SOC Certification for Your Professional Services Business: What You Need to Know, Part One

By: John Erickson – CEO of Credit Service Intl. – Content Editor of R.O. Hammer Companies

Are you tired of seeing RFPs come across your desk that require a SOC certification to participate? Do you have clients requesting a copy of your current SOC report? 

If you’re a professional services business owner, the chances are, you have probably heard about SOC (System and Organization Controls) certifications. Your competitors definitely have! 

Achieving SOC certification is becoming an increasingly common goal for businesses looking to enhance their credibility, security, and operational standards. But is the investment right for your professional services business? 

In this three-part blog series, we will discuss 1) What SOC certification is and its benefits, 2) the costs and time commitment involved in SOC certification, and 3) how to prepare for the SOC certification process.. 

Let’s dive into the details of this first point: What SOC is and what its benefits are.

What Is SOC Certification and What Are Its Benefits?

SOC certifications are frameworks developed by the American Institute of Certified Public Accountants (AICPA) to evaluate how companies manage data, particularly client information, and ensure its security and privacy. 

An SOC report is a document that verifies that your business is following a framework of best practices based on a set of specific controls. If you have been around the industry long enough, you may remember SOC’s predecessor, the “SAS 70” standard. SOC is now the gold standard in assurance certifications in this industry and has three main categories or types:

• SOC 1: Focused on financial reporting and internal controls.

• SOC 2: Emphasizes trust service criteria like security, availability, processing integrity, confidentiality, and privacy.

• SOC 3: Similar to SOC 2 but designed for public distribution with less technical detail. (This discussion focuses less on this option)

Most professional services businesses aim for SOC 2 certification due to the sensitivity of the data they handle. 

There are also two different audit types for each SOC certification. Type 1 and Type 2. Each relates the auditing period that will be used to compile your business’s report.

Here are some details:

When considering your options, it is imperative to know your client base. Researching current and prospective clients’ requirements can help you decide which SOC path is right for you and your organization's budget.

What Are SOC Controls?

SOC Controls are a set of internal criteria that are reviewed by an auditor as a part of the assurance process. The set of controls required to be implemented and audited will vary depending on the type of certification you are attempting to achieve. 

Let’s take a look at the key differences.

SOC 1 Controls: Financial Reporting

SOC 1 reports focus on controls related to financial reporting. They are particularly relevant for professional services businesses that are processing or handling funds owed to a third-party.

Key Features of SOC 1 Controls

Purpose: Evaluate controls related to processes that impact a client’s financial reporting.

Examples of SOC 1 Controls:

• Accuracy of transaction processing.

• Access controls for financial systems.

• Segregation of duties in financial operations.

SOC 2 Controls: Trust Services Criteria

SOC 2 reports focus on controls related to information security, availability, processing integrity, confidentiality, and privacy. These controls are critical for organizations that handle sensitive data or provide IT, cloud, or data storage services.

Key Features of SOC 2 Controls

Purpose: Evaluate controls to ensure the security and privacy of client data.

Trust Services Criteria (TSC):

• Security: Ensuring systems are protected against unauthorized access.

• Availability: Ensuring systems are operational and available as committed.

• Processing Integrity: Ensuring system processing is accurate, timely, and authorized.

• Confidentiality: Protecting sensitive information from unauthorized disclosure.

• Privacy: Ensuring personal data is collected, used, and disposed of appropriately.

Examples of SOC 2 Controls:

• Firewall and encryption configurations.

• Incident response and monitoring systems.

• Data access restrictions and logging mechanisms.

Both frameworks help build trust, enhance credibility, demonstrate operational excellence, and a commitment to integrity.

Pro Tip: If you don't currently have a client(s) asking for specific SOC 2 requirements, and you are new to SOC certification, you may want to consider starting with SOC 1 Type 1. This will reduce your time commitment and cost, as well as familiarize your team with the SOC implementation and audit process. Achieving SOC 1 lays the groundwork upon which you can add the broader controls required to achieve SOC 2 at a later date. SOC 1 is still considered a significant achievement, and carries weight for your organization. Choosing audit type 1 (for either SOC 1 or 2), will also allow you to achieve the certification quicker as you will not need to wait for the completion of the minimum three-month audit period. If you choose, you may then begin a longer audit period for your next report.

What Are the Benefits of SOC Certification?

The professional services business industry lives in an ever-shifting regulatory landscape, and increasing importance has been placed on financial controls, data security, and compliance. (Even more so if your business is active in the medical industry.) 

High-value clients want to work with vendor partners that have the requisite level of sophistication to meet their needs. Achieving SOC certification demonstrates that your professional services business has implemented robust systems to ensure accurate financial reporting and the protection of sensitive client information. 

SOC certification helps to create peace of mind for clients, regulators, and stakeholders. Many industry experts also believe that an SOC certification eventually may become a requirement for participation in the professional services industry.

In a highly competitive industry, such as professional services business, an SOC certification is a significant market differentiator that ultimately can be the difference between winning a new contract or not. 

Many large, highly sought-after organizational clients will require professional services vendors to have achieved an assurance and will require a copy of the vendor’s most recent audit report upon request.

Pro Tip: The benefits to your organization of achieving SOC certification will extend beyond increased compliance and winning new business. Your team will discover an amazing number of improvements to make, efficiencies to implement, and valuable lessons to take away as you work through the certification process. If you are new to SOC, it will be an eye-opener for you. 

What’s Next?

Be sure to check out the second and third installments of this blog post series to learn about the costs and time commitment involved for SOC certification and how to prepare for the SOC certification process.