SOC 2 compliance: It’s not cheap, but it’s worth it.
If anyone tells you that SOC 2 compliance is a breeze, they’re lying. It takes significant financial resources, time, and technological investment to prepare for a SOC 2 audit. But trust me, it’s worth it.
The cost of a SOC 2 audit depends on several factors, including the size and complexity of your organization, the scope of the audit, and the experience of the auditor you hire. You can expect to pay anywhere from $15,000 to $50,000 for a SOC 2 Type 1 audit and $30,000 to $75,000 for a SOC 2 Type 2 audit. Yes, it’s a lot of money. But think of it as an investment in your organization’s future. By achieving SOC 2 compliance, you’ll be able to attract new customers, grow your business, and protect your reputation.
Factors That Affect SOC 2 Audit Cost
There is no single SOC audit cost size that fits all organizations. The cost of a SOC 2 audit varies depending on several factors. These factors include:
Size and complexity of your organization: This is an obvious factor: the larger and more complex your organization is, the higher your SOC 2 audit costs. Why? Because as a large organization, you have more systems and data to audit, and that automatically equates to more complex SOC 2 controls.
Scope of the audit: The scope of the audit refers to the specific trust services principles you are being audited on. Suppose your organization is being audited on all five trust services principles (security, availability, processing integrity, confidentiality, and privacy). In that case, you will automatically be looking at a very high SOC 2 audit cost than if you are only being audited on one or two principles.
Experience of the auditor: More experienced auditors will typically charge higher fees. However, it is essential to note that experience is important when choosing a SOC 2 auditor. You should select an auditor that has experience auditing organizations in your industry, and that has a good reputation. If you’re using your SOC 2 report to close deals, the importance of your auditor will influence your customer’s confidence in your data security.
Industry: Some industries are more regulated than others, and organizations in these industries may have higher SOC 2 audit costs. This is because organizations in these industries may need to implement more complex controls to meet regulatory requirements.
Geographic location: The cost of SOC 2 audits varies by geographic location. For instance, SOC 2 audits in major metropolitan areas may be more expensive than SOC 2 audits in rural areas.
How Much Does a SOC 2 Audit Cost?
The total cost of a SOC 2 audit, including any extra expenses, can range from tens to hundreds of thousands of dollars. Generally, when budgeting for a SOC 2 audit, small to medium-sized businesses(SMBs) can expect to pay between $15,000 and $50,000 for a SOC 2 Type 1 audit and between $25,000 and $75,000 for a SOC 2 Type 2 audit. Large businesses can expect to pay between $50,000 and $100,000 for a SOC 2 Type 1 audit and between $75,000 and $150,000 for a SOC 2 Type 2 audit.
How Much Does a SOC 2 Type 1 Cost?
A type 1 report focuses specifically on the company’s security at that particular time. An independent auditor assesses the organization’s controls and systems and then gives an honest review in a report. They are less expensive than SOC 2 type 2. However, most organizations choose SOC 2 Type 2 auditing over Type 1 despite the expensive costs. Type 1 report typically starts around $5k.
It is advisable to start with a SOC 2 Type 1 audit before moving on to a Type 2 audit. This will help your organization understand the audit process and identify any improvement areas.
How Much Does a SOC 2 Type 2 Cost?
The main difference between type 1 (point-in-time assessment) and type 2 (long-term assessment) is in the evaluation timeframe. The auditor examines and reports how a company performs over 3-6 months.
A SOC 2 Type 2 report is 30-50% more expensive than a SOC 2 Type 1 report because it examines data over a period of time rather than a single point in time.
Type 2, on average costs $30-60k for just the auditing alone. They come with associated additional costs for readiness assessment, remediation, employee training, etc.
Companies can end up spending more than $100k at the end of the entire process.
SOC 2 Cost Breakdown
The cost of SOC 2 compliance can be broken down into four different categories:
- Readiness Assessment $(7-15k): A readiness assessment is a preliminary assessment of your organization’s security and compliance posture. An independent auditor you hire performs an audit to identify any gaps or weaknesses in your organization’s controls. The goal of the assessment is to help you prepare for a SOC 2 audit and to achieve compliance with the SOC 2 trust services criteria (TSCs).
- Audit Firm Fees $(15-60k): The most significant cost is usually the fees charged by a certified public accounting (CPA) firm that specializes in SOC 2 audits. Your auditing has to be done by a CPA firm that has been certified by AICPA.
The audit fees can vary widely based on the reputation of the SOC 2 audit firm you choose to use, their experience, and the scope of the audit. Higher-priced auditors are more likely to have the experience and expertise necessary to produce a high-quality SOC 2 report.
- Compliance Preparation Costs $(25-85k): Your internal staff must dedicate time to prepare for the audit, including documentation, policy development, and control implementation. You can hire consultants or third-party experts to assist with SOC 2 preparation. These services come with their costs.
- Remediation Cost $(5-25k): The remediation cost is fixing any deficiencies the auditor finds in the organization’s controls. The severity of the deficiencies will affect the cost of remediation.
Completed SOC 2 Cost Breakdown
Additional Costs of a SOC 2 Audit
Legal and Insurance Costs(Varies): You may want to consult legal experts to ensure compliance with privacy and security regulations. Cybersecurity insurance can also be a cost, providing financial protection in case of a data breach.
Software, New Tools, and Employee Training (Varies): You will need specialized software to help manage and track your compliance efforts. This could include GRC (Governance, Risk, and Compliance) software. Employee training and awareness programs ensure all staff members understand and follow security policies and procedures. You also need to consider the costs associated with training materials, courses, and awareness campaigns should be considered.
Security Improvements: If your organization identifies gaps in its security controls or policies during the SOC 2 preparation, you may need to invest in security improvements. This could include upgrading IT infrastructure, implementing new security measures, or enhancing employee training.
Other Ongoing Costs: After obtaining your SOC 2 report, there are ongoing costs to maintain compliance, such as annual audits and continuous monitoring.
How to Reduce the Cost of a SOC 2 Audit?
Here are a few smart ways to reduce your SOC 2 compliance costs:
1. Start planning early. The earlier you start planning for your audit, the more time you’ll have to prepare and get your systems and documentation in order. This will help to reduce the amount of time the auditor spends on your audit, which can save you money.
2. Identify and remediate any deficiencies in your controls before the audit. The auditor will look for weaknesses in your security, availability, processing integrity, confidentiality, and privacy controls. If they find any deficiencies, you’ll need to remediate them before you can pass the audit. This can be a time-consuming and expensive process, so it’s best to identify and fix any problems before the audit begins.
3. Hire an experienced auditor. An experienced auditor will be able to quickly identify any potential problems with your controls and help you to remediate them. They will also be able to help you prepare for the audit and avoid any surprises.
4. Consider hiring a consultant. A consultant can help you to prepare for and implement SOC 2 compliance. That can save you time and money, and it can also help you avoid making any mistakes that could lead to findings in the audit report.
5. Be responsive to the auditor’s findings. If the auditor finds any deficiencies in your controls, be sure to remediate them promptly. This will show the auditor that you are committed to security and compliance, and it will help to reduce the cost of the audit.
Additional tips for reducing the cost of your SOC 2 audit:
- Choose the right scope for your audit. Not all organizations must be audited on all five SOC 2 trust services principles. If you can, choose to be audited on only the principles that are most relevant to your business.
- Use automation to help with your audit preparation. There are several tools available that can help you automate tasks, such as gathering evidence and testing controls. That can save you time and money.
- Outsource non-core tasks. If you have the resources, consider outsourcing non-core tasks such as documentation and remediation to a third-party provider. This can free up your internal staff to focus on more critical tasks.
Choose the Right Partner for SOC 2 Compliance
Partnering with the right team can make all the difference. With over 25 years of experience, I.S. Partners brings expert guidance and tailored SOC 2 solutions to streamline your path to SOC 2 compliance.
Contact I.S. Partners today for a cost-effective SOC 2 compliance journey.