What Is SOC 2 Compliance? Criteria, Types, And Benefits

When you're evaluating a vendor to handle sensitive data, patient records, financial information, or proprietary business data, you need more than promises. You need proof of their security practices. That's exactly what understanding what is SOC 2 compliance provides: an independent verification that a service organization meets rigorous security and privacy standards developed by the American Institute of Certified Public Accountants (AICPA).

For healthcare technology companies and the vendors they work with, SOC 2 certification has become a baseline expectation. It demonstrates that your systems protect data the way enterprise clients and regulatory frameworks demand. Without it, closing deals with healthcare organizations, hospitals, and insurers becomes significantly harder, they simply won't take security risks with their patients' information.

At SoFaaS, we built our healthcare data integration platform with SOC 2 Type II compliance from the ground up. We understand that healthcare innovators connecting to EHRs need partners who take security as seriously as they do. This guide covers everything you need to know about SOC 2: the five Trust Services Criteria, the difference between Type I and Type II reports, the certification process, and the tangible benefits for service organizations operating in healthcare and beyond.

What SOC 2 compliance means

SOC 2 compliance represents your organization's commitment to protecting customer data through independently audited security controls. The Service Organization Control (SOC) 2 framework was created by the American Institute of Certified Public Accountants (AICPA) specifically for service providers that store, process, or transmit customer data in the cloud or through hosted systems. When you achieve SOC 2 compliance, a licensed CPA firm has examined your security practices and confirmed they meet rigorous industry standards based on the Trust Services Criteria.

The framework's purpose and scope

Understanding what is soc 2 compliance starts with recognizing that this framework targets service organizations rather than products or technologies. Unlike other security standards that focus on specific industries or data types, SOC 2 applies broadly to any company providing services to other organizations. Your compliance status demonstrates that you've implemented documented security policies, procedures, and controls that protect data throughout your service delivery.

The framework operates on principles rather than prescriptive requirements, which means you design controls that fit your specific business model and risks. You won't find a checklist of 100 specific technical configurations to implement. Instead, SOC 2 requires you to address security objectives appropriate to your services, infrastructure, and customer commitments. This flexibility allows healthcare platforms, SaaS companies, data centers, and managed service providers to all pursue the same certification while implementing vastly different technical controls.

SOC 2 certification proves to enterprise customers that your security practices have been independently verified against recognized industry standards.

What achieving compliance actually involves

Achieving SOC 2 compliance means you've established formal security policies that govern how your organization handles data, manages access, monitors systems, and responds to incidents. These policies must translate into implemented controls that your team follows consistently in daily operations. You document everything from how you onboard employees and grant system access to how you encrypt data in transit and at rest.

Your compliance journey requires maintaining detailed evidence of these controls operating over time. This includes access logs, change management records, security training completion, vulnerability scan results, and incident response documentation. When auditors examine your organization, they review this evidence to verify that your stated policies match actual operational reality rather than theoretical intentions.

The certification process concludes with a formal SOC 2 report issued by your auditing firm. This report details which Trust Services Criteria you addressed, describes your system and controls, and provides the auditor's opinion on whether your controls achieved their stated objectives. Enterprise customers and partners use this report to assess your security posture without conducting their own lengthy security assessments. For healthcare technology companies handling protected health information (PHI), SOC 2 compliance often serves as the minimum security baseline that hospital systems and health plans require before they'll consider your solution.

Trust services criteria explained

When evaluating what is soc 2 compliance, you need to understand the five Trust Services Criteria that form the foundation of every SOC 2 audit. These criteria define the security and operational objectives your organization must address. Security stands as the mandatory baseline that all SOC 2 reports must include, while the remaining four criteria (Availability, Processing Integrity, Confidentiality, and Privacy) apply based on your specific services and customer commitments. Your auditor works with you to determine which additional criteria make sense for your business model.

Security: The mandatory foundation

Security represents the non-negotiable requirement for all SOC 2 audits. This criterion evaluates how you protect your systems against unauthorized access, both external threats and internal risks. Your organization must demonstrate implemented controls for network security, access management, system monitoring, and incident response. You'll need documented policies for password requirements, multi-factor authentication, firewall configurations, and how you detect and respond to security events.

Physical security controls also fall under this criterion. You must show how you protect data centers, office spaces, and hardware from unauthorized access. This includes visitor logs, badge systems, surveillance cameras, and environmental controls that prevent equipment damage. For cloud-based service organizations, you'll document how your infrastructure provider handles physical security alongside your own application-level controls.

Security serves as the foundation that supports all other Trust Services Criteria in your SOC 2 compliance program.

The four additional criteria

Availability measures whether your systems and services remain accessible as committed. You demonstrate controls for system monitoring, redundancy, backup procedures, and disaster recovery capabilities. This criterion matters most when you've made uptime guarantees to customers or when service interruptions would significantly impact their operations.

Processing Integrity confirms that your systems process data completely, accurately, and in a timely manner. Controls address data validation, error handling, transaction monitoring, and quality assurance processes. Healthcare platforms handling patient data exchanges between EHR systems typically include this criterion.

Confidentiality applies when you handle proprietary information beyond standard security protections. You'll demonstrate additional controls for data classification, need-to-know access restrictions, and secure disposal procedures. Privacy addresses personal information collection, use, retention, and disclosure practices, particularly relevant when handling protected health information or consumer data subject to regulations like GDPR.

SOC 2 Type I vs Type II reports

When pursuing what is soc 2 compliance, you'll need to choose between two distinct report types that serve different purposes in your certification journey. Type I and Type II reports both validate your security controls, but they differ fundamentally in scope and depth of examination. Understanding which report type your customers expect helps you plan your compliance timeline and resource allocation effectively.

Type I: Point-in-time assessment

A Type I report examines whether your security controls exist and are properly designed at a specific point in time. Your auditor evaluates your documented policies, procedures, and control implementations to determine if they're theoretically capable of meeting the Trust Services Criteria. This assessment typically takes less time and costs less than a Type II audit because auditors don't test whether your controls actually operate effectively over an extended period.

You might pursue a Type I report when you're establishing compliance for the first time and need to demonstrate baseline security posture quickly. Some organizations use Type I as a stepping stone toward Type II certification, particularly when they've recently implemented new controls and want validation before committing to a longer audit period. However, most enterprise customers and healthcare organizations view Type I reports with skepticism because they don't prove your controls work consistently in daily operations.

Type II: Operational effectiveness over time

Type II reports provide significantly more assurance by examining both control design and operating effectiveness over a defined period, typically six to twelve months. Your auditor collects evidence throughout this timeframe to verify that your controls actually function as documented and consistently achieve their security objectives. They review access logs, change management tickets, security training records, and incident response documentation to confirm your team follows established procedures.

Type II certification demonstrates that your security controls operate effectively day-to-day, not just on paper during an audit.

Healthcare technology companies almost universally require Type II reports because they provide meaningful evidence of sustained security practices. Hospitals, health plans, and other covered entities under HIPAA need confidence that you protect patient data continuously throughout your service relationship, not just during a single assessment date. The longer audit period and operational testing make Type II reports more expensive and time-intensive, but they deliver the credibility necessary to close deals with security-conscious enterprise customers.

Who needs SOC 2 and why it matters

Understanding what is soc 2 compliance becomes critical when you realize which organizations your customers expect to have this certification. Any service organization that stores, processes, or transmits customer data should seriously consider SOC 2, but the practical necessity varies significantly by industry and customer base. You'll find the strongest demand in sectors where data breaches carry severe consequences: healthcare technology, financial services, human resources platforms, and infrastructure providers.

Organizations that require certification

Healthcare technology companies face the most stringent demands for SOC 2 compliance. When you build applications that integrate with electronic health records or handle protected health information, hospital systems and health plans will require your SOC 2 Type II report before they sign contracts. These organizations operate under HIPAA regulations and can't afford to work with vendors who lack proven security practices. Similarly, financial technology companies processing payments or managing financial data encounter mandatory SOC 2 requirements from banking partners and enterprise customers.

Software-as-a-service providers across all industries increasingly pursue certification as market expectations shift toward verified security. Your SaaS platform might serve small businesses initially without facing compliance pressure, but enterprise sales require SOC 2 reports. Cloud infrastructure providers, managed service providers, and business process outsourcers also find certification essential for competing in their markets.

SOC 2 certification often determines whether enterprise customers will even consider your solution during vendor selection.

The business impact of compliance

Achieving SOC 2 status directly affects your revenue potential and deal velocity. Enterprise procurement teams maintain approved vendor lists that typically require current SOC 2 reports, and without certification, you won't make the list regardless of your product's capabilities. Sales cycles shorten dramatically when you can provide your report upfront instead of spending months responding to custom security questionnaires from each prospective customer.

Your compliance status also reduces customer churn and security audit fatigue. Once you complete your SOC 2 certification, customers accept your report instead of conducting their own audits, saving both parties significant time and resources throughout your business relationship.

What a SOC 2 audit covers

Your SOC 2 audit examines far more than just technical security configurations. Auditors evaluate your entire service delivery system, including the people, processes, and technology that protect customer data. Understanding what is soc 2 compliance requires recognizing that auditors assess both your documented policies and actual operational practices to determine if your controls meet the Trust Services Criteria. This comprehensive examination spans your infrastructure, applications, personnel practices, vendor relationships, and business continuity procedures.

System and infrastructure documentation

Auditors begin by understanding your complete system architecture and the boundaries of what they're examining. You'll provide detailed documentation of your network topology, data flows, cloud infrastructure components, applications, and databases that process customer information. This system description forms the foundation for your SOC 2 report and helps auditors identify which controls apply to your specific environment.

Your infrastructure documentation must cover physical and logical security controls at every layer. This includes firewall rules, network segmentation, encryption methods, access control mechanisms, and monitoring systems. When you operate in cloud environments like Amazon Web Services or Microsoft Azure, auditors review how you leverage platform security features alongside your own application controls.

Control testing and evidence collection

During the audit period, your team must collect and maintain extensive evidence of controls operating effectively. Auditors sample this evidence to verify your practices match documented policies. They review access logs to confirm appropriate permissions, examine change management tickets to validate approval workflows, and inspect security training records to ensure employee compliance.

Your auditor needs concrete proof that security controls function consistently in daily operations, not just theoretical policy documents.

Evidence requirements vary significantly based on your selected Trust Services Criteria and control implementations. You might provide vulnerability scan results, penetration test reports, incident response logs, backup restoration tests, or vendor security assessments. Auditors also interview your staff to understand how controls work in practice and whether employees follow established procedures. This testing phase determines whether your controls achieve their stated objectives throughout the entire audit period.

How to prepare and maintain compliance

Preparing for what is soc 2 compliance requires strategic planning well before your first audit. You need to establish a structured approach that addresses the Trust Services Criteria relevant to your services while building documentation and evidence collection systems. Most organizations need six to twelve months of preparation before they're ready for a Type II audit, though Type I assessments can occur sooner once you've implemented and documented your controls.

Building your initial compliance program

Your first step involves conducting a comprehensive readiness assessment that identifies gaps between your current practices and SOC 2 requirements. You document all systems, applications, and data flows that fall within your audit scope, then map existing security controls to the Trust Services Criteria you plan to address. This assessment reveals which policies need creation or updates, which technical controls require implementation, and where you lack sufficient evidence of control operation.

Start implementing missing controls immediately while establishing formal documentation procedures for everything. You'll need written policies for access management, change control, incident response, vendor management, and risk assessment processes. Your team must follow these policies consistently and maintain evidence through access logs, ticket systems, training records, and review documentation. Automated tools for log collection, vulnerability scanning, and compliance monitoring significantly reduce the manual effort required throughout your audit period.

Building compliance requires months of consistent control operation and evidence collection before your audit can begin.

Maintaining compliance year-round

After achieving certification, you must operate your controls continuously rather than treating compliance as a one-time event. Your SOC 2 report expires after twelve months, requiring annual recertification through follow-up audits that examine the subsequent period. This means maintaining your evidence collection systems, updating policies as your infrastructure evolves, and ensuring your team consistently follows documented procedures in daily operations.

Schedule regular internal audits that test control effectiveness before your external auditor arrives. These reviews help you identify control failures, documentation gaps, or policy violations early enough to remediate issues and demonstrate corrective actions. You'll also need to update your system description and risk assessments whenever you make significant changes to your infrastructure, applications, or service offerings.

Where to go from here

You now understand what is soc 2 compliance, how the Trust Services Criteria define security requirements, and why enterprise customers demand this certification before signing contracts. Your compliance journey requires strategic planning, consistent control operation, and ongoing evidence collection that extends far beyond a single audit event. Healthcare technology companies particularly need this certification to demonstrate the security practices that hospitals and health plans require when sharing protected health information.

If you're building healthcare applications that connect to EHR systems, you face the dual challenge of achieving SOC 2 compliance while implementing complex SMART on FHIR integrations. VectorCare's SoFaaS platform delivers both: a SOC 2 Type II compliant infrastructure that handles EHR connectivity so you can focus on your application instead of integration complexity. Launch your Smart on FHIR app with pre-built connectors, automated OAuth management, and enterprise security already built in, reducing your time to market from months to days.