As such, security will become an increasingly critical factor for software-as-a-service providers, technology startups, fintechs, and many other service providers with regards to winning the interest of enterprise clients who require assurance that the business has proper controls over data, access, vendors, incidents, and system availability.
That is when SOC 2 compliance may become a critical business necessity.
SOC 2 is an audit that has been developed by the American Institute of Certified Public Accountants (AICPA). This audit evaluates controls related to Trust Services Criteria, including security, availability, processing integrity, confidentiality, and privacy.
Compliance with SOC 2 is a bewildering process for new organizations. However, when broken down to distinct steps, the process gets easier.
What Is SOC 2?
SOC 2 deals with controls within service organizations that offer services to clients.
The five Trust Services Criteria are:
- Security: Protecting systems and information against unauthorized access or damage.
- Availability: Ensuring systems are available as agreed.
- Processing Integrity: Ensuring processing is complete, accurate, timely, and authorized.
- Confidentiality: Protecting information designated as confidential.
- Privacy: Managing personal information according to applicable privacy commitments.
Security is generally the foundation of a SOC 2 examination. Depending on the company’s services and customer requirements, other criteria may also be included.
SOC 2 Type 1 vs. Type 2
The startups should be aware of the distinctions between the two SOC 2 reports.
SOC 2 Type 1 determines the appropriateness of control design and implementation at a particular moment in time.
SOC 2 Type 2 looks into the control design as well as its operational effectiveness over a certain period of time.
The startups should conduct their controls on a consistent basis if the enterprise customers require a SOC 2 Type 2 report.
SOC 2 Compliance Checklist for Startups
1. Define Your Scope
Start by determining exactly what will be contained in the SOC 2 audit.
Your scope may cover:
- A specific SaaS application
- Production infrastructure
- Cloud environments
- Customer data
- Engineering systems
- Customer-support systems
- Relevant employees and processes
Systems that are not needed should not be added to the scope. Having a clear scope will help simplify compliance efforts.
2. Select the Trust Services Criteria
Determine which Trust Services Criteria apply to your business.
Most startups begin with Security. Availability, Processing Integrity, Confidentiality, or Privacy might be required depending on the service as well.
For instance, Availability could be important when it comes to Software as a Service (SaaS) companies which require high uptime levels, but Privacy and Confidentiality have to be offered by an organization that handles confidential data.
3. Conduct a Risk Assessment
Look for risks that may impact your systems, customers, and information.
Common risks include:
- Unauthorized access
- Stolen credentials
- Phishing
- Data breaches
- Cloud misconfigurations
- Software vulnerabilities
- Insider threats
- System outages
- Data loss
- Vendor failures
Record the following for every identified risk: the risk itself, its effects, probability, controls, and owner.
4. Implement Access Controls
Access management is a core part of startup security.
Your checklist should include:
- Unique employee accounts
- Multi-factor authentication
- Role-based access
- Least-privilege permissions
- Administrative access restrictions
- Employee onboarding procedures
- Employee offboarding procedures
- Regular access reviews
When an employee leaves, unnecessary system access should be removed promptly. Maintain access-review records as evidence that controls are operating.
5. Create Security Policies
Develop policies that accurately describe how your organization manages security.
Common policies include:
- Information security
- Access control
- Acceptable use
- Incident response
- Change management
- Vendor management
- Risk management
- Data classification
- Business continuity
- Disaster recovery
Policies should reflect actual company practices. Creating documents that employees do not follow can create compliance problems.
6. Provide Security Awareness Training
Employees are an important part of your security program.
Training should cover topics such as:
- Phishing and social engineering
- Password security
- MFA
- Data protection
- Confidential information
- Incident reporting
- Appropriate use of company systems
Keep records showing when employees completed security training.
7. Establish Change Management
Technology startups frequently deploy code and infrastructure changes.
A basic change-management process should include:
- Documenting the change.
- Reviewing or approving it.
- Testing it when appropriate.
- Deploying it through an authorized process.
- Recording the deployment.
- Monitoring the outcome.
For software companies, pull requests, code reviews, deployment records, and version-control systems can provide useful evidence.
8. Implement Vulnerability Management
Create a repeatable process for identifying and fixing vulnerabilities.
Consider using:
- Dependency scanning
- Vulnerability scanning
- Patch management
- Application security testing
- Penetration testing where appropriate
- Vulnerability tracking
- Remediation deadlines
The critical aspect is consistency. The ability for your company to demonstrate how vulnerabilities are discovered, prioritized, assigned, and remediated is key.
9. Create an Incident Response Plan
Incident response strategy should be established for your startup.
The plan should define:
- What constitutes an incident
- Who responds
- How incidents are reported
- How incidents are investigated
- How affected systems are contained
- How evidence is preserved
- When customers or authorities must be notified
- How recovery occurs
Tabletop exercises can assist employees in comprehending their duties before a genuine event happens.
10. Secure Cloud Infrastructure
Almost all contemporary businesses use cloud computing services; therefore, cloud computing security is an integral component of SOC 2.
Review:
- Identity and access management
- MFA
- Network controls
- Encryption
- Logging
- Monitoring
- Backups
- Secrets management
- Production access
- Configuration management
The use of an established cloud service provider does not guarantee SOC 2 compliance for your startup. Your firm is still responsible for controls within your own infrastructure.
11. Manage Third-Party Vendors
Many start-ups use external providers for hosting, payments, analytics, identification, communication, and support services.
Maintain a vendor-management process covering:
- Vendor inventory
- Risk classification
- Security reviews
- Relevant contracts
- Security reports or certifications
- Periodic reassessment
Use a risk-based approach rather than applying identical requirements to every vendor.
12. Implement Logging and Monitoring
Security-related activity should be logged and monitored appropriately.
Relevant systems may include:
- Cloud infrastructure
- Production applications
- Authentication systems
- Administrative accounts
- Network systems
- Security tools
Define how logs are protected, retained, reviewed, and investigated.
13. Test Backups and Disaster Recovery
Backups alone are not enough. Your startup should have documented recovery procedures and test whether important systems and information can actually be restored.
Your disaster recovery process should address:
- Data backups
- Backup protection
- Recovery procedures
- Recovery objectives
- System restoration
- Employee responsibilities
- Communication procedures
- Recovery testing
Document the results of recovery tests and address identified problems.
14. Collect Evidence Continuously
Do not wait until the SOC 2 examination to gather evidence.
Examples include:
- Access-review records
- Training records
- Vulnerability scans
- Change-management records
- Incident reports
- Backup reports
- Recovery tests
- Vendor assessments
- Policy acknowledgments
- Risk assessments
In the case of Type 2 tests, evidence gathering must be done continuously since the controls are assessed for some duration of time.
15. Conduct a Readiness Assessment
Before the formal examination, review every control and ask:
- Is it documented?
- Does it have an owner?
- Is it operating consistently?
- Can we provide evidence?
- Are there exceptions?
- Have identified gaps been addressed?
Create a remediation plan and prioritize significant risks.
16. Choose a Qualified Service Auditor
SOC 2 audits are conducted by independent professionals who include CPA firms that adhere to relevant professional standards.
When selecting an auditor, consider:
- Startup experience
- Technology expertise
- Industry experience
- Examination approach
- Timeline
- Scope
- Fees
- Communication process
Do not choose an auditor only by how fast or how cheap he or she is. It is important for the customers and other parties that the audit is credible.
SOC 2 Startup Checklist
Use this quick checklist before beginning your examination:
- Define SOC 2 scope
- Select applicable Trust Services Criteria
- Conduct a risk assessment
- Create security policies
- Implement MFA
- Establish access controls
- Create onboarding and offboarding procedures
- Provide security awareness training
- Establish change management
- Implement vulnerability management
- Create an incident response plan
- Secure cloud infrastructure
- Review third-party vendors
- Implement logging and monitoring
- Test backups and disaster recovery
- Collect evidence continuously
- Conduct a readiness assessment
- Remediate control gaps
- Select a qualified service auditor
Final Thoughts
Obtaining SOC 2 certification is not a difficult feat for a startup company. This can be divided into small tasks like defining scope, identifying risks, implementing controls, documentation, and collecting evidence.
Consistency is the key principle. A startup should not build controls only for an examination. Access reviews, security training, vulnerability management, incident response, vendor reviews, monitoring, and recovery testing should become part of normal business operations.
A sustainable SOC 2 program can help startups demonstrate how they protect customer information and manage security risks while building a stronger foundation for growth.
