification and Recodification, which includes AT-C section 105, Concepts Common to All Attestation . SOC 2 reports are the result of an official SOC 2 audit. Elements of a Strong System Description for SOC 1. For example, the description may be organized by components of internal control (the control environment, risk assessment process, control activities, monitoring activities, and information and communications). The Goal of SOC 2 Audits. The AICPA recently updated the guidelines for presenting a service organization's system description in a SOC 2 report, effective for any SOC 2 examination of an organization's controls over security, availability, processing integrity, confidentiality, and privacy, for periods ending after Dec. 15, 2018. . Software. . It is a broad architecture that organizations can use to audit the . To receive a clean SOC 2 report (no exceptions found), the first step is to understand the criteria which will be evaluated. These description criteria are to be used when preparing and evaluating the description of the service organization's system (description) in an examination of a service organization's controls over security, availability, processing integrity, confidentiality, and privacy (SOC 2 examination). SOC 2 Readiness Assessment An average of 120 questions are used (from a pool of over 300) for a tailored assessment of your processes and practices to the SOC 2 standard. What is SOC 2. A SOC 1 Report (System and Organization Controls Report) is a report on Controls at a Service Organization which are relevant to user entities' internal control over financial reporting.The SOC1 Report is what you would have previously considered to be the standard SAS70 (or SSAE 16), complete with a Type I and Type II reports, but falls under the SSAE 18 guidance (as of May 1, 2017). Moving on from this general information, the . Create a Clear and Comprehensive Description for Your Customers Without All the Confusion and Onerous Preparation Work. CPA's opinion on whether the entity maintained effective controls over its system. This document presents the description . The reason this is so important is that, ultimately, it is what your SOC 2 report opinion is on. If it's incomplete, your auditor will need to ask for more details to complete their evaluation. In most SOC 2 reports, you will find four sections and an optional fifth section: Section 1 - Independent Service Auditor's Report. Avoid marketing language, keeping it straightforward and . Our SOC 2 System Description App Automates Your SOC 2 Report Description. Tier 1 SOC analysts are triage specialists who monitor, manage, and configure security tools, review incidents to assess their urgency, and escalate incidents if necessary. SOC 3 reports can be issued on one or multiple Trust Services Principles (security, availability, processing integrity, . Listing relevant CUECs is one component of a great System Description (or Section 3). Section 5 - Other information provided by management. 1. Types of services provided. Type 2: a report on the organization's description of its system, the suitability of that system's design, and the operating effectiveness of its controls. The American Institute of Certified Public Accountants (AICPA) defines a service organization as: The entity (or segment of an entity . Section 2 - Management's Assertion. 2. It's important to put some thought into your system description. the description of the system). Any SOC report, but typically SOC 1 or SOC 2, can be Type 1 or Type 2. There is no need to list all products provided to third parties, but make sure those that are . 2018 description criteria. They're intended to examine services provided by a service organization so that end users can assess and address the risk associated with an outsourced service. Overview of the Company, Products, and Services Delivered. to differ in SOC 1 and SOC 2 engagements - Example: Controls over Changes to Application Programs SOC1 SOC 2 Focus is on risks affecting the financial . AWS is compliant with just about every standard and regulation you can think of. During a SOC 2 Type II audit, the auditor will carry out field work on a sample of days across the testing period to observe how controls are implemented and how effective they are. A SOC 2 report is designed to provide various users with assurances regarding internal controls related to the Trust Principles of a service organization. A written assertion by management of the service organization regarding the description of the service organization's system and suitability of design. Under SOC 1, there are two types of audits a CPA may perform: SOC 1 Type 1 and SOC 1 Type 2. What is SOC 2? It is commonly used to assess the risks associated with outsourced software solutions that store customer data online. The boundaries of your system and the system description will limit what is in and out of scope, and limiting scope makes for an easier audit. The System Description is not required to follow a specific format, but it is required to include eight "description criteria" in a Type 1 report, and nine in a Type 2 report. It contains pertinent details regarding the people, processes, and technology that support your product, software, or service. 2 Certain description criteria may not be pertinent to a particular service organization or system. DPS uses the services of external organizations to provide software development services and ACH processing services related to the System. Example 4: Kubernetes audit trail - SOC 2 CC7.2: "The entity monitors system components and the operation of those components for anomalies that are indicative of malicious acts, natural disasters, and errors affecting the entity's ability to meet its objectives; anomalies are analyzed to determine whether they represent security events." Azure publishes a combined attestation report (C5:2020, SOC 2 Type 2, CSA STAR Attestation) based on the audit assessment performed by an independent auditor, which demonstrates proof of compliance with . If SOC 2 lingo wasn't mysterious enough, be careful that you don . Complementary User Entity Controls, or CUEC s, are the controls that you, as a SaaS (or other services) company want your customer to have in place in order for them to properly use your service. The SOC 1 audit involves the user auditor's review of the user entity's financial statements to evaluate the effect of the controls at the service organization, according to the AICPA. For example, a company may have a SOC 1 Type 1, SOC 2 Type 1 etc. Section 3: System Description. A C5:2020 audit can be combined with a SOC 2 audit to leverage parts of the system description and audit results for overlapping controls. Components of a SOC 2 report PwC 13 Type 1 report Type 2 report A description of the service organization's system. This document presents the description . Understanding the Trust Criteria. If that weren't confusing enough, SOC 2 is different than SOC 1 . 2. 1) The Description fairly presents the system for processing payroll, tax payment, and tax filing (System) made available to user entities of the System as of July 10, 2012, for processing their transactions. 3 (SOC 2) Service Org Control 3 (SOC 3) The New Framework . The SOC 2 or 'SOC for Service Organizations' report evaluates controls relevant to maintaining the data management system's security, privacy, confidentiality, availability, and processing integrity. . Description of service organization's system. It's intended for use by service organizations (organizations that provide information systems as a service to other organizations) to issue validated reports of internal controls over those . REPORT ON COMPANY'S DESCRIPTION OF ITS BUSINESS PLATFORM SYSTEM AND ON THE SUITABILITY OF THE DESIGN AND OPERATING EFFECTIVENESS OF ITS CONTROLS RELEVANT TO SECURITY, PRIVACY, AVAILABILITY, INTEGRITY AND CONFIDENTIALITY . For example, let's say one of your controls is that all employees use a password manager like LastPass to store passwords securely. A SOC 2 system description outlines the boundaries of a SOC report. Through the system description, managers assert that the right internal controls were chosen to help the organization achieve its stated objectives. If it's incomplete, your auditor will need to ask for more details to complete their evaluation. The description criteria give report users including user entities, business partners, their auditors, regulators, and other intended users of the SOC 2 report, information regarding the service organization system and its boundaries including its inputs, processing, and outputs. The report can apply to an application, platform, hosting services, data center infrastructure, and related areas. 1.2 System . 1. System and Organization Controls (SOC), defined by the American Institute of Certified Public Accountants (AICPA), is the name of a set of reports that's produced during an audit. The structure of a SOC 2 report is similar to that of a SOC 1 report. Identify auditors - Identify and contact the certified and experienced auditors who have built a reputation for proper SOC 2 audits. If your auditor finds that three out of 50 employees they reviewed as part of a . Assessment Dates: 10-01-2019 - 06-07-2020