SOC 2 compliance is an investment in the future of your business. Like any valuable investment, it requires a considerable amount of time, effort, and resources. The cost of a SOC 2 report can be significant, especially for small or growing bootstrapped businesses. However, it’s important to see it as an investment, as it can open doors to valuable business opportunities down the road. With the rise of cloud-hosted applications, SOC 2 compliance is a powerful way for B2B SaaS companies like yours to demonstrate strong security measures that safeguard customer data. If you’re curious about the cost of a SOC 2 report, we’ve outlined the details step by step below. 

What is SOC 2 Compliance?

SOC 2 (Service Organization Control Type 2) is a report that verifies the trustworthiness of a service organization’s offerings, particularly for outsourced software solutions that store customer data online. Conducted by a Certified Public Accountant (CPA) under AICPA standards, SOC 2 audits evaluate attributes like Security, Availability, Processing Integrity, Confidentiality, and Privacy. These reports confirm that a service, such as a SaaS solution, has been rigorously assessed for risks in these areas, ensuring the organization’s commitment to protecting customer data. To achieve SOC 2 certification, an organization must first define its security controls and determine which Trust Service Criteria (Security, Availability, Processing Integrity, Confidentiality, and Privacy) are relevant to its services.

Factors that Influence Cost of SOC 2 Report?

Understanding the factors that influence the cost of SOC 2 certification is essential for effectively managing and minimizing expenses. Let’s look into the key considerations.

CPA Firm Rates

Audit firms vary based on their size, expertise, and reputation. Well-known agencies typically charge higher rates but offer a more streamlined assessment process. Smaller firms may be more affordable but often employ non-accounting graduates, which can make the audit process more challenging. Costs can also increase if third-party security firms or consultants are brought in to assist with the audit. 

Size of Organization and Industry

Enterprises with complex systems require more in-depth assessments and extended auditor engagement. Industries handling significant amounts of PII, such as healthcare and fintech, undergo more rigorous evaluations. The cost of SOC 2 certification also varies based on your location, as local regulations and pricing affect audit fees. You can either hire a local firm or factor in travel expenses for an external auditor.

Security Controls

Organizations with processes that align with SOC 2 and ISO 27001 standards can expedite the SOC 2 audit. Implementing strong technologies and well-designed security policies can significantly reduce the time required to achieve compliance.

Note: SOC 2 is often referred to as a certification, but it’s important to clarify that it isn’t one. Instead, the successful completion of a SOC 2 audit results in an attestation from an independent certified public accountant, rather than a formal certificate. The auditor evaluates and confirms the robustness of your organization’s data and cloud security practices through a SOC 2 report.

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SOC 2 Report Cost Breakdown

The cost of SOC 2 certification includes both direct fees and indirect expenses. By understanding these, your organization can better manage and control overall costs.

Fees of Auditors

A significant portion of your SOC 2 certification expenses will go to the CPA firm conducting the audit. The cost of a Type I report varies based on the size of your organization, while a SOC 2 Type II audit tends to be more expensive, especially for larger enterprises compared to small and medium-sized businesses (SMBs).

Advisory Services

Organizations often seek guidance from external IT and data security consultants to prepare for a SOC 2 audit. These consultants can help assess your organization’s readiness, identify potential gaps, and provide tailored advice to ensure a successful audit process. While there may be associated costs, investing in expert guidance can help you avoid costly re-audits and achieve your compliance goals more efficiently.

Security Testing

Companies must perform regular security testing to comply with certification requirements. The cost of a penetration test varies based on factors such as project size, the scope of objectives, and the expertise of the service provider.

Ways to Maximize Cost of SOC 2 Report

You can lower the costs of a SOC 2 audit by clearly defining the scope, conducting a proactive gap analysis, and automating compliance processes. Here are some of the most effective strategies:

Narrow the Scope

A SOC 2 compliance audit focuses solely on the Trust Services Criteria (TSC) and the systems you choose. It’s essential to determine what to include in the scope. Consider the following questions: 

  1. Does this system, process, or data require compliance standards?
  2. Could non-compliance harm our customer relationships?

Avoid including unnecessary items in the audit, as applying controls to unrelated systems can waste resources. For instance, it’s likely unnecessary to assess Privacy or Processing Integrity for internal tools that do not handle personally identifiable information (PII).

Perform a Readiness Assessment

A readiness assessment serves as a trial run for the SOC 2 audit, helping to pinpoint gaps in your setup. Addressing these gaps in advance will better prepare you for the audit and help avoid unnecessary costs associated with reauditing. To get ready, you need to identify your data storage processes, map out workflows, and compile a technical system inventory.

Employees should familiarize themselves with the company’s security controls and privacy policies. In certain industries, organizations may be required to conduct employee background checks and manage clearances.

Testing of Internal Controls

Addressing issues prior to the audit helps avoid expensive and rushed corrections. To reduce the costs associated with the SOC 2 audit, start by conducting thorough internal assessments of your controls in relation to the Trust Services Criteria (TSC). Implement penetration testing services to uncover any hidden vulnerabilities, and then analyze the results to identify compliance gaps.

Review Documentation

Before the SOC 2 audit, it’s essential to review all documents governing data handling and protection. Legal teams should thoroughly examine all customer, contractor, and employee agreements related to privacy, confidentiality, and security. Ensure that your service level agreements (SLAs) accurately reflect the actual availability capabilities of your services.

Why Do Companies Need SOC 2 Report?

SOC 2 report promotes the reliability of the public. Below is the list of benefits of SOC 2 report to organizations: 

Services Standard of High Quality

SOC 2 report showcases your dedication to excellence. It serves as a testament to the reliable quality of your internal processes across various industries.

Compliance Assurance with Data Privacy Laws

A successful audit confirms your compliance with rigorous data security and privacy regulations, which is essential for industries that manage Personally Identifiable Information (PII), including healthcare and fintech.

Advantage Over Other Companies

Possessing SOC 2 certification provides you with a competitive edge over organizations that lack it. Customers can trust that their data is securely managed.

Reduction in Cost of Data Breaches

Maintaining ongoing SOC 2 compliance enhances your security and privacy practices, ensuring you are prepared to implement your response plan immediately upon detecting any issues. According to IBM’s report, organizations with advanced response strategies incur an average breach cost that is about $1 million lower.

Conclusion

While the cost of obtaining a SOC 2 report can be significant, the benefits far outweigh the investment for businesses, especially those in sensitive industries like healthcare and fintech. By prioritizing SOC 2 compliance, organizations not only enhance their security measures and safeguard customer data but also demonstrate their commitment to high-quality service standards and regulatory compliance. This strategic move not only provides a competitive advantage but also reduces the financial impact of potential data breaches. Ultimately, a SOC 2 report is not just a certification; it’s a vital tool for building trust, enhancing operational resilience, and unlocking new business opportunities in today’s digital landscape.

FAQs

  1. How do I get a SOC 2 report?

    To obtain a SOC 2 report, you must engage an AICPA-accredited auditor who will assess your data security measures and document the SOC 2 controls you have in place. Following this evaluation, the auditor will compile a report detailing their findings and provide their attestation regarding your organization’s compliance with SOC 2 criteria.

  2. What documents are required for SOC 2?

     For the SOC 2 report, you’ll need three key documents for your audit: a management assertion, a system description, and a controls matrix.

  3. How much does SOC 2 report cost? 

    The cost of a SOC 2 report can vary significantly based on several factors, including the scope of work required, the size of the company, and its location, including the places of its offices. Generally, smaller companies may incur lower costs, while larger organizations or those with complex systems may face higher expenses. 

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