Cloud Providers' Audit Reports

B.

One approach that many cloud providers opt to take is to undergo a SOC 2 audit and make the report available to cloud customers and potential cloud customers as a way of providing security confidence without having to open their systems or sensitive information to the masses.

The correct answer to the question is B. SOC 2.

SOC (Service Organization Control) reports are a series of auditing standards that help measure how well an organization's internal controls and practices align with industry standards. There are three different types of SOC reports - SOC 1, SOC 2, and SOC 3 - that cater to different areas of concern.

SOC 1 reports are designed to help service organizations that might impact their clients' financial reporting meet the requirements of the Sarbanes-Oxley (SOX) Act. SOC 1 reports focus on internal controls related to financial reporting and are therefore geared towards auditors of financial statements.

SOC 2 reports, on the other hand, are more broadly applicable to any organization that provides cloud-based services. SOC 2 reports focus on a company's non-financial reporting controls related to security, availability, processing integrity, confidentiality, and privacy. The report provides a detailed description of the organization's policies, practices, and procedures, including how it safeguards customer data and ensures system availability. A SOC 2 report is intended to instill confidence in current and potential customers by demonstrating that the organization has implemented effective controls to mitigate risks.

SAS-70 (Statement on Auditing Standards No. 70) was an older auditing standard that was commonly used before SOC reports became prevalent. It was primarily used for financial audits and has since been replaced by SOC 1. SOX (Sarbanes-Oxley Act) is a US law that mandates strict financial reporting requirements for public companies, and its compliance is typically demonstrated through a SOC 1 report.

In summary, many cloud providers use SOC 2 reports to instill confidence in their policies, practices, and procedures to current and potential customers, as it provides a comprehensive view of their non-financial reporting controls related to security, availability, processing integrity, confidentiality, and privacy.