Many businesses invest in obtaining SOC 2 reports – first a Type 1 report, and then a Type 2 report. These reports are invaluable in helping organizations move upmarket to target a larger, more sophisticated market.
SOC 2 Type 2 reports are extremely detailed. They’re often 100 pages or more in length and contain extensive information on the inner workings of a business’s IT infrastructure and systems. That fact makes many business leaders apprehensive about sharing their SOC 2 report with potential clients and partners, which can ultimately impede business growth.
Fortunately, there’s a solution to this: obtaining a SOC 3 report. In this overview, we outline what SOC 3 reports are and explore when (and why) it might make sense for your business to obtain one.
A SOC 3 report is a short, public-facing report that documents a business’s internal controls over a number of SOC reporting criteria. In essence, it is an abbreviated version of a business’s existing SOC 2 Type 2 report that is better suited to public consumption.
A business can obtain a SOC 3 report at the same time it obtains a SOC 2 Type 2 report, often for a relatively small additional investment. While the SOC 2 Type 2 report maps out a business’s internal controls and weaknesses in an extremely detailed manner, a SOC 3 report is much shorter. It summarizes the key information new partners need to know and provides abbreviated versions of the key elements of a SOC 2 Type 2 report.
Unlike a SOC 2 Type 2 report, SOC auditors are not required to restrict the use of a SOC 3 report. It can be included in Request for Proposals (RFPs), published on a company’s website, and included in a variety of marketing materials.
A SOC 3 report is provided by the same auditing firm that provides businesses with their SOC 2 report. SOC 3 audits are conducted at the same time as SOC 2 Type 2 audits and companies must undertake these audits every six or twelve months to remain in compliance. Much like the SOC 2 Type 2 audit, a SOC 3 audit involves comprehensive testing of an organization’s security standards.
Unlike the far longer SOC 2 report, a SOC 3 report is concise and generally only contains the following information:
A SOC 2 report often plays a pivotal role in a business’s ability to form relationships with large enterprises with more rigorous security demands. As part of this process, businesses must share their SOC 2 report, under a Non-Disclosure Agreement (NDA), with potential new partners and clients. However, when a business has a SOC 3 report, this isn’t required.
For many businesses, this is a compelling reason to get a SOC 3 report. The sensitive information contained in their SOC 2 report, such as detailed descriptions and findings of the control tests performed during the audit, remains confidential.
Beyond this, a SOC 3 report is also an excellent marketing asset that helps businesses improve the reputation of their brand and market their services to new clients. A SOC 3 report is effectively a public declaration that a business invests in security and has developed sophisticated internal controls that have been reviewed by accredited auditors.
SOC 3 reports can be leveraged in many different ways by sales and marketing teams, removing many of the barriers to signing new clients. They provide businesses with the means to proactively address any security concerns before they begin working with a new client or partner.
Businesses obtain a SOC 3 report as a supplement to their existing SOC 2 report. Businesses can only obtain one at the same time as they undergo a SOC 2 audit.
To obtain a SOC 3 report, businesses should ask their SOC auditor to also complete a SOC 3 audit at the same time they complete a SOC 2 audit. Because the audit process is very similar, this is typically a relatively minimal charge compared to the overall cost of the SOC audit.
Securing a SOC 3 report is an important step for businesses with aspirations of working with more sophisticated customers. It’s an invaluable marketing tool that demonstrates the strength of your business’s internal controls and security systems, laying the foundation for continued growth.
At Smith + Howard, our AICPA-accredited SOC audit professionals bring depth of experience to every SOC reporting engagement, along with the full resources of our audit, accounting, advisory and tax practices.
Our SOC reporting team takes a consultative approach, often supporting businesses through every stage of their SOC compliance journey, from obtaining a SOC 2 Type 1 report to undertaking regular SOC 2 Type 2 and SOC 3 audits.
To learn more about working with Smith + Howard on your next SOC 2 audit, contact an advisor today.
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