What is SOC 2 Certification and How Does it Help Small Businesses?
As more and more businesses go digital in a fast-paced and ever-growing era of technology, and an increasing number of high-profile data breaches appear on our daily news feeds, customers and stakeholders demand assurance that their sensitive information is in safe hands. This is where SOC 2 certification comes into play. While the process is something bigger organisations may be familiar with, smaller and newer businesses may be falling behind and underestimating the importance of this certification. In this blog post, we will delve into what SOC 2 certification is, who requires it, the audit process, and the benefits it offers to your small business.
Definitions and Principles
SOC 2, which stands for System and Organisation Controls 2, is a set of compliance reports designed to ensure that vendors can be trusted to handle sensitive information. These reports are created to give customers and stakeholders confidence that the service organisation has implemented robust controls over its systems. SOC 2 was introduced by the American Institute of Certified Public Accountants (AICPA), replacing the older SAS70 standards in 2011.
The heart of SOC 2 certification lies in the five Trust Service Criteria (TSC) principles:
Trust Service Criteria (TSC)
|Ensuring that data and systems are protected against unauthorized access.
|Safeguarding personal information and ensuring compliance with data privacy regulations.
|Protecting confidential information from unauthorized access.
|Ensuring that data processing is accurate, timely, and complete.
|Ensuring that systems are available and operational when needed.
The Process of SOC 2 Audit
The SOC 2 certification process involves two main types of reports: Type 1 and Type 2. Organisations can opt between 1 or 2 depending on what stage of developing their business security they are at.
- Type 1: This report describes the service organisation’s systems and evaluates the system’s design to confirm that it meets the required TSC principles. It is essentially a snapshot of the organisation’s controls at a specific point in time.
- Type 2: A Type 2 report attests to the operating effectiveness of a vendor’s systems and controls throughout a disclosed period, typically spanning 12 months. This provides a more in-depth and reliable assessment of the controls in place.
The road to SOC 2 certification can be time-consuming and costly, often taking anywhere between 6 to 12 months. Costs can vary significantly, ranging from $50,000 and $60,000, all the way up to $250,000, depending on the specific needs of your organisation. These cost estimates take into consideration expenses related to material preparation, staff training, and hiring auditors. But the cost shouldn’t throw off businesses that are looking to grow.
Benefits of SOC 2 Certification
While the path to SOC 2 certification may be challenging, the benefits it offers to small business are significant:
- Enhanced Trust: SOC 2 certification acts as a trust signal to potential clients and partners, helping you secure valuable business deals. According to surveys conducted by A-LIGN, 14% of businesses have lost deals due to the absence of SOC 2 certification.
- Market Access: Many industries, including technology, healthcare, finance, banking, crypto, and education, now require SOC 2 certification. Achieving this certification opens doors to new markets and opportunities.
- Data Protection: SOC 2 compliance safeguards sensitive information and ensures that you meet regulatory requirements. This not only protects your customers but also your business from potential legal issues.
- Operational Efficiency: Going through the SOC 2 audit process often leads to the optimisation of internal processes and controls, making your business more efficient and secure.
In conclusion, while obtaining SOC 2 certification may be an expensive and time-consuming endeavour, it is an essential step for the growth and success of small businesses. It enhances trust, expands market reach, and protects data and operations.
At AKW Consultants, we understand that small businesses have unique budget constraints. That’s why we offer expert SOC 2 certification services at competitive rates. Don’t let the cost deter you; take the step toward greater security and credibility. Contact us today to learn how we can help your small business thrive with SOC 2 certification.
Source & References:
- Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses
- Non-Resident Persons Corporate Tax Guide CTGNRP1 by FTA