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SOC 2 compliance often comes up during security reviews, vendor assessments, or procurement discussions, especially when organizations are evaluating how service providers handle systems and data. While it’s widely referenced in trust and security conversations, its purpose and scope aren’t always immediately clear for teams encountering it for the first time.
SOC 2 focuses on how organizations manage controls related to system security, availability, and data handling, rather than financial reporting. In this guide, we’ll explain what SOC 2 compliance is, how it works, who it applies to, and what it does and does not cover, so businesses understand its role in vendor trust and risk evaluation.
What is SOC 2 compliance?
SOC 2 compliance is a framework used to evaluate how organizations manage controls around system security and data handling. It is most commonly used by service providers to demonstrate that their systems are designed and operated in line with defined trust and security principles.
Unlike SOC 1, which focuses on financial reporting, SOC 2 looks at how systems protect information, maintain availability, and support reliable processing. SOC 2 reviews only the systems and services an organization chooses to include, based on the Trust Services Criteria being evaluated.
SOC 2 is typically used in vendor due diligence, security reviews, and procurement processes, where customers need assurance about how systems and data are managed. The outcome is a SOC 2 report that provides structured insight into the controls supporting those environments.
How does SOC 2 compliance work?
SOC 2 compliance follows a defined examination approach focused on systems, data, and trust criteria. At a high level, it works through the following components:
Defining systems and scope
SOC 2 begins by identifying which systems and services are included in the review. Organizations define clear system boundaries, focusing only on environments that store, process, or transmit customer data. The Trust Services Criteria being evaluated also shape what falls within scope.
Aligning controls to trust criteria
Once scope is set, controls are mapped to the selected Trust Services Criteria, such as security or availability. The focus is on how controls support these criteria within the defined systems, rather than documenting all operational activities across the business.
Documenting system design and practices
Organizations prepare documentation that explains how systems are structured and how controls operate in practice. This typically includes system descriptions, data flows, and policies that govern system access, monitoring, and change management.
Independent review and testing
An independent auditor reviews the design of controls and, for a Type II report, how they operate over a defined period. Testing is based on evidence and observation to confirm whether controls function as described.
Using the SOC 2 report
The resulting SOC 2 report presents a standardized view of how systems and controls align with the selected Trust Services Criteria. It summarizes the scope of the review and how controls are designed and operated within the defined systems.
Trust Services Criteria explained
SOC 2 is built around the Trust Services Criteria, a set of principles used to evaluate how systems are designed and operated. Let’s take a look at them:
Security
Security is included in every SOC 2 report and focuses on protecting systems against unauthorized access, both physical and logical. This includes controls related to authentication, authorization, system monitoring, and vulnerability management, all aimed at reducing the risk of unauthorized activity that could compromise system integrity or data.
Availability
The availability criterion addresses whether systems are accessible and operational as committed or agreed. It looks at how organizations manage system capacity, performance monitoring, incident response, and recovery planning to support continued service availability. The focus is on preparedness and reliability rather than guaranteeing uptime.
Processing integrity
Processing integrity evaluates whether systems process data accurately, completely, and in a timely manner. The criterion applies when systems are responsible for executing transactions or data processing tasks. Controls in this area help ensure that inputs, processing, and outputs behave as intended and that errors are detected and addressed.
Confidentiality
Confidentiality focuses on how sensitive information is protected throughout its lifecycle, including controls over data classification, access restrictions, encryption, and secure disposal. The criterion applies to information designated as confidential, whether it belongs to customers, partners, or the organization itself.
Privacy
The privacy criterion applies when systems handle personal information. It examines how personal data is collected, used, retained, disclosed, and disposed of in accordance with defined privacy commitments. Controls in this area support transparency and consistency in how personal information is managed within the system.
Requirements for SOC 2 compliance
SOC 2 compliance is based on several core requirements, including:
Defined system boundaries
Organizations must clearly define which systems, services, and processes fall within the scope of the SOC 2 examination. Establishing clear system boundaries ensures that only relevant environments are reviewed against the selected Trust Services Criteria.
Relevant controls aligned to criteria
Controls should be designed to support the Trust Services Criteria included in scope. SOC 2 does not require coverage of every criterion, but it does require that selected criteria are supported by appropriate controls within the defined systems.
Documented policies and procedures
SOC 2 examinations rely on documentation to explain how controls are designed and operated. Written policies, system descriptions, and procedural records help demonstrate how controls support stated trust objectives.
Evidence of control operation
Auditors expect to see evidence showing that controls operate as described. Records such as logs, configuration settings, or review documentation help illustrate how controls function in practice within the system.
Ongoing monitoring and oversight
Maintaining SOC 2 compliance involves reviewing controls over time to confirm they remain effective as systems evolve. Ongoing oversight helps identify gaps, address issues, and support consistency across reporting periods.
Benefits of SOC 2 compliance
SOC 2 compliance offers practical benefits for organizations that operate systems customers rely on for secure and reliable service delivery:
- Supports vendor security reviews: A SOC 2 report provides a standardized way to communicate how systems and controls align with the Trust Services Criteria, reducing the need to explain security practices repeatedly during reviews.
- Improves transparency around system controls: SOC 2 helps organizations present clear, structured information about how systems are managed, helping stakeholders understand what’s included in the review and how system controls are managed.
- Clarifies trust and responsibility expectations: By documenting which systems and controls are in scope, SOC 2 helps set clear expectations around how data and services are protected and which areas are covered by the report.
- Supports consistency in security practices: Preparing for SOC 2 often encourages organizations to formalize documentation, monitoring, and review processes, helping maintain consistency as systems and services evolve.
- Facilitates smoother procurement and onboarding: Having a SOC 2 report available can streamline security-related discussions during procurement by providing a recognized reference point for system assurance.
Who needs SOC 2 compliance?
SOC 2 compliance is relevant for organizations whose systems play a role in storing, processing, or transmitting data that customers depend on:
Service providers handling customer data
Organizations that host, process, or manage customer data often pursue SOC 2 compliance to provide assurance about how their systems protect that information. This includes providers whose platforms or services are integral to customers’ operations or data workflows.
SaaS and cloud-based platforms
Software-as-a-service and cloud providers frequently encounter SOC 2 requirements during customer onboarding or security reviews. Since these platforms rely on shared infrastructure and centralized systems, SOC 2 helps communicate how system-level controls support secure and reliable service delivery.
Organizations subject to vendor security reviews
Businesses that regularly respond to security questionnaires or due diligence requests may need SOC 2 reports to address customer concerns efficiently. SOC 2 provides a recognized framework for demonstrating how systems are managed without responding to ad hoc or duplicative requests.
Companies supporting regulated or risk-sensitive industries
Organizations that serve customers in industries with higher security or data protection expectations often face greater scrutiny around system controls. SOC 2 can help meet those expectations by providing structured, third-party insight into system design and operation.
Common SOC 2 compliance challenges
SOC 2 compliance can present practical challenges for organizations:
Defining appropriate system boundaries
One common challenge is determining which systems, services, and processes should be included in the SOC 2 scope. Including too much can complicate the review, while excluding relevant components can raise questions during audits or security reviews.
Selecting the right Trust Services Criteria
Organizations may struggle to determine which Trust Services Criteria apply to their systems. SOC 2 does not require all criteria to be included, but selecting criteria that accurately reflect system risks and customer expectations is essential to keeping the report relevant.
Maintaining consistent documentation
SOC 2 relies heavily on documentation to explain how systems and controls are designed and operated. Keeping policies, system descriptions, and supporting records accurate and up to date can be challenging, especially as systems change or scale.
Coordinating across teams
SOC 2 compliance often involves multiple teams, including engineering, security, operations, and compliance. Aligning responsibilities, timelines, and evidence across these groups can require ongoing coordination and clear ownership.
Sustaining control effectiveness over time
For organizations pursuing ongoing SOC 2 reporting, maintaining consistent control operation can be difficult as systems, personnel, or processes change. Ensuring controls continue to function as intended requires regular review and adjustment.
What SOC 2 compliance does not cover?
SOC 2 has a defined scope, and several commonly assumed areas fall outside what it evaluates:
- Financial reporting controls: SOC 2 does not assess controls related to internal control over financial reporting. Financial accuracy and accounting processes are addressed through SOC 1, not SOC 2.
- Regulatory or legal compliance: SOC 2 does not certify compliance with laws or regulations. While controls may support regulatory obligations, the report itself does not confirm legal or regulatory adherence.
- Product quality or business performance: SOC 2 does not measure how well a service performs, its reliability from a customer experience perspective, or overall business outcomes. Its focus remains on system controls, not service effectiveness.
- All systems across an organization: SOC 2 applies only to the systems and services defined in scope. Systems outside those boundaries are not evaluated, even if they exist within the same organization.
- One-time or ongoing security guarantees: SOC 2 does not guarantee security or eliminate risk. It reflects how controls are designed and, in some cases, how they operate over a defined period.
SOC 2 vs SOC 1 compliance
| Aspect | SOC 2 | SOC 1 |
| Primary focus | Controls related to system security and trust | Controls related to financial reporting (ICFR) |
| Purpose | Provides assurance over how systems and data are protected | Supports reliance in financial statement audits |
| Typical audience | Customers, prospects, security and risk teams | Auditors, finance teams, compliance stakeholders |
| Scope of controls | Systems supporting service delivery and data handling | Systems and processes impacting financial reporting |
| Common use cases | Vendor security reviews and trust assessments | Financial audits and third-party reliance |
| Evaluation basis | Trust Services Criteria (AICPA) | Trust Services Criteria (AICPA) |
Frequently asked questions
SOC 2 compliance refers to an organization’s ability to demonstrate how its systems manage security, availability, and data handling controls. It provides a structured way to communicate how system-level controls support trust and reliability within defined environments.
SOC 2 examinations are performed by independent certified public accountants (CPAs). These auditors evaluate controls against the Trust Services Criteria in accordance with professional attestation standards.
SOC 2 compliance is relevant for organizations whose systems store, process, or transmit customer data or support services customers rely on. It is most commonly pursued by service providers, SaaS companies, and organizations subject to vendor security reviews.
The five Trust Services Criteria are security, availability, processing integrity, confidentiality, and privacy. Organizations select the criteria that apply to their systems, and controls are evaluated in relation to those selections.
SOC 2 costs vary based on scope, system complexity, selected Trust Services Criteria, and report type. In practice, SOC 2 Type I reports often cost several thousand dollars, while SOC 2 Type II reports typically cost more due to extended testing over time.
