Data service providers — especially smaller companies and startups — are usually on the lookout for ways to cut costs and accomplish more with less. At the end of the day, cost cutting is a legitimate path to growth and business efficiency, and it seems clear that companies with a wasteful approach to ROI don’t thrive, or even survive. This is particularly true today, when there’s little to no FOMO in the tech investment space, and tech companies are tightening their budgets across the board.
As regulatory consultants, there’s one question we often hear from our efficient, growth minded clients: “Do we really need a SOC 2 report?”
In other words, company decision makers want to understand the stakes. Are SOC 2 reports a legal obligation? Will non-compliance result in financial penalties? What happens if the company “fails” a SOC 2 audit? Can a SOC 2 report actually drive more revenue? And so on.
Our answer will sometimes vary depending on unique circumstances. However, for the most part, even though the five “Trust Service Principles” that comprise a SOC 2 report are voluntary from a legal standpoint, we strongly advise going down the path of SOC 2 compliance. Here’s a closer look at why.
What are the benefits and returns of a clean SOC 2 report?
If SOC 2 reporting is voluntary, why should you make it a top priority? Cybersecurity and reliable data management are essential to strong client relationships. Customers rely on the strength of a company’s internal controls, for both their financial security and the protection of valuable data. And clients and partners are more likely to sign contracts with companies that can produce a clean report.
In other words, a SOC 2 is an industry-recognized stamp of approval that immediately generates trust and helps you stand out against your competitors. This means you win out against all the other founders that don’t think SOC 2 is worth the trouble.
What are the auditing requirements applied to SOC 2 reporting?
SOC 2 auditors follow guidelines from the AICPA, an accountancy body. However, each auditor uses their own discretion when applying the five Trust Service Principles. This means that an auditor with a strong reputation will provide a report that holds more value for potential enterprise clients. For this, it’s worth researching auditors and picking one that has a strong track record.
Are there any risks in running through the process?
For data management or cloud service providers, the riskiest path to success will involve foregoing an audit altogether. The path of least risk will involve obtaining a clean report from a highly rated SOC 2 auditor.
What happens if you fail your audit?
SOC 2 reports aren’t pass / fail — you get qualifications from your auditor on each of the controls they need to evaluate. At the end of the evaluation process, your auditor will share their opinion on how well your business meets SOC 2 requirements. If they decide that the security measures are satisfactory, then they’ll deem your business compliant.
If, in their opinion, your business isn’t fully compliant, then they will identify the gaps and give you an opportunity to improve on them. This makes the compliance process an iterative initiative — and there’s no need for your business to share the lack of compliance at any point in the journey.
What’s the best way to get started?
Contact our team and arrange a consultation. We can help you map out the steps you’ll need to take to attain SOC 2 compliance, and we’ll review your current data management infrastructure so you’re prepared to move through the process with minimal expense and complications.
We’re here for you at every turn. Arrange an initial consultation today.
