If your customers rely on you to protect consumer information, chances are you may be asked to produce a SOC 1 audit report. A SOC 1 audit reports on the controls at an organization that are relevant to, or may affect, a client’s financial statements. This reporting framework is designed to demonstrate that an organization has proper internal controls and processes in place to address information security and compliance risks. It’s not uncommon to have a million questions the first time you have a SOC 1 audit performed. Where do we start? What does a SOC 1 entail? Will we fail? Here are 10 things you can do to prepare for your SOC 1 audit.
Top 10 Things to Prepare for Your SOC 1 Audit
1. Risk Assessment
If you look at any compliance or information security framework, audit, or standard, they all require a risk assessment. That being said, performing a formal risk assessment is the best starting point in preparing for your upcoming SOC 1 audit. A risk assessment helps you understand what you’re doing as an organization and can help identify any risks in your environment. Based on your assessment, the implementation of controls should be reasonable and feasible. A written, formal risk assessment should be performed by a cross-section of departments and employees.
2.Evaluate Client Requirements
Who are you serving as a market? Are you providing services to retail organizations? Healthcare organizations? Federal government? Financial services organizations? Your answers will determine the laws and regulations that apply to you and how you deliver your services. What do your clients expect from you? What does your contract say you’re providing? As a service provider, your audit’s scope is shaped by your service delivery methods and client requirements should be evaluated in order to understand what is expected and reasonable. Don’t forget to evaluate contracts and service packages to ensure that expectations have been properly documented.
3. Regulatory Implications
In order to prepare for your SOC 1 audit, you must determine what your regulatory responsibilities are based on your locale and the customers you service. For example, if you’re serving the healthcare market, you’ll be responsible to comply with relevant sections of the HIPAA/HITECH Act. If you’re serving the financial marketing, then GLBA is relevant. If you’re serving publicly traded companies, SOX is relevant. If you’re serving the Federal government, you must comply with FISMA. Taking into consideration each regulatory framework that applies to you will help determine what’s important to consider as you prepare for your SOC 1 audit.
4. Service Delivery Controls
Possibly one of the biggest risks that businesses may overlook (since it’s not a security breach) are operational risks. As auditors, we look for things that deal with operational efficiency, catching errors, and quality assurance. These are all important factors that will help make up a set of service delivery controls. What controls do you have set up along the service delivery process? A helpful way to manage service delivery controls is by creating a data flow diagram of the life-cycle of your service delivery model. Take us step-by-step through the entire process.
5. Written Policies and Procedures
This isn’t the first time you’ve heard us say this, and it won’t be the last. The most important thing to remember when developing policies and procedures to prepare for any audit is, “if it’s not written down, it didn’t happen.” Having a formally written and fully documented set of policies and procedures is paramount for a SOC 1 audit because these are what we audit against. If your policy says you do X, Y, Z, we will perform a test against that policy to verify that you do, in fact, do X, Y, Z. Having a formal set of written policies and procedures also helps guide employees on company expectations and consequences, and provides guidance on the proper execution of service delivery. Policies and procedures should be fully endorsed by senior management and updated by the authorized individual at least annually.
When trying to prepare for your SOC 1 audit, policies and procedures go hand in hand with training. It’s essential that employees receive job-specific training to ensure full compliance with all company policies and procedures. Did all employees attend? Did all employees comprehend? Is there some kind of acknowledgement form that was signed saying they have been presented with and understand what’s expected of them as an employee? Since, for example, HR, IT, and Production are all responsible for different aspects of the business, training should be as job specific as possible. Another type of training that is critical in our current threat-landscape is security awareness training. Employees should be trained annually to keep them vigilant in understanding the types of threats that are out there.
7. Vendor Management
Vendors represent a risk to every organization. Your vendor requirements for each vendor may vary based on the risk that vendor poses to your organization. For example, a VPN-connected vendor introduces different risks than a cleaning service. As far as managing your vendors, on-boarding and off-boarding procedures are just as critical for vendors as they are for employees. What are you going to require for the on-boarding process? A signed non-disclosure? Ask to verify that they perform a background check on employees? Verify that they are in compliance with any relevant information security and regulatory compliance requirements? Effective policies, training, and monitoring can greatly reduce your vendor risk. Be sure to include the right-to-audit clause in your contract.
8. Physical Controls
Your physical controls talk about restricting access to your physical environment. These controls cover things like controlling how someone comes in and out of your facility, tracking visitors, and keeping a log. Access controls can generate logs to verify access granted and denied. Video footage can be helpful after an incident to determine the impact. Visitor procedures are important for documenting historical events. Are there additional checkpoints or limited access once inside? Sensitive areas should be controlled to restrict access on a strictly business-justified basis. Assessing your physical controls is important when you prepare for a SOC 1 audit.
9. Security Controls
When we talk about controls that affect “security”, we are talking about CIA: Confidentiality, Integrity, and Availability. If an important document containing sensitive information is stolen, then the confidentiality of that document has been compromised. If you’re storing an important hardcopy document that has gotten wet and is now unreadable, then the integrity of that document has been compromised. If something has gone missing, like an important filing cabinet full of sensitive documents, but hasn’t been taken by an unauthorized person, then the availability of those documents inside the filing cabinet has been compromised. Placing Administrative, Technical, and Physical controls in place can help you address each of those areas of security.
10. Availability Controls
Availability controls include things such as Business Continuity and Disaster Recovery Plans. These are critical for maintaining availability to your customers. Other availability controls to consider as you prepare for your SOC 1 audit are data backups, network monitoring, and cross-training employees.
Companies are looking to do business with vendors who understand these issues. Being proactive about undergoing your SOC 1 audit can mean the difference in winning your next big deal and earning the trust and respect of the clients you serve.
KirkpatrickPrice strives to be your partner. Engaging in a SOC 1 audit doesn’t have to be a scary thing and we are here to offer help every step of the way with recommendations and resources to help strengthen your environment. If you’re ready to get some help, contact us today.