What is Soc 2 Compliance and Why is it Important?

September 28, 2021

Protecting consumer data should be of utmost importance for organizations. In a world of increasing cybersecurity threats and data breaches, now is the time more than ever to put policies and procedures in place to ensure your customers are protected. If a company does not take measures to protect consumer data this could leave important information vulnerable to hacks and ultimately allowing for distrust in the organization. Organizations that are Soc 2 certified can bring consumers and fellow institutions at ease knowing that all measures are being taken to keep their data safe.

What is Soc 2 Compliance

Soc 2 was developed by the American Institute of CPA’s (AICPA) to provide for how organizations should manage customer data. Firms that are Soc 2 compliant pursue rigid auditing procedures to ensure that data is securely managed throughout their organization in connection with the organization’s service providers.

There are 2 Types of Soc Reports

  • Type 1 - Describes a vendor’s systems and whether their design is suitable to meet relevant trust principles
  • Type 2 - Details the operational effectiveness of those systems

Soc 2 follows 5 “Trust Service Principles”

Security, Availability, Processing Integrity, Confidentiality, and Privacy

Image From https://www.dashsdk.com/resource/soc-2-trust-services-criteria-tsc/

Which Industries Receive Soc 2 Compliance?

Managed Services, Banking and Financial Services, Software-as-a-Service (SaaS), Data Centers and Colocation Facilities, and Healthcare are all industries that benefit from Soc 2 compliance and protecting consumer data.

What are the steps to Receive Soc 2 Compliance?

Step 1) Bring In Credible Outside Auditors

Step 2) Select Security Criteria for Auditing

Step 3) Building a Roadmap to Soc 2 Compliance

Step 4) The Formal Audit

Step 5) Certification and Recertification - Annual Audits

What does this mean for ModernTax?

ModernTax recently received it’s Soc 2 Type I certification and is on the way to receive Soc 2 Type 2 certification. This allows for ModernTax to continue serving its clients & their customers with the highest level of security and protection.

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