Service companies that collect, retain, and disclose sensitive personal or financial information must protect the security, privacy, and integrity of their systems and data.
SOC 2 is a standard by which auditors can evaluate companies to determine the strengths and weaknesses of internal controls designed to protect the security and privacy of sensitive information.
This guide explains compliance and why your background check provider should meet or exceed SOC 2 standards.
Key Takeaways
- SOC 2 compliance refers to complying with a voluntary standard developed by the AICPA in the handling, processing, and disclosing sensitive personal and financial information by service companies.
- Maintaining SOC 2 compliance demonstrates a business’s strong internal security protocols and appropriate handling of sensitive information.
- Employment background check providers regularly handle sensitive personally identifiable information (PII) and should meet or exceed SOC 2 compliance standards to demonstrate their trustworthiness and dedication to consumer privacy.
What is SOC 2 Compliance?
The American Institute of Certified Public Accountants (AICPA) developed a voluntary compliance standard for service organizations that handle personally sensitive and financial information called the Systems and Organizations Control (SOC).
This is divided into two different types of standards, including:
- SOC 1 – Applies to companies for financial reporting and focuses on internal controls
- SOC 2 – Applies more broadly and applies to service organizations and tech companies that handle sensitive data and evaluates their controls to ensure the privacy, security, processing integrity, and availability of the data they handle
While SOC 1 primarily applies to financial services organizations, SOC 2 applies more broadly to tech and service companies that handle sensitive information in the cloud or over the internet, including:
- Cloud service providers
- Data processors
- SaaS vendors
- Background check companies like iprospectcheck
To be SOC 2 compliant, an organization must conform to the standards and undergo regular audits by a SOC 2 auditor.
SOC 2 certification is granted if the organization meets the five Trust Service Criteria (TSC) as demonstrated by the auditor’s report:
- Security – This involves verifying the system is protected against both physical and logical unauthorized access.
- Availability – This refers to the system’s availability for operation and agreed-on use.
- Processing integrity – This criterion ensures the system’s processing is valid, complete, timely, accurate, and authorized.
- Confidentiality – This criterion confirms that confidential information is protected.
- Privacy – This verifies that personal information is gathered, used, retained, and disclosed in compliance with privacy policies and regulations.
SOC 2 compliance and certification demonstrate an organization that handles customer data has implemented rigorous controls to protect the information it handles.
A SOC 2-certified organization can provide reports and audit certificates to clients and stakeholders to show it handles data securely.
When searching for a background check provider, it’s important to verify they have rigorous internal controls to protect the privacy and confidentiality of your sensitive information.
At iprospectcheck, we ensure that your data is always processed and stored in a manner that is SOC 2 compliant.
Why SOC Compliance Matters
SOC 2 auditors evaluate the security of a company’s overall recruiting process.
While the standards don’t explicitly require you to perform background checks, partnering with a provider that meets or exceeds SOC standards can help you demonstrate your company’s own SOC 2 compliance.
Establishing SOC 2 controls involves implementing measures to restrict access to data based on the individual’s responsibilities and role.
SOC 2 certification shows that businesses handle sensitive data securely and have strong internal controls to prevent data breaches and intrusions by bad actors.
Being SOC-certified builds trust with clients and partners and is important for the following reasons:
1. Credibility
An organization that is SOC 2 certified demonstrates their claims about data security are credible.
Strong internal controls that meet or exceed SOC standards mean you can trust the provider will handle your sensitive information appropriately.
2. Demonstrable Security Focus
A background check provider that meets or exceeds SOC standards sets itself apart from others that can’t provide the same level of assurance to clients.
3. Regulatory Compliance
SOC compliance helps your company maintain regulatory compliance.
If your organization operates within a regulated industry, it must comply with regulations and laws that apply to it.
During SOC 2 audits, your organization might have to demonstrate adherence to relevant regulations, laws, and contractual duties.
When you partner with a provider that meets or exceeds SOC 2 compliance standards, you’ll be better equipped to demonstrate that your company values security and seeks partners with similarly rigorous standards.
4. Risk Management
SOC standards help companies identify and mitigate potential risks to protect their data and yours.
This helps reduce your risk of data breaches, losses, and liability while your third-party provider handles your sensitive information.
Know Before You Hire
SOC 2 Requirements for Background Check Providers
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) guides companies on the implementation of controls for security, fraud deterrence, and risk management.
COSO has published common criteria controls (CC1) for organizations to follow to meet the SOC 2 standards.
Under CC1.4, organizations should demonstrate that they are committed to attracting, retaining, and developing qualified individuals.
Like other security-focused companies, SOC-compliant background check providers assess candidates’ trustworthiness and qualifications.
CC1.4 specifies different controls that demonstrate an organization dedicates itself to integrity and ethics as called for by CC1.1.
The SOC 2 auditor evaluates recruitment and hiring strategies to see whether they align with CC1.1 and CC1.4. A SOC-compliant background check provider has internal controls you can trust and also hires competent, trustworthy employees to handle and process your information securely.
Trust iprospectcheck as Your Highly Secure Background Check Provider
Maintaining SOC 2 compliance demonstrates an organization handles, retains, and processes sensitive information securely and provides assurances to third parties.
It’s important to work with a reliable, SOC 2-compliant provider like iprospectcheck.
To learn more about our background checks and security protocols, contact us today: (888) 509-1979.
DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.
FAQ
Do I need to perform background checks on existing employees to meet SOC2 requirements?
SOC auditors don’t focus on background checks but instead, evaluate a company’s overall recruitment and hiring process.
You don’t have to conduct background checks to meet SOC standards, but your background check provider should meet or exceed these standards to demonstrate it handles sensitive information with a high level of security.
What happens if a provider fails SOC 2?
SOC 2 auditors don’t use a pass/fail system when auditing an organization. They instead issue one of the three types of opinions when they discover deficiencies in their reports:
- Qualified opinion modifications – This indicates the organization’s controls generally meet SOC 2 standards with one or more exceptions, indicating what the business needs to improve.
- Disclaimer opinion modifications – This indicates the auditor was unable to complete the audit because of insufficient or a lack of evidence, indicating the business should consult the auditor to determine how to fill in the gaps.
- Adverse opinion modifications – This indicates the organization does not meet the SOC 2 standards because of extensive issues, indicating the business needs to address these issues to come into compliance.
If your background check provider receives an adverse opinion from a SOC 2 auditor, you should look for a different provider that meets or exceeds these standards.
The background check provider you choose should demonstrate its SOC 2 compliance by providing SOC 2 auditor reports and certificates to assure you that it handles sensitive data securely.
A reliable provider should also comply with the FCRA and all other relevant laws when conducting background checks and return accurate, current, and comprehensive reports.
