- SOC 2 history was conducted by American Institute of Certified Public Accountants (AICPA) in 2010
- It was created as a replacement of SAS 70
- We can expect to see further evolution and refinement of the SOC 2 in the near future
People talk about SOC 2 quite much these days. Conversely, as a technological innovation, rarely have they known about its history whereas it is important to help one understand why it was created and how it has evolved over time. This also can help to appreciate the strengths and weaknesses of the framework and stay up-to-date with the latest best practices in security and control. Having a good understanding of the history of SOC 2 can also make people have a better decisions about cybersecurity and data privacy in your organization, as it provides context for the current state of the industry and the challenges that service organizations face when it comes to protecting sensitive data and systems.
So, how is the story of SOC 2?
SOC 2 History: Who created SOC 2?
SOC 2 was created in 2010 by the American Institute of Certified Public Accountants (AICPA) in response to the need for a more comprehensive and up-to-date framework for assessing the security and privacy controls of service organizations. The AICPA recognized that the previous standard, SAS 70, was no longer sufficient to meet the growing demands of the digital age, and that a new approach was needed to provide assurance to stakeholders that service organizations were operating securely and with integrity.
To create SOC 2, the AICPA worked closely with industry experts, stakeholders, and other organizations, such as the Canadian Institute of Chartered Accountants (CICA), to develop the Trust Services Criteria (TSP) that form the basis of SOC 2. The AICPA also worked closely with the Cloud Security Alliance (CSA), a nonprofit organization dedicated to promoting best practices for security in cloud computing, to develop the Cloud Controls Matrix (CCM). The CCM is a set of security controls specifically designed for cloud computing environments, and it is closely aligned with the TSP and SOC 2 framework. The AICPA and CSA continue to collaborate on the development of new guidance and best practices for cloud security and assurance.
SOC 2 History: What was before?
Before SOC 2, the most widely used standard for reporting on controls at service organizations was Statement on Auditing Standards (SAS) No. 70, which was developed by the American Institute of Certified Public Accountants (AICPA) in 1992. SAS 70 was originally designed to provide auditors with guidance on how to evaluate the controls at service organizations that process financial data, such as data centers, payment processors, and other service providers.
SAS 70 became a popular standard for service organizations to demonstrate their commitment to security and control, but over time, it became clear that it had limitations. SAS 70 reports only covered financial reporting controls and did not address other areas such as privacy, confidentiality, and availability. Additionally, SAS 70 reports were often difficult to understand for non-auditors, and there were no standardized guidelines for how they should be presented or structured.
To address these limitations, the AICPA developed the SOC (Service Organization Controls) framework, which includes SOC 1, SOC 2, and SOC 3. SOC 1 reports are intended for service organizations that process financial data, and they are designed to be the successor to SAS 70. SOC 2 reports are broader in scope and cover controls related to security, availability, processing integrity, confidentiality, and privacy, making them more relevant for a wider range of service organizations. SOC 3 reports provide a general overview of the service organization’s controls and can be publicly shared.
SOC 2 History Periodization
None other way to have a better understanding of the history of SOC 2 rather than by knowing its periodization. The periodization of history of SOC 2 can divided into 5 period:
|Timeline||Pre-SOC 2 Era (Prior to 2010)||SOC 2 Framework(2010-2011)||(Cloud Computing Era) 2014||Streamlining of SOC 2 (2016-2018)||Cybersecurity Supplement (2020)|
|Key Developments||SAS 70 audits||Development of SOC 2||Guidance for cloud||Streamlining of SOC 2||SOC 2 supplement for|
|limited to financial||framework and new||computing and shared||criteria and guidance||reporting on cybersecurity|
|reporting controls||criteria added||responsibilities||for auditors and users||risk management|
Pre-SOC 2 Era (Prior to 2010)
Prior to the development of SOC 2, service organizations were audited using Statement on Auditing Standards (SAS) No. 70. However, the criteria in SAS 70 were limited to controls that were relevant to financial reporting. This meant that users did not receive enough information about the effectiveness of the service organization’s controls related to other important areas. As a result, SAS 70 reports were not comprehensive enough to provide a full understanding of the service organization’s controls.
SOC 2 Framework Development (2010-2011)
In response to the shortcomings of SAS 70, the American Institute of Certified Public Accountants (AICPA) developed the SOC reporting framework, which included SOC 1, SOC 2, and SOC 3 reports. The SOC 2 report was designed to provide a comprehensive evaluation of a service organization’s controls related to security, availability, processing integrity, confidentiality, and privacy. The AICPA updated the SOC 2 framework in 2011, adding new criteria for reporting on the security, availability, processing integrity, confidentiality, and privacy of information processed by service organizations. These criteria were based on industry-accepted standards and frameworks such as the ISO/IEC 27001 standard.
Cloud Computing Era (2014)
With the rise of cloud computing, the AICPA issued guidance on the use of SOC 2 reports for cloud service providers. The guidance provided additional considerations for service organizations that use cloud computing and emphasized the importance of transparency in reporting. It also addressed how to evaluate controls related to the shared responsibilities between the cloud service provider and the user organization.
Streamlining of SOC 2 Criteria (2016-2018)
The AICPA updated the SOC 2 framework again in 2016, streamlining the criteria and introducing the concept of “suitable criteria” for user organizations to use in evaluating service organizations. The suitable criteria allowed user organizations to choose criteria that were relevant to their specific needs and objectives. In 2018, the AICPA updated the SOC 2 reporting standards to include additional guidance for auditors and clarify the requirements for user organizations. These updates clarified the expectations for service organizations and made the SOC 2 reporting process more efficient.
Cybersecurity Supplement (2020)
In 2020, the AICPA issued a SOC 2 supplement for reporting on cybersecurity risk management. The supplement expanded the criteria for evaluating a service organization’s cybersecurity controls and emphasized the need for service organizations to continuously monitor and update their controls to address evolving threats. The supplement provided user organizations with a comprehensive evaluation of a service organization’s cybersecurity risk management practices and gave them confidence that their data was being protected appropriately. This was particularly important as cyber threats continued to evolve, and it was critical for service organizations to have robust cybersecurity controls in place to protect their clients’ data.
The Future of SOC 2
As data privacy and cybersecurity continue to be major concerns for businesses and consumers alike, SOC 2 is likely to remain a critical framework for assessing the security, availability, processing integrity, confidentiality, and privacy of service organizations. In the coming years, we can expect to see further evolution and refinement of the SOC 2 framework to reflect new and emerging security risks and threats. Some potential areas for future development include:
- Increased focus on privacy: With the rise of data privacy regulations like GDPR and CCPA, we can expect to see greater emphasis on privacy controls in SOC 2 assessments. This could include more specific criteria for data privacy, such as requirements for data access controls, data retention policies, and data breach notification procedures.
- Emphasis on third-party risk management: As more and more companies outsource critical services to third-party vendors, there will be a growing need for SOC 2 assessments to evaluate the security controls of those vendors. SOC 2 assessments may incorporate more rigorous requirements for third-party risk management, such as due diligence processes, contract language, and ongoing monitoring.
- Integration with other cybersecurity frameworks: SOC 2 is already closely aligned with other cybersecurity frameworks like NIST and ISO 27001. As these frameworks continue to evolve, we can expect to see greater integration between them and SOC 2. This could include the adoption of common language and terminology, as well as the incorporation of new cybersecurity best practices into SOC 2 assessments.
The history of SOC 2 dates back to the need for a new standard that would address the limitations of the traditional SAS 70 audit standard. SOC 2 was created as a response to the growing need for comprehensive and flexible approaches to auditing and reporting on controls at service organizations, particularly those that handle sensitive data and systems.
Understanding the history of SOC 2 is crucial for anyone involved in managing or auditing service providers. It provides valuable context for understanding the current state of the industry and the importance of cybersecurity and data privacy in the digital age. By understanding the challenges that led to the development of SOC 2 and the strengths and weaknesses of the framework, organizations can make better decisions about their cybersecurity and data privacy strategies.