How Much Does a SOC 2 Audit Cost in 2024? Pricing & Preparation Tips

SOC 2 is all about protecting customer data. This security framework shows that companies have taken the appropriate steps to protect against leaks, security vulnerabilities, and unauthorized access. Getting SOC 2 certification affirms your company’s commitment to protecting your customers and is a measure of good customer service.

However, the audit requires extensive preparation and can be expensive. SOC 2 certification cost is one area that many companies wish they could control better.

Luckily, breaking down the factors associated with the audit can help you understand which apply to your company and offer insights into ways to streamline the process to make it cost-efficient. Many companies find it makes sense to use an experienced consultancy firm to help them pass SOC 2 Type I and Type II audits.

TechMagic offers strategies and tips to help you control costs during the essential preparation, assessment period, and ongoing compliance.

Understanding SOC 2 Audits

SOC 2, or System and Organization Controls 2, is a compliance standard that defines the criteria for data management. It was developed by the American Institute of CPAs (AICPA) in 2010, and the audit assesses the effectiveness of the mechanisms your company has in place. The framework is built on five Trust Services Criteria (TSC):

• Security — protecting against unauthorized access, hacker attacks, and data tampering. An audit for this criteria focuses on your authentication measures, password policies, intrusion detection and prevention systems, and web and mobile application security tools.
• Availability — the ability to maintain your system's acceptable functionality for customers as outlined in the Service Level Agreements (SLAs). This includes incident handling, network performance, site engineering reliability, and disaster recovery.
• Processing Integrity — the system's capacity to meet its purpose on time. Auditors validate your error-handling mechanisms, data processing, and quality assurance procedures.
• Confidentiality — capability to restrict data to stakeholders according to the organization’s policies. This involves assessing data encryption during transmission, role-based access controls, and network policies.
• Privacy — sufficient protection of personally identifiable information (PII) according to regulations. Adherence requires appropriate policies for data collection, retention, anonymization, storage, and usage.

The SOC 2 audit is performed by independent firms with a Certified Public Accountant (CPA) certification. These auditors can’t have ties with your organization. Non-CPA professionals (IT firms, cloud service providers, etc.) can collaborate during the assessment, but only a certified firm can issue the final report.

The certification is valid for one year, and the process can be very expensive, so it’s important to avoid having to re-audit or incur other unnecessary costs.

Factors Influencing the Cost of a SOC 2 Audit

Understanding the factors that determine the price of the SOC 2 certification is crucial for managing and reducing the costs. Let’s start with the key ones.

The Scope of the Audit

The primary factor for the cost depends on the type of audit. Auditors provide two types of reports:

• Type I evaluates your system’s design and controls at a specific moment.
• Type II is an ongoing assessment that takes place over a period of time, usually 1 year.

Type II demonstrates your long-term commitment to maintaining the TSC. So, naturally, it requires more resources to complete.

CPA Firm Rates

Audit firms charge differently based on their size, specialization, and reputation. Renowned agencies will charge premium rates but have a smooth assessment process. Smaller firms charge less but often hire non-accounting graduates, which can complicate the audit. The auditor costs also depend on whether third-party data security firms and consultants are hired.

Organization Size and Industry

Enterprises with complex systems demand more extensive assessment and longer auditor involvement. Industries that deal with large volumes of PII, primarily healthcare and fintech, require more stringent evaluation.

The SOC 2 cost also depends on your location, as this impacts the regulatory environment and local rates (you can either hire a local firm or cover travel expenses).

Security Controls and Compliance Maturity

Organizations whose processes align with SOC 2 and ISO 27001 standards can shorten the SOC 2 audit. Robust technologies and thought-out security policies decrease the time needed for achieving compliance.

Companies with innovative software may need to implement fewer security tools by the end of the audit. So, a meticulous readiness assessment helps lower expenses for your SOC 2.

SOC 2 Cost Breakdown: Which expenses to plan

The SOC 2 certification price consists of direct fees and indirect expenditures. Understanding these can help your organization control costs.

Auditor’s Fees

The core of your expenses goes to the CPA firm performing the audit. Auditors can charge anywhere from $10,000 to $15,000 for a Type I report, depending on the size of your organization. Meanwhile, a typical SOC 2 Type II audit for small and medium-sized businesses (SMBs) may cost $20,000-$40,000 or $150,000 or more for larger enterprises.

Consulting Services

Organizations pay consulting and legal fees to external advisers (usually IT and data security companies) who help you prepare for the SOC 2 audit. Depending on your organizational maturity, size, and industry, these can range from $5,000 to $20,000.

On the bright side, consultants aid in gap analysis. This helps you identify issues that could prevent you from passing the audit and avoid the expense of re-auditing.

Security testing

Companies are required to conduct regular security testing to meet certification requirements. The cost of a penetration test can start at $4,000 per test and increase depending on the size of the project, the scope of the objectives, and the expertise of the service provider.

Productivity Losses

Lost productivity comes from reassigning key employees to audit-related activities instead of their daily tasks. Your departments must prepare for the SOC 2 audit, review the documentation, meet with auditors, and implement changes afterward. If your staff multitasks across roles, then this is going to add up very quickly.

Additional Security Tools

You should also consider the costs of the costs of specialized SOC 2 software streamlines the preparation and audit itself. It helps you automate crucial tasks like infrastructure monitoring and mapping data to controls. The necessary documentation is stored in a structured format for easier research, making it easier for stakeholders and the auditor to find it promptly.

Remediation Costs

Organizations must address the gaps found before and after the SOC 2 compliance audit. This may include testing tools, migrating from legacy software, and modifying operational procedures. Costs can range from a few thousand dollars for minor updates to hundreds of thousands for a major overhaul.

Recurring SOC 2 Audit Costs

Maintaining SOC 2 standards and retaining certification annually is unavoidable. The ongoing activities involve regular software updates, dynamic application security testing, and risk assessments.

Security Training (Optional)

You need to educate your team about SOC 2 compliance, data handling practices, and policy updates. Annual security awareness training requires materials and third-party experts. Medium-sized companies spend $2,000-$8,000 every year on workshops, and the larger your organization, the more you will have to spend on this.

So, with so much annual outlay, it’s critical to understand how to control costs.

8 Ways to Minimize SOC 2 Costs

You can reduce the expense of a SOC 2 audit by defining the scope, running a preemptive gap analysis, and automating compliance processes. Here are the most effective strategies:

1. Limit the Scope

A SOC 2 compliance audit covers only the TSC and systems you select. It’s vital to understand what to include within the scope. To decide, answer these questions:

• Does this system, process, or data need to meet compliance standards?
• Does non-compliance damage our relationships with customers?

Don’t include extraneous items in the audit, as applying controls to irrelevant systems wastes resources. For example, you probably don’t need to evaluate Privacy or Processing Integrity for in-house tools that don’t deal with PII.

2. Conduct a Readiness Assessment

A readiness assessment is a dry run of the SOC 2 audit, which helps identify gaps in your setup. Acting on this gap analysis prepares you for the audit and prevents unnecessary expenditure on reauditing, for example.

To prepare, you must identify your data storage processes, map workflows, and create a technical system inventory.

Employees should study the company’s security controls and privacy policies. In some industries, organizations have to conduct employee background checks and manage clearances.

3. Optimize the Application Portfolio

Migrating from legacy systems can bolster your security maturity and productivity. Outdated and end-of-support software is prone to vulnerabilities, integration issues, and bugs.

Analyze how often your employees use each application. You'll often find that some applications are barely used or have overlapping functions. Consider retiring or replacing some software with cost-efficient alternatives.

4. Test Internal Controls

Rectifying issues before the audit prevents costly and hastily made corrections. To minimize the cost of the SOC 2 audit, initiate detailed internal assessments of your controls against the TSC. Prepare and conduct penetration testing to expose hidden vulnerabilities. Then, analyze the results to pinpoint compliance gaps.

5. Analyze Chain Disruption Risks

Manufacturers, distributors, and logistic companies should analyze supply chain risks. Disruptions impact their ability to deliver products, impacting the Availability aspect of the TSC.

Assess potential risks, including internal and external factors. External risks include the financial health of shippers, the risk of natural disasters, and military threats in certain countries. Implement a reporting framework to communicate supply chain risks and establish effective response policies.

6. Review Documentation

All documents regulating data handling and protection must be reviewed before the SOC 2 audit. Your attorneys should research every customer, contractor, and employee agreement regarding privacy, confidentiality, and security. Make sure your SLAs reflect the true availability capabilities of your services.

7. Establish a Communication Pipeline

Quick responses to auditors' requests result in fewer billable hours. You should organize the necessary documentation and datasets beforehand to streamline the SOC 2 audit. Efficient communication ensures auditors spend less time waiting for or sorting the data.

8. Start with a Type I Report

We recommend starting with a Type I audit. It helps identify significant gaps in your compliance that require remediation with fewer financial risks. This report will become a baseline for ongoing compliance and the subsequent Type II SOC 2 audits.

The dashboard enables quick analysis of key KPIs, system security, and compliance tasks. This software also alerts employees about compliance issues in real-time.

Why companies need SOC 2 certification

A SOC 2 report primarily promotes your reliability to the general public. However, ongoing commitment to the TSC has other benefits for your organization.

• High-quality service standards. SOC 2 certification demonstrates your commitment to excellence. It’s a testament to the consistent quality of your internal processes across industries.
• Assurance of compliance with data privacy laws. A successful audit validates your adherence to strict data security and privacy regulations. This is vital for sectors that handle PII information, such as healthcare and fintech.

• Reliability and availability of service. Certified services have proven uninterrupted availability. Your customers can trust your products to meet SLAs and performance targets.
• Increased employee awareness. Preparation and security training improve your employees' qualifications. Ongoing compliance efforts help maintain high work standards and the efficient passing on of knowledge to onboarding staff.
• Competitive edge over other businesses. Holding SOC 2 certification gives you a competitive advantage over other organizations that do not have it. Your customers can be assured that their data is in safe hands.
• Reduced costs of data breaches. Ongoing SOC 2 compliance turbocharges your security and privacy practices and ensures that you are ready to execute your response plan as soon as an issue is identified. According to IBM’s 2023 report, an average breach costs about $1 million less for organizations with advanced response strategies in place.

So, meeting SOC 2 criteria actually saves your company more money in the long run despite the expense of the audit.

How to Prepare for SOC 2 Certification: Expert advice

Yevhenii Kurii, Information Security Consultant, advised those who are just entering the certification process:

"Preparing for a SOC2 audit can be daunting, with numerous potential pitfalls. Firstly, I highly recommend involving an experienced individual or engaging a consulting organization familiar with the SOC2 auditing process. The standard's requirements can be vague, necessitating expert guidance to comprehend the specifics.

Secondly, it's crucial to define the scope of attestation before implementation begins. This approach could entail focusing solely on critical applications or products rather than the entire company or conducting evaluations against the most relevant criteria.

Lastly, conducting a gap assessment before implementation is advisable. This step helps identify areas for improvement and highlights domains where compliance with the standard's requirements is already sufficient. This, in turn, reduces the resources needed for implementation and preparation for the audit".

Conclusion

Companies should understand the factors contributing to the SOC 2 audit costs and readiness assessment to budget properly. You will incur immediate and recurring expenses to reapply for a certification every year. However, these investments do wonders for your reputation and market position.

Prioritizing the Trust Services Criteria enhances your business uptime and risk management. The Type I and Type II certifications show your business partners that you are a reliable partner. It shows that you can be entrusted with projects and confidential information.

SOC 2 compliance means that you adhere to the strictest data security and privacy standards. This allows you to prevent unnecessary threats and data breaches. You save more than you invest to pass a SOC 2 audit.

Do you want to sustain your SOC 2 compliance every year without stress? Investing in data security can streamline most of the work. Consider contacting TechMagic if you need assistance passing your SOC 2 audit.

FAQ

1. How much does a SOC 2 audit cost, and what factors influence the price?

   The SOC 2 audit cost depends on the assessment scope and the rates of the auditor. Other key factors include your organization’s preparedness, maturity, size, and industry. Complex systems and extensive data handling can increase the total cost. The price also varies subject to local regulatory requirements.

2. How much does a SOC 2 cost on average?

   The overall cost of the SOC 2 audit depends on the scope. SOC 2 Type I reports are less complex and can be in the $10,000-$15,000 range. A Type II audit takes over six months. It typically costs $20,000-$40,000 and up to $150,000 for large organizations. The total expenses include auditor’s rates, consultancy fees, recurring maintenance, security training, and lost profit (due to productivity loss).

3. How can organizations minimize SOC 2 audit costs?

   Organizations can reduce SOC 2 audit costs by limiting the scope and starting with a Type I report. They can further cut down on expenditure through preemptive readiness assessment, application portfolio optimization, internal tests, vulnerability assessments, and continuous monitoring. It’s necessary to review and organize necessary documentation and data. Before the audit, companies should establish efficient communication channels with auditors. Companies can also implement SOC 2 audit software to automate company processes.

4. What are the benefits of undergoing a SOC 2 audit?

   A SOC 2 report improves customer trust and enhances your security posture. You demonstrate that your organization complies with stringent security and data privacy laws and maintains high-quality operations. Despite the expense of SOC 2 audit costs, ongoing cybersecurity efforts and employee training minimize the impact of data breaches.