SOC 2 audits inspect the security controls of vendors and service providers. (“SOC” itself is an abbreviation of System and Organization Controls for Service Organizations.) It’s reasonable to ask how much a SOC 2 audit might cost, but every SOC 2 audit is unique — which means that nobody can give a single, universal estimate of compliance cost for a SOC 2 audit. The answer truly is, “it depends.”
In this Guide to SOC 2 Audit Costs, we’ll explain why.
What Is a SOC 2 Audit?
A SOC 2 audit assesses the strength of a service vendor’s cybersecurity controls. The audit is done by an independent audit firm, resulting in an attestation report about the vendor’s cybersecurity. The vendor can then provide that report to would-be customers, who want to know whether they can entrust their confidential data with that vendor.
SOC 2 audit standards were designed specifically for service providers, including just about every Software-as-a-Service (SaaS) provider storing customer data in the cloud. Most B2B vendors are asked to complete SOC 2 or ISO 27001 audits by their customers, to assure that the vendor has appropriate controls in place to reduce its risk of data breaches or other security incidents.
The main difference between SOC 2 and ISO 27001 is that SOC 2 focuses on whether a vendor has implemented internal controls to protect its customer data. In contrast, ISO 27001 is much broader in scope; it is a standard to assure that the organization has implemented an information security management system (ISMS) to manage its information security.
SOC 2 audits can be one of two types:
A SOC 2 Type 1 audit (SOC 2 Type I) only assesses whether a vendor’s security controls are properly designed for the risks at hand. That is, a SOC 2 Type 1 report only provides assurance on your controls at one point in time.
A SOC 2 Type 2 audit (SOC 2 Type II) also assesses whether those controls work effectively over a period of time (say, six months or one year).
SOC 2 Type 1 audits are usually the first SOC audit a vendor undergoes, to provide a baseline for future audits. SOC 2 Type 2 audits then come next, and assess how well your data security and privacy controls have worked since the last SOC 2 audit.
How Much Does It Cost to be SOC 2 Compliant?
The cost of becoming SOC 2 compliant can vary widely depending on the size and complexity of the organization, existing controls, scope of the audit, and other factors. Here’s a breakdown of potential costs associated with SOC 2 compliance:
Step 1: Gap analysis and initial assessment. Before undergoing a full audit, companies often engage consultants to perform a gap analysis to identify potential areas of non-compliance. This helps to set a roadmap for what needs to be addressed. The cost could be $5,000 to $20,000
Step 2: Technology and tool investments. This involves investing in technologies to meet the SOC 2 audit standards (known as “Trust Services Criteria”), such as encryption tools, monitoring tools, security software, and more. The costs in this step can vary widely, from a low of $10,000 to $100,000 or more.
Step 3: Personnel and time. A dedicated team or individual will need to manage the audit process, including remediation you might undertake to close any gaps found during Step 1. The personnel could be an internal resource or an external consultant. The time spent on SOC 2 can translate into significant costs; what your exact price tag might be is anyone’s guess.
Step 4: Policy policy and documentation. If you don’t already have them in place, you’ll need to create or refine policies, procedures, and other documentation to meet SOC 2 requirements. Cost is likely to be $5,000 to $25,000.
Step 5: Training and awareness programs. Employees need to be trained on new policies, procedures, and tools. Cost could be $1,000 to $10,000 or more.
Step 6: Remediation. If gaps are identified, there might be costs involved in addressing and correcting them, which could range from minor adjustments to major system overhauls. Costs could vary widely here.
Step 7: External audit. Engaging a third-party firm to conduct the SOC 2 audit is a significant portion of the cost. Type I audits assess the design of controls at a specific point in time, while Type II audits assess both the design and operating effectiveness of controls over a minimum six-month period. Costs for a Type I audit could be $20,000 to $60,000, and $30,000 to $75,000 for Type II.
Step 8: Ongoing maintenance. You will need continuous monitoring, periodic reviews, and yearly re-assessments to maintain compliance. These costs could vary widely.
Step 9: Additional costs. Your audit might incur legal fees, require changes to infrastructure or vendors, and other costs you didn’t expect at the start. Again, costs could vary widely.
Step 10: Intangible costs. Expect stress, potential disruptions to normal business operations, and the learning curve associated with understanding and addressing SOC 2 requirements. Quantifying those pressures with a cost number is impossible, but clearly they will impose some sort of burden on your business.
Also note that all of the above are general estimates; actual costs can vary widely depending on many factors. Additionally, while SOC 2 compliance can be costly, the benefits of being compliant — including enhanced trust with customers and stakeholders, improved security and operational processes, and competitive advantage — can often outweigh the costs.
Is SOC 2 Legally Required?
No, SOC 2 audits are not required under U.S. law. That said, many large companies will ask their vendors to complete a SOC 2 audit before engaging in business with those vendors. Completing that audit gives those corporations assurance that your security controls are strong, and they can trust your business to handle their data or to engage in other transactions with them.
SOC 2 Audit FAQs
How do you determine the cost of a SOC 2 audit?
The cost of a SOC 2 audit depends on the audit’s scope, the size of the organization, how many locations are involved, the complexity of the processing, and the maturity of the organization’s internal controls.
The scope of the audit — that is, what actually gets reviewed in the audit — is defined before the engagement begins. SOC 2 audits were developed by the American Institute of Certified Public Accountants (AICPA), and they are based on five “Trust Service Criteria:”
- Processing integrity
The vendor and the auditor will first need to decide which of those five principles should be included in the SOC 2 audit (perhaps even all of them). The auditor then uses various procedures to review and test controls related to the principles in scope for the audit. Usually, the more principles in scope, the more expensive the audit.
Can any CPA perform a SOC 2 audit?
While a SOC 2 audit is under the purview of the AICPA and technically any Certified Public Accountant (CPA) can be involved in the process, not just any CPA is qualified to lead and perform a SOC 2 audit.
Here are some points to consider:
Specialized training and expertise. SOC 2 audits require specialized knowledge and expertise about the Trust Services Criteria (TSC), systems, IT controls, and more. CPAs who work in other areas such as tax or financial accounting may not have this expertise.
Experience. Experience plays a crucial role. A veteran SOC 2 auditor will be better equipped to understand the intricacies of the assessment, which can make the audit process smoother and more effective.
Firm licensing. Not all CPA firms are licensed or authorized to perform SOC 2 audits. Firms that conduct these audits need to undergo a peer review to ensure that their audit and attestation work meets the professional standards set by the AICPA.
Quality controls. The AICPA requires that firms have certain quality controls in place to conduct attestation engagements, including SOC 2 audits. This means that not every CPA firm is set up to meet these standards.
Potential conflict of interest. A CPA or CPA firm that provides certain services to a company (such as system implementation or certain consulting services) might be seen as having a conflict of interest, and may not be able to perform an independent SOC 2 audit for the same company.
Continuous learning. The world of cybersecurity and data privacy is evolving all the time. A CPA involved in SOC 2 audits needs to engage in continuous learning to stay updated with the latest threats, controls, technologies, and regulations.
If your organization is considering a SOC 2 audit, it’s essential to select a CPA or a CPA firm with a strong track record in this area. This assures that you’re getting an accurate and thorough assessment that can genuinely benefit your organization’s security and trustworthiness.
How long does a SOC 2 audit take?
A SOC 2 audit‘s duration varies depending on several factors, including the audit’s scope, the organization’s size and complexity, and its current state of readiness.
Typically, the preliminary phase involves a readiness assessment or gap analysis, which can take between one to three months. This assessment identifies areas that might not meet the Trust Services Criteria, allowing organizations to address potential deficiencies. Following this, a Type I audit, which evaluates the design of controls at a specific point in time, can generally be completed in three to six weeks.
In contrast, a Type II audit, which assesses both the design and operational effectiveness of controls over a minimum six-month period, requires the auditor to review the organization’s processes over that extended timeframe. Therefore, from the initial readiness assessment to the completion of a Type II audit, companies should anticipate the process to last seven to nine months, although this can be shorter or longer based on specific circumstances.
ZenGRC Can Help You Manage SOC 2 Audits
Audits of any kind are onerous projects, with large amounts of documentation that auditors need to manage. To do all that work — communicating with everyone involved in the audit, confirming test results, and gathering evidence — is nearly impossible to do with spreadsheets, emails, and manual processes. In the modern era, you need a dedicated tool to manage your SOC 2 audit.
ZenGRC is a compliance tool that can help. It can streamline your compliance procedures by automating those laborious, manual tasks. You could also speed up self-assessments with its compliance templates. ZenGRC’s simple, unified dashboard offers a comprehensive picture of all your compliance frameworks, identifying gaps in your programs and outlining solutions.
Depending on your particular needs, compliance officers can monitor non-compliance risks in real-time in a rapid, simple, and dynamic manner. Even better: ZenGRC stores and arranges all relevant documents, making it simple to find them when the time comes for your audit.
Why would you try to manage a SOC 2 audit on your own? By taking the risk out of risk management and compliance, ZenGRC helps. Schedule a demo with us today to start your worry-free path to compliance.