SOC 1 and SOC 2

Consultancy SOC 1 and SOC 2

SOC 1 and SOC 2 are both types of reports issued in accordance with standards developed by the American Institute of Certified Public Accountants (AICPA). These reports are relevant to service organizations and attest to the controls and processes in place regarding financial reporting (SOC 1) and security, availability, processing integrity, confidentiality, and privacy (SOC 2). Below is an outline of typical documentation required for SOC 1 and SOC 2 compliance:

1 Policies and Procedures

1. Internal Control Policies (SOC 1): Documents outlining policies and procedures related to internal controls over financial reporting, such as segregation of duties, authorization, and transaction processing.
2. Security Policies (SOC 2): Policies and procedures related to information security, including access control, data classification, incident response, and data retention.

2 Risk Assessment and Management

1. Documentation of risk assessment methodologies used to identify and assess risks to financial reporting (SOC 1) or to the security, availability, processing integrity, confidentiality, and privacy of systems and data (SOC 2).
2. Records of risk mitigation strategies and controls implemented to address identified risks.

3 Control Environment Documentation

1. Description of the control environment, including organizational structure, governance processes, and the tone set by management regarding controls and compliance.
2. Documentation of management's oversight of controls and their commitment to internal control effectiveness.

4 Control Activities Documentation

1. Detailed descriptions of control activities implemented to achieve control objectives related to financial reporting (SOC 1) or security, availability, processing integrity, confidentiality, and privacy (SOC 2).
2. Evidence of the design and operating effectiveness of control activities.

5 Information Technology (IT) Controls Documentation

1. Description of IT general controls (ITGCs) and application controls relevant to financial reporting (SOC 1) or security and data protection (SOC 2).
2. Documentation of controls related to logical access, change management, data backups, system monitoring, and incident response.

6 Third-Party Service Provider Documentation

1. Documentation of contracts and agreements with third-party service providers and vendors, including service level agreements (SLAs) and agreements related to data processing and protection.
2. Records of due diligence performed on third-party service providers and assessments of their controls and compliance.

7 Testing and Monitoring Documentation

1. Records of testing procedures conducted to evaluate the effectiveness of controls over financial reporting (SOC 1) or security, availability, processing integrity, confidentiality, and privacy (SOC 2).
2. Documentation of monitoring activities performed to detect control failures or deficiencies and to ensure ongoing compliance.

8 Incident Response and Remediation Documentation

1. Procedures for responding to and remediating control deficiencies, incidents, and breaches.
2. Documentation of incidents, including their nature, impact, root causes, and remediation actions taken to prevent recurrence.

9 Reporting and Communication Documentation

1. Documentation of communication with stakeholders, including reports issued to management, customers, regulators, and auditors regarding control objectives, testing results, and compliance status.
2. Records of management's assertions and representations regarding control effectiveness and compliance with SOC 1 or SOC 2 requirements.

10 Audit and Assurance Documentation

1. Documentation of audit procedures performed by internal or external auditors to evaluate control effectiveness and compliance with SOC 1 or SOC 2 requirements.
2. Audit reports, findings, and recommendations for improving controls and compliance.

11 Compliance Framework Documentation

1. Documentation of the organization's adoption of control frameworks, standards, and best practices relevant to SOC 1 or SOC 2 compliance, such as COSO (Committee of Sponsoring Organizations of the Treadway Commission) for SOC 1 or the Trust Services Criteria for SOC

12 Evidence Retention Policy

Policies and procedures for retaining and securely storing documentation and evidence related to SOC 1 or SOC 2 compliance, including retention periods and access controls.

These documents collectively provide evidence of an organization’s adherence to control objectives and compliance requirements specified in SOC 1 or SOC 2 reports. They are essential for demonstrating the effectiveness of controls over financial reporting (SOC 1) or security, availability, processing integrity, confidentiality, and privacy (SOC 2) to customers, regulators, and other stakeholders. Additionally, they support the audit and assurance process and contribute to ongoing improvement efforts in control effectiveness and compliance.