Costly Pitfalls of SOC 1 and SOC 2 Examinations

Businesses may find themselves navigating difficult circumstances in today's digital world, where the tides of security and compliance are always changing. One way to demonstrate your commitment to security and compliance is through SOC (System and Organization Controls) examinations, which audit an organization's internal controls. However, the SOC exam process can be challenging, especially with evolving regulations and complex cybersecurity threats. We’ve identified seven common mistakes to avoid as you embark on your SOC exam voyage.

1. Uncertain scope and report type confusion

SOC 1, 2, and 3 reports are all used for different purposes. A failure to understand your business's specific SOC needs, timing, or the boundaries of your system can lead to unnecessary complexities, delays, and inaccuracies in the final report. Take the time to assess your organization's compliance requirements, ask questions, and consult with users and stakeholders to fully understand the scope of the system (people, architecture, locations, environments, software, and controls in scope). At the end of the day, if the final report doesn't meet your needs, it'll be nothing more than an expensive paperweight.

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2. No designated point of contact

Effective SOC examinations start with executive management buy-in and support and require dedicated resources to manage the audit requests, field questions, monitor deadlines, and coordinate walkthroughs. Without that buy-in or a designated individual or team overseeing the examination, important tasks may be forgotten or overlooked, which could lead to missed deadlines, communication breakdowns, increased costs, frustrated leadership, and unhappy customers. Assigning a knowledgeable resource with strong project management skills, the authority to make decisions, and the ability to enforce deadlines to your SOC team will ensure that all aspects of the process are properly addressed and executed.

3. Insufficient planning

Failing to prepare adequately for the SOC exam can leave blind spots for your business and to stakeholders, so be sure to remember the 5 Ps: Proper Preparation Prevents Poor Performance. Rushing into the process without adequate planning can result in exceptions, qualified opinions, or abandoned exams. We recommend you develop a comprehensive timeline, identify key milestones, and allocate sufficient resources to ensure your organization is adequately prepared for the examination. In addition, for first time exams, you should complete a high-level gap assessment, at a minimum, which can be performed internally, by contracting with a reputable security compliance consulting firm, or engaging a CPA firm. Readiness assessments can help identify areas for improvement and mitigate potential issues before they come up.

4. No audit trail

Leaving a clear and well-documented audit trail is essential to an efficient SOC examination and can help you demonstrate the effectiveness of your organization's controls and processes. Informal processes that don't have evidence to support them make it difficult to assess compliance and identify potential risks and vulnerabilities. To avoid this, implement robust tracking mechanisms, maintain detailed records of activities and changes, and be sure that audit trails are easily accessible and understandable for examiners. For example, you should be able to provide evidence that a periodic review of firewall rules took place, including what rules were reviewed, who reviewed them, when, the results of the review, and what actions were taken.

5. Inadequate vendor/subservice oversight

Many organizations rely on third-party vendors to support their operations. Failing to monitor and assess the security and compliance status of these entities can introduce significant risks and challenges to your organization, which could lead to data breaches. We recommend businesses manage the scope of vendor risk assessments by first identifying vendors that provide third-party data storage, process or transmit large amounts of customer data, and/or have remote access into your network. Based on that criticality or risk rating, vendor management processes, due diligence assessments, and ongoing monitoring and oversight mechanisms can be implemented to ensure that vendors meet your organization's security and compliance requirements.

6. Minimal segregation of duties

Giving one person all the keys, valuables, and authority would not be wise. Similarly, segregation of duties is a fundamental principle of internal control that helps prevent fraud, errors, and conflicts of interest. Whenever possible, you need to separate the asset owner from the approver to minimize the ability for the circumvention of these controls, which can lead to unauthorized activities going undetected. If your organization can't separate these functions, you should focus on other mitigating controls that will minimize exposure, such as an independent person reviewing application code after it’s been deployed to make sure that only approved code was released or a periodic review of user access to applications when an employee is both approving and administering access.

7. Limited risk assessment procedures and documentation

Risk assessments support the strong foundation of a business. Comprehensive risk assessment procedures are essential for identifying, prioritizing, and mitigating risks throughout the organization. Without them, it's difficult for a company to assess where its vulnerabilities are. We encourage companies to conduct their risk assessment against an industry standard framework, leverage a combination of technical and nontechnical assessments, and include multiple people in the assessment.

Navigating SOC examinations requires careful planning, coordination, and attention to detail. By avoiding these common pitfalls and adopting best practices, your organization can streamline the SOC exam process, enhance its security and compliance, and build trust with stakeholders and customers. Preparation is the key to success in achieving SOC compliance exam success and demonstrating your commitment to safeguarding sensitive information and assets.