SOC 2 versus SOC 3: Know the Difference

Over the last few decades, organizations have increasingly looked up to outsourcing as a way of cutting back on costs and improving efficiencies. There’s a significant increase in software outsourcing as services and other cloud-based technologies have skyrocketed over the past few years. This escalation in designating has also given a push to the need for auditor reports at service organizations to adequately ensure that the service providers have internal controls in place over the system. This increment in the use of service organizations has also increased the need for Service Organization Controls (SOC) examinations. Service organizations providing software or platform as a service, data hosting, along with other cloud-based technologies are more likely to be asked to provide SOC 2 or SOC 3 compliance reports to the customers.

Getting more frequent, these appeals for the report can cause confusion regarding the information that suits your Service Organization. To avoid this bewilderment, we have compiled the differences between SOC 2 and SOC 3 Compliances. Read on to clear out your doubts about the same! To understand the differentiation, we need to revise the meanings first.

What is SOC 2 Compliance?

SOC 2 Compliance types are defined as a criterion for managing customer data based on “five trust service principles” — Security, Availability, Confidentiality, Processing Integrity, and Privacy. All the SOC 2 reports contain the security category. The other categories are optional, customizable, and relevant to your business depending on the commitments your customers expect. To complete a SOC 2 compliance security implementation, your enterprise’s security measures must be reviewed and verified by a certified auditor. SOC 2 compliance reports incorporate detailed information about an organization’s systems. The use of these reports is restricted — companies share their SOC 2 details with customers and prospects under NDA.

‍What is SOC 3 Compliance?

SOC 3 compliance reports are created from the same audit procedure that yields SOC 2 compliance reports. Think of a SOC 3 report as a redacted SOC 2 document: SOC 3 summarizes all the materials of a SOC 2 and excludes the main details and results of the testing performed during the audit. A SOC 2 report is written to prepare a SOC 3 statement.

What is the difference between a SOC 2 and SOC 3 Report?

Till now, we have seen that the examinations for SOC 3 and SOC 2 have much in common. The most significant difference between them is the reporting. More specifically, the targeted audience for each report, the level of details, and the expected distribution for each information are opposite.

SOC 2 reports are restricted-use reports—meaning that they’re for a specific kind of audience. User bodies, service organization management, or other specifically named parties are examples of those who have access to reading a SOC 2 report.

On the other hand, SOC 3 reports are for general purposes. They are composed in a way intended for people with a basic interest in the service organization without getting into the specific details. SOC 3 reports are for the public. The audited companies can use them for marketing purposes.

Typical SOC 2 reports provide specific details to other entities on how controls are implemented to protect the needs of their clients.

Summarizing It All

In summary, it can be difficult for a service organization to put a finger on the most commonly used SOC reports (SOC 1, SOC 2, and SOC 3) as the right choice for them. They all serve different purposes.

Normally, it is easier for service organizations to determine if they need SOC 1, SOC 2, or SOC 3 because the key difference is whether the service organization’s controls impact a customer’s internal control over financial reporting.

The Bottom-Line

The decision of which Compliance to choose is up to you. The key things to note are that a SOC 2 is a restricted use report containing detailed information on the system, the controls in place, the service auditor’s test procedures, and the results of their test procedures. A SOC 3 is a general use report that doesn’t contain much detail and is a great marketing tool.

Need more guidance on choosing the right Security Compliance? Contact us for the best and most secure Management System.

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