What does SOC stand for in the context of internal controls?

In the context of internal controls, SOC stands for System and Organization Controls. This term refers to frameworks used to evaluate the controls at a service organization related to handling data, particularly when that data impacts the security and confidentiality of users. SOC reports, such as SOC 1, SOC 2, and SOC 3, provide valuable insights into the internal controls of an organization, focusing on aspects like data security, availability, processing integrity, confidentiality, and privacy.

Understanding SOC is integral for businesses that rely on third-party service providers because it helps assess the effectiveness of those providers’ internal controls over the processes that can affect the clients' operations. This aligns closely with the value of internal controls, which is to ensure that organizations manage risks effectively while maintaining compliance with relevant regulations and standards.