What is SOC 2? Definition, Requirements, and How the Audit Works

Learn what SOC 2 is, its Trust Services Criteria, key requirements, and how the SOC 2 audit process helps organizations build customer trust.

Whether you're a SaaS provider managing customer records, a cloud service provider hosting enterprise applications, or a fintech company processing financial transactions, your customers expect more than assurances that their information is secure, they expect independent evidence that robust security controls are in place.

This growing demand for transparency has made SOC 2 one of the most recognized assurance reports for organizations that store, process, or manage customer data. Today, enterprise customers frequently request a SOC 2 report during vendor evaluations, procurement reviews, and cybersecurity due diligence before signing contracts.

Unlike industry-specific regulations, SOC 2 is applicable across a wide range of service organizations. It demonstrates that an organization's security controls have been independently evaluated against recognized criteria developed by the American Institute of Certified Public Accountants (AICPA).

For many organizations, achieving SOC 2 compliance is not only about meeting customer expectations but also about strengthening governance, improving operational maturity, and establishing greater confidence in how sensitive information is managed.

In this article, we'll explain what SOC 2 is, the Trust Services Criteria it is based on, the key SOC 2 requirements, and how the SOC 2 audit process works.

What Is SOC 2?

SOC 2, short for Service Organization Control 2, is an independent attestation report that evaluates whether a service organization's controls are designed and operating effectively to protect customer data. The framework was developed by the American Institute of Certified Public Accountants (AICPA) to provide organizations with a standardized method for demonstrating their commitment to information security, operational resilience, and data protection.

Unlike certifications based on international management system standards, SOC 2 results in an attestation report rather than a traditional certification. An independent auditor evaluates the organization's controls against selected Trust Services Criteria and issues a report describing the effectiveness of those controls. This distinction is important because many organizations mistakenly refer to "SOC 2 certification." While the phrase is commonly used in the marketplace, SOC 2 is technically an independent assurance engagement that results in a SOC 2 report.

Organizations seeking SOC 2 certification in the USA should note that SOC 2 is technically an attestation report issued by a licensed CPA rather than a formal certification. However, the term "SOC 2 certification USA" is widely used by businesses and customers when referring to the audit process.

The primary objective of SOC 2 is to provide customers, business partners, and other stakeholders with confidence that an organization's systems and processes are designed to protect sensitive information appropriately. Because cybersecurity risks continue to evolve, organizations increasingly use SOC 2 compliance as a way to demonstrate that information security is embedded into their operational practices rather than treated as a one-time project.

Who Needs SOC 2?

SOC 2 is particularly valuable for organizations that provide technology-enabled services or handle customer information on behalf of other businesses.

Examples include:

Software-as-a-Service (SaaS) providers
Cloud service providers
Managed Service Providers (MSPs)
Data centers
Fintech companies
Healthcare technology organizations
HR technology platforms
Artificial Intelligence service providers
Payment technology companies
Business Process Outsourcing (BPO) organizations

Enterprise customers increasingly request a SOC 2 report before selecting new vendors because it provides independent evidence that recognized security controls have been evaluated. For growing technology companies, SOC 2 often becomes an important differentiator during competitive sales opportunities.

Why SOC 2 Matters?

Cybersecurity incidents can have far-reaching consequences beyond financial loss. Data breaches may disrupt business operations, damage customer relationships, trigger contractual disputes, and affect an organization's reputation. As organizations outsource more technology services, vendor security has become an important consideration during procurement decisions.

SOC 2 provides organizations with a structured approach for demonstrating that information security controls have been independently evaluated against recognized industry criteria. For customers, this reduces uncertainty when selecting technology providers. For organizations, SOC 2 contributes to stronger governance, improved risk management, and greater operational consistency.

Many enterprise procurement teams now include SOC 2 reports as part of their standard vendor due diligence process. Rather than relying solely on security questionnaires or internal declarations, customers increasingly seek objective third-party assurance before sharing sensitive information.

SOC 2 also contributes to broader information security compliance initiatives. Organizations that establish mature governance processes, access controls, monitoring capabilities, and incident response procedures often find that these practices strengthen other regulatory and contractual obligations as well.

Ultimately, SOC 2 demonstrates an organization's commitment to cybersecurity compliance while reinforcing customer confidence in its ability to protect sensitive information.

The Five SOC 2 Trust Services Criteria

The SOC 2 Trust Services Criteria developed by the AICPA form the foundation of every SOC 2 audit. While Security is mandatory, organizations can select additional criteria based on their services, customer expectations, and business risks.

Security (Mandatory)
Security is the only mandatory Trust Services Criterion and evaluates whether systems are protected against unauthorized access, misuse, disclosure, or alteration. Auditors typically assess controls related to access management, authentication, network security, system monitoring, vulnerability management, and incident response.
Availability
The Availability criterion assesses whether systems remain operational and accessible as committed to customers. It includes controls such as business continuity, disaster recovery, infrastructure monitoring, backups, and capacity management.
Processing Integrity
This criterion evaluates whether systems process data accurately, completely, and in a timely manner. Common controls include data validation, transaction processing, error detection, and quality assurance procedures.
Confidentiality
The Confidentiality criterion focuses on protecting sensitive business information throughout its lifecycle. Auditors review controls such as data classification, encryption, secure transmission, retention, and access restrictions.
Privacy
The Privacy criterion evaluates how organizations collect, use, retain, disclose, and dispose of personal information. It covers controls related to privacy notices, consent management, data retention, disposal, and access to personal data.

Choosing the Right Trust Services Criteria

Not every SOC 2 engagement includes all five criteria. Every engagement includes Security, while the remaining four are selected based on the organization's services, customer expectations, contractual obligations, and business risks.

For example, a cloud hosting provider may include Availability in addition to Security, while a healthcare technology company managing patient information may include Confidentiality and Privacy as well.

Selecting appropriate Trust Services Criteria ensures that the resulting SOC 2 report reflects the organization's operating environment and provides meaningful assurance to customers and stakeholders.

Understanding these criteria is an important first step toward building a strong SOC 2 program. Equally important is understanding the different report types, the underlying control requirements, and how the SOC 2 audit process evaluates the effectiveness of those controls, topics we will explore in the next section.

SOC 2 Type 1 vs Type 2

One of the first decisions organizations make when pursuing SOC 2 compliance is whether to obtain a SOC 2 Type 1 or SOC 2 Type 2 report. Although both reports evaluate controls against the Trust Services Criteria, they differ in the scope of the assessment and the level of assurance they provide.

A SOC 2 Type 1 report evaluates whether an organization's controls are suitably designed at a specific point in time. The auditor assesses the design of policies, procedures, and security controls to determine whether they meet the selected Trust Services Criteria. Organizations often choose a Type 1 report when they have recently implemented their control environment or require independent assurance within a shorter timeframe.

A SOC 2 Type 2 report evaluates not only the design of controls but also their operating effectiveness over a defined review period, typically between three and twelve months. The auditor reviews evidence to confirm that controls were applied consistently throughout the reporting period. Because it provides a higher level of assurance, a SOC 2 Type 2 report is generally preferred by enterprise customers, procurement teams, and business partners.

SOC 2 Type 1 vs Type 2 Comparison

Although both SOC 2 Type 1 and SOC 2 Type 2 reports evaluate controls against the Trust Services Criteria, they differ in the depth of the assessment and the assurance they provide.

A SOC 2 Type 1 report focuses on whether an organization's controls are appropriately designed at a specific point in time. In contrast, a SOC 2 Type 2 report evaluates both the design of those controls and their operating effectiveness over a defined review period, providing evidence that they have been applied consistently in practice.

Because of this broader evaluation, SOC 2 Type 1 is often suitable for organizations beginning their SOC 2 journey or establishing their control environment. SOC 2 Type 2, however, is generally preferred by enterprise customers and business partners because it offers stronger assurance of operational maturity and ongoing control effectiveness.

What Are the SOC 2 Compliance Requirements?

SOC 2 does not prescribe a fixed checklist of technical controls. Instead, organizations are expected to implement controls that address the selected Trust Services Criteria based on their services, technology environment, business risks, and operational needs. Common areas evaluated during a SOC 2 audit include:

Governance
Establish security policies, assign responsibilities, and ensure leadership provides oversight and accountability for information security across the organization.
Risk Management
Identify, assess, and manage cybersecurity risks through regular risk assessments and appropriate mitigation measures.
Access Controls
Implement user access management, privileged account controls, multi-factor authentication, password policies, and periodic access reviews to protect sensitive systems and data.
Change Management
Follow structured processes to review, test, approve, and deploy system changes while minimizing security and operational risks.
Vendor Management
Evaluate third-party providers, monitor vendor risks, and ensure appropriate controls are in place for services that access customer data or critical systems.
Incident Response
Maintain documented procedures for identifying, reporting, containing, investigating, and recovering from security incidents.
Security Monitoring
Continuously monitor systems through security logging, vulnerability management, threat detection, and alert monitoring to identify potential risks early.
Business Continuity
Develop and maintain business continuity and disaster recovery plans to support service availability and minimize disruption during unexpected events.
Employee Awareness
Provide ongoing security awareness training so employees understand their responsibilities, recognize cyber threats such as phishing, and follow organizational security policies consistently.

How the SOC 2 Audit Process Works

The SOC 2 audit process generally follows these key stages:

Define the Audit Scope
Determine which systems, services, business processes, and Trust Services Criteria will be included in the audit. A clearly defined scope ensures the assessment focuses on the relevant areas of the organization.
Select the Trust Services Criteria
Every SOC 2 audit includes the Security criterion. Organizations may also include Availability, Processing Integrity, Confidentiality, and Privacy, depending on customer requirements, business objectives, and operational risks.
Establish and Operate Controls
Implement governance processes, security controls, policies, and monitoring activities that align with the selected criteria. For SOC 2 Type 2, these controls must operate consistently throughout the reporting period.
Collect Evidence
Gather objective evidence demonstrating that controls are functioning effectively. This may include access reviews, security logs, change management records, incident reports, training records, backup reports, and risk management documentation.
Independent Audit
An independent auditor reviews documentation, interviews personnel, examines evidence, and evaluates whether the controls are appropriately designed. For Type 2 engagements, the auditor also assesses whether the controls operated effectively over the defined review period.
Report Issuance
After completing the assessment, the auditor issues the SOC 2 report, outlining the audit scope, selected Trust Services Criteria, system description, auditor's opinion, and the results of control testing. Organizations can then share the report with customers and stakeholders under appropriate confidentiality arrangements.

Common Challenges Organizations Face

Although many organizations already maintain mature cybersecurity programs, preparing for a SOC 2 engagement often highlights opportunities for improvement.

Common challenges include:

Maintaining consistent documentation across business functions.
Demonstrating sufficient evidence that controls operated throughout the reporting period.
Managing user access across cloud platforms and business applications.
Monitoring third-party vendors with access to customer information.
Coordinating security responsibilities across multiple departments.
Keeping policies aligned with evolving technologies and business processes.

Addressing these challenges early contributes to a smoother audit experience while strengthening operational maturity.

Who Needs SOC 2?

SOC 2 is valuable for any organization that stores, processes, or manages customer information on behalf of other businesses. Industries that commonly pursue SOC 2 compliance include:

SaaS companies
Cloud service providers
Managed Service Providers (MSPs)
Fintech organizations
Healthcare technology providers
Artificial Intelligence platforms
HR software providers
Data centers
Business Process Outsourcing (BPO) organizations
Customer support platforms

As enterprise organizations place greater emphasis on vendor risk management, SOC 2 for SaaS companies and SOC 2 for cloud companies has become an increasingly common customer requirement.

Achieving Greater Trust Through SOC 2 Assurance

As organizations continue to manage increasing volumes of sensitive customer information, SOC 2 has become one of the most widely recognized assurance frameworks for demonstrating effective information security and operational governance.

Built around the Trust Services Criteria, SOC 2 evaluates whether an organization's controls are appropriately designed and, in the case of SOC 2 Type 2, whether they operate effectively over time.

While achieving SOC 2 compliance requires strong governance, access management, risk management, security monitoring, and evidence collection, the long-term value extends beyond meeting customer requests. It strengthens organizational resilience, improves operational consistency, and provides independent assurance that recognized security controls are functioning as intended.

As an internationally recognized certification body, INTERCERT provides independent certification and assessment services against internationally recognized standards. Through impartial evaluation of management systems and assurance frameworks, organizations can demonstrate conformity while reinforcing confidence among customers, regulators, investors, and other stakeholders.