SOC 2 vs. ISO 27001: Which security standard is right for you?

SOC 2 and ISO 27001 are the most commonly chosen compliance standards. However, many companies wonder which of the two they need. Is one better than the other? The answer depends on various factors and can vary depending on what you’re looking for.

Read on to understand the differences and similarities between the two frameworks and learn which one to choose and when.

What is SOC2?

SOC 2-Reports (System and Organisation Controls) are independent investigation reports, that document how a company or organisation organisation implements essential compliance measures and objectives. These reports are based on the Auditing Standards of the American Institute of Certified Public Accountants (AICPA) and the applicable Trust Services Criteria (TSC).

The main purpose of SOC 2 reports is to evaluate all of a company’s information systems that are relevant to security, availability, processing integrity, confidentiality, and privacy. Large companies regularly undergo rigorous, independent SOC 2 audits conducted by reputable CPA firms to certify compliance with these standards.

In these audits, the auditor assesses whether the company’s compliance measures are appropriately designed, implemented at the time of the report, and functioning as intended during the reporting period. SOC 2 reports thus serve as important attestation examinations, conducted in accordance with AICPA standards, particularly sections AT-C 105 and 205 of SSAE 18.

What is ISO 27001?

ISO 27001 is an internationally recognised standard that specifies requirements for the establishment, implementation, maintenance and continuous improvement of an information security management system (ISMS). This standard helps organisations to protect confidential information, guarantee the integrity of data and ensure the availability of information.

The focus of ISO 27001 is on the systematic management of security risks, including the identification of threats and vulnerabilities, as well as the implementation of appropriate risk mitigation measures. The standard is flexible and adaptable, meaning it is suitable for various organizations and industries, regardless of size or type.

What is the difference between SOC 2 and ISO 27001?

The main difference between SOC 2 and ISO 27001 is that SOC 2 evaluates the strength of your cybersecurity measures to secure sensitive information, while ISO 27001 evaluates the effectiveness of your cybersecurity programme. ISMS assessed. Although both SOC 2 and ISO 27001 focus on strong information security measures, they are different in many respects.

1. scope and focus

The scope of SOC 2 can be limited to one Trust Service Criterion, with Security being the mandatory criterion. The applicability of other criteria depends on the type of services the organization provides. Therefore, SOC 2 is a flexible compliance framework that requires organizations to implement between 70 and 150 controls based on the selected Trust Service Categories.

ISO 27001, on the other hand, focuses on all aspects of information security and requires organizations to establish, maintain, and continuously improve an ISMS . In this case, the organization cannot select specific controls, as ISO 27001 mandates the implementation of all 93 controls from Annex A.

2. Attestation vs. Certification

A SOC 2 audit is conducted by a licensed CPA firm and attests to the effectiveness of an organization’s internal controls. There is no SOC 2 certification; the audit results in the issuance of a SOC 2 report. The attestation process requires you to select appropriate Trust Service Principles, test controls related to each of these principles, and gather evidence.

The ISO 27001 audit, on the other hand, is conducted by an accredited certification body that assesses the effectiveness of the ISMS ISMS . Based on the results, the independent auditor issues an ISO 27001 certification to the organization.

3. Target Market

SOC 2 is primarily in demand in North America and is generally accepted by U.S. companies. However, digital businesses outside the U.S. are increasingly requesting SOC 2 reports due to the rigor and reputation of the standard. SOC 2 is widely adopted by service organizations handling sensitive customer data, such as cloud service providers, SaaS companies, IT services, etc. Vendors often require it as part of their due diligence to ensure data security.

Compliance with ISO 27001 On the other hand, ISO 27001 is globally recognised and accepted by companies worldwide looking for information security. Whilst providers may not specifically ask for ISO 27001, you can always benefit from its credibility and gain additional customers as it is beneficial to have an ISO 27001 certification. It is used in industries such as IT, finance, telecoms and healthcare.

4. Struktur des Rahmens und Audit

The structure of the SOC 2-The Trust Service Framework is based on the 5 Trust Service Criteria, under which more than 60 requirements are defined. The organisation is audited based on the chosen trust principles, with the security criterion being mandatory. A SOC 2 audit results in a SOC 2 report, which can be either type 1 or type 2.

A SOC 2 Type 1 report evaluates the design of controls at a specific point in time. In contrast, a SOC 2 Type 2 report assesses the design and operational effectiveness of controls over a period of 6 to 12 months.

The structure of ISO 27001 is divided into clauses and annexes. The ISO 27001 controls are grouped into four themes: people, organization, technology, and physical security. The latest version includes 93 controls, and the ISMS ISMS is audited based on the Plan-Do-Check-Act (PDCA) cycle.

ISO 27001 has a two-stage external audit process. Stage 1 involves a preliminary review of the ISMS, followed by a detailed Stage 2 audit that evaluates the effectiveness and implementation of the information security system. Certification is issued after the Stage 2 audit, and surveillance audits are conducted annually to ensure ongoing compliance.

5. Timeline

SOC 2 compliance can take between 6 and 12 months, while ISO 27001 can take between 6 and 24 months due to its comprehensive requirements.

As for renewals, SOC 2 compliance is valid for one year and requires an annual renewal audit. ISO 27001 is valid for three years but requires annual surveillance audits.

6. Report Granularity

The SOC 2 report is more detailed and provides information on every aspect of the audit. It includes the external auditor’s opinion, management’s assertion, a system description, a list of effective controls, and tests conducted.

The ISO 27001 report is less detailed and offers an overview of the audit findings. It does not highlight which parts of the systems have non-conformities.

Similarities between ISO 27001 and SOC 2

SOC 2 and ISO 27001 are often compared because they have certain similarities. Let's take a look at these similarities:

1 Voluntary, but internationally recognised

Both ISO 27001 and SOC 2 are voluntary standards and not mandatory regulations like the GDPR. DSGVOHowever, both are internationally recognised and in high demand as they focus on strict information security requirements.

2. overlap of the measures

ISO 27001 and SOC 2 have more than 90% overlap in measures as they aim to protect sensitive information. Examples of common measures include emergency management plans, access controls, physical security, change management, supplier management and data backups.

3. focus on information security

The main objective of both frameworks, ISO 27001 and SOC 2, is to protect information from unauthorised access and disclosure. SOC 2 focuses on the confidentiality and security of customer data. ISO 27001, on the other hand, focuses on ensuring a secure ISMS.

4. third-party validation

Both security standards require external audits or assessments. In the case of SOC 2, third-party validation leads to confirmation, while for ISO 27001 it leads to certification.

5 Ongoing maintenance and improvement

Neither framework is a one-off process, but both require ongoing maintenance and improvement for assessments over time. This requires a continuous monitoring mechanism to ensure ongoing compliance.

Which framework should you use? ISO 27001 or SOC 2?

The decision between ISO 27001 and SOC 2 depends on the target group of your organisation and the requirements of your customers. Your security situation and ambitions also play a role. After all, many organisations use both frameworks. However, if you have to choose one, you should consider the following factors.

The two compliance frameworks are not mutually exclusive. In fact, depending on the size of the organisation and the scope of the audit, they overlap by approximately 90%. Therefore, you could also consider combining the two.

From an audit perspective, the overlap of requirements and measures makes the compliance process much easier. In addition, in our experience, we have found that most organisations typically add both frameworks as they grow and expand into new geographic regions.

FAQs

Is an ISO 27001 certification equivalent to a SOC 2 report?

While an ISO 27001 certification can give customers confidence in strong information security practices, it is not a substitute for a SOC report. Customers, especially in the US, will not be satisfied if they do not receive a SOC 2 report, and you may attract detailed questionnaires or RFIs.

How can you benefit from SOC 2 and ISO 27001 certification?

If you have a SOC 2 report and ISO 27001 certification, make sure you display the badge on your website. In addition, you can talk on social media or set up your own Trust Centre to communicate your current compliance status to potential customers. This builds customer trust and improves public perception.

What is the cost difference between SOC 2 and ISO 27001?

ISO 27001 is more expensive than SOC 2 because the implementation of the measures is more comprehensive. For example, the audit costs for the security TSC can be around 20,000 USD, while an ISO 27001 certification audit can cost between 30,000 and 60,000 USD.

Is it possible to fail a SOC 2 audit?

While you cannot ‘pass’ or ‘fail’ a SOC 2 audit, you will receive a statement from the auditor in the report. If the measures are not properly designed or implemented, the auditor may give the following:

• Qualified opinion: the measures fulfil the requirements, but with exceptions.
• Negative opinion: There is non-compliance in one or more areas.
• Disclaimer: There are limitations in scope or other issues that affect the auditor's ability to form an opinion.

What happens if you fail an ISO 27001 certification audit?

If you fail an ISO 27001 certification audit, the auditor will issue a non-compliance report highlighting major and minor non-compliances. You will be requested to take corrective action and a re-audit will take place, which may delay certification. If you are already certified, your certification may be suspended and the frequency of surveillance audits may increase.