A SOC 2 examination is an attest engagement that assesses an organization’s suitable design (Type 1) and the operational effectiveness (Type 2) of its internal controls to meet its service commitment and system requirements under the American Institute of Certified Public Accountants’ trust services criteria including security, availability, processing integrity, confidentiality, and/or privacy. The benefits of a SOC 2 examination include:
- Enhances Trust: Signals to clients and business partners that you take data security seriously.
- Reduces Risk: Helps to identify and minimize risks related to data breaches and cyberattacks.
- Competitive Advantage: Many customers, especially in regulated industries, require an organization to have an annual SOC 2 report before engaging with them.
- Legal and Regulatory Readiness: Helps organizations prepare for other regulatory audits and requirements by establishing robust internal controls.
The Health Insurance Portability and Accountability Act (HIPAA) is a U.S. federal law enacted in 1996 to protect sensitive patient health information. HIPAA sets national standards for the security and privacy of Protected Health Information (PHI) in both physical and electronic forms. The HIPAA Security Rule focuses on protecting electronic PHI with technical, physical, and administrative safeguards, while the Privacy Rule sets national standards for when and how PHI can be used and disclosed in any format (electronic, paper, or verbal). The importance of HIPAA compliance includes:
- Protects Patient Privacy: HIPAA safeguards the confidentiality of medical records and PHI.
- Ensures Data Security: The law mandates administrative, physical, and technical safeguards to prevent unauthorized access to PHI.
- Avoids Legal Penalties: Non-compliance can result in hefty fines and legal repercussions for organizations.
- Builds Patient Trust: When patients know their information is secure, they are more likely to trust healthcare providers and associated vendors.
SOC 2 and HIPAA are essential frameworks for organizations that collect, use, retain, disclose, and dispose of PHI. A SOC 2 + HIPAA Report combines the trust services criteria of SOC 2 with the specific requirements of HIPAA. The recommended frequency of both a SOC 2 examination and HIPAA audits is that they be conducted annually. Understanding your organization’s requirements and pursuing a SOC 2 + HIPAA Report not only saves time, costs, and resources when undergoing an independent third-party attestation engagement; it also strengthens your security posture and demonstrates your commitment to security, confidentiality, privacy, and compliance. Further, by receiving an independent and objective service auditor opinion on your internal controls as they relate to both SOC 2 and HIPAA, it opens the door for more business opportunities.
So how do you know if this is the route you should go? If you are an organization that is a healthcare provider, pays for healthcare and government programs (health plans), processes nonstandard health information into a standard format for electronic billing and other transactions between covered entities, or is a business associate that handles PHI, a SOC 2 + HIPAA Report is the right choice for you.