SOC Report Cost

If you spend a lot of time and money on a SOC 2 audit, it’s critical to be confident about the cost.

Readiness assessment

An assessment is meant to teach your team on the audit scope and conduct preliminary research, including determining data stores, mapping workflow, and compiling a technological systems inventory. It’s also an excellent time to notify some of your most important teams, such as legal and human resources, that some of your company’s documentation and policies will need to change.

SOC 2 certification cost: Productivity 

Keep in mind that the people who will devote their time to the SOC 2 process will do so throughout the project. As a result, they’ll be forced to take time away from other responsibilities to focus on the audit. Most companies do not consider this loss in productivity (at least not early enough). The main reason for this is that it’s not a visible expenditure to consider.

It’s not a task for your IT department or security staff. It’s the work of a person with technological knowledge who can use that expertise to schedule the team effectively.

Training for personnel

The cost of staff training is an important SOC 2 audit investment. It’s a good idea to start with yearly security awareness sessions, either through a third party (usually a cybersecurity company) or in-house. This is an educational program that attempts to educate your workers about data security procedures. 

SOC 2 audit cost: Building vs. buying decisions

You may need to invest in new technology as your SOC 2 audit gathers steam. These products will:

• gather asset lists
• create tickets to track compliance actions
• administer security and reporting compliance
• detect dangers and attacks
• assess vulnerabilities

There will be a never-ending debate about whether to produce or buy these tools. If you have the in-house capacity to create these systems, you’ll want to build them. If your business is smaller or doesn’t have development expertise on hand, buying them may be the best option. Each one has its own set of requirements, but as a whole, a mid-market business may anticipate to spend 5-15K here.

Time and money are important factors to consider when deciding whether to develop or purchase. For example, should you opt for extensible open-source Access Onboarding & Termination Policy solutions at first or switch to another solution if your organization wants to get ahead?

SOC 2 compliance cost: Legal

All client and vendor agreements, contractor and subcontractor contracts, and employment documents should be reviewed with your attorney. These documents establish a basis for responsibility assignment that may be used to defend your privacy, confidentiality, and security policies in the future. Expect that revisiting these on an annual basis as part of an audit will be a continual SOC 2 expense.

Annual maintenance expenses

You’ll need to complete an audit each year to keep SOC 2 compliance

Even if you stay with a SOC 2 Type I audit, it isn’t cheap. Even so, obtaining a good SOC 2 certificate may save you money in the long run in a variety of ways:

• More companies want to do business with you, raising your income.
• Your SOC 2 report distinguishes you from the competition, attracting more consumers than others.
• Your newly built secure technology prevents data breaches that can lead to millions of dollars in fines.

SOC 2 certification is a voluntary process spearheaded by the American Institute of Certified Public Accountants (AICPA) that evaluates and reports on a service organization’s security controls. 

These controls are specific to five Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. The criteria relate directly to how an organization manages customer data – crucial in sectors where data breaches pose significant risk. 

Types of SOC 2 Certification 

Two types of SOC 2 certification are SOC 2 Type I and SOC 2 Type II. 

SOC 2 Type I 

SOC 2 Type I certification involves an analysis of a company’s systems and processes. It specifically looks at compliance with the Trust Services Criteria at a specific point in time.  

Preparing for SOC 2 Type I certification often requires significant efforts from within the organization. This includes employee training, readiness assessments, remediation of nonconformities, and potential investment in new security tools like vulnerability scanners or multi-factor authentication systems. 

SOC 2 Type I certification improves cybersecurity and enhances their reputation among clients and partners who value data privacy and security. 

SOC 2 Type II 

SOC 2 Type II certification takes a deep dive into your company’s control systems over an extended period, typically six to twelve months. This audit checks whether these mechanisms are operating effectively instead of looking at the design and description of controls like SOC 2 Type I does. 

It replicates real-world conditions more accurately, giving stakeholders more assurance about your commitment to data security. Companies that deal with sensitive data or operate in heavily regulated environments often choose this type of certification as it demonstrates a higher level of compliance and trustworthiness. 

Crucially, achieving SOC 2 Type II compliance requires stringent adherence to cybersecurity management norms, including regularly scheduled audits and implementing necessary system enhancements based on previous audit results. 

Cost Comparison: SOC 2 Type I and Type II Certification 

SOC 2 Type I 

Type I certification evaluates a company’s controls at a specific time. This means that the assessment period is shorter, thus reducing the cost. However, it still includes costs for pre-assessment, external audit, and potential software licenses. 

SOC 2 Type II 

Type II certification, on the other hand, focuses on compliance over a period of 6-12 months. The extended period means more costs in maintaining compliance, including continuous monitoring, increased audit costs, and potential costs for fixing identified gaps. Additionally, the software licenses for SOC 2 certification can cost between $12,000 to $60,000. 

It is essential to understand these cost differences when considering which certification type is more appropriate for your company. 

Breakdown of SOC 2 Certification Cost 

The SOC 2 certification cost breakdown will comprehensively understand the expenses involved in achieving compliance. Read on to gain insights into the different stages and factors impacting the overall cost. 

Pre-Assessment Stage  

The pre-assessment stage is a crucial step in SOC 2 certification that helps organizations understand the actual cost of achieving compliance. This stage involves conducting a comprehensive gap analysis, which includes interviews, collecting necessary documentation, and preparing a pre-assessment report. 

The goal is to identify any gaps or areas of non-conformity with the Trust Services Criteria (TSC) and determine the effort required for remediation. Organizations can better estimate the costs associated with achieving SOC 2 certification and prepare for the subsequent external audit by assessing these gaps during pre-assessment. 

External Audit Stage 

The external audit stage is crucial to SOC 2 certification as it involves reviewing and validating a company’s controls and processes. Certified public accountants (CPAs) conduct the external audit to ensure compliance with SOC 2 standards and requirements. 

This stage is included in the total cost of SOC 2 certification, as it requires expertise and thorough examination to confirm that an organization meets the necessary criteria. By undergoing the external audit, businesses can demonstrate their commitment to data security, reliability, and confidentiality. 

Fixing Gaps Until SOC 2 Type II Audit 

Fixing gaps until the SOC 2 Type II audit is crucial in obtaining SOC 2 certification. It involves addressing deficiencies or weaknesses in an organization’s controls and processes to ensure compliance with SOC 2 requirements. 

This may require implementing new policies and procedures to strengthen security measures, protect sensitive data, and enhance operational integrity. The timeframe for fixing gaps can vary but typically ranges from 6 to 12 months before the scheduled SOC 2 Type II audit. 

Additional Costs Impacting SOC 2 Certification 

Additional costs impacting SOC 2 certification include productivity costs, internal blockers, and legal fees. 

Productivity Costs 

Implementing and enforcing SOC 2 policies and procedures can significantly impact an organization’s productivity. Achieving SOC 2 certification, including tasks such as conducting a gap analysis, interviews, and collecting documentation, requires time and resources that could otherwise be dedicated to regular business operations. 

These additional responsibilities can distract employees from their primary duties, reducing efficiency and output. Engaging external consultants or vendors for pre-assessment can alleviate some of the workload on internal staff and improve overall productivity during the certification process. 

The costs of ensuring compliance with SOC 2 requirements go beyond financial expenses. It is important to recognize that there are productivity costs involved as well. 

As organizations focus on meeting the criteria for SOC 2 certification, valuable time may be diverted away from core business activities. This resource diversion can affect employee productivity and the smooth functioning of day-to-day operations within the company. 

Internal Blockers 

Internal blockers are obstacles within an organization that can impede achieving SOC 2 certification. These blockers may include employee resistance, lack of awareness or understanding about compliance requirements, inadequate security controls and policies, or insufficient resources dedicated to the certification process. 

Addressing these internal issues is crucial to ensuring a successful SOC 2 audit. It requires effective communication, employee training, implementation of security measures, and allocation of necessary resources to overcome these internal barriers. 

Legal Fees 

Legal fees are an additional cost that organizations may incur when pursuing SOC 2 certification. These fees can arise from the need to consult with legal professionals who specialize in cybersecurity and data privacy regulations. 

The complexity of an organization’s operations, industry-specific requirements, and any potential legal issues related to compliance can all contribute to the overall cost of legal fees. 

When budgeting for SOC 2 certification, organizations must consider this aspect, as legal expertise is crucial in ensuring compliance and minimizing potential risks or liabilities. 

Approximate Cost for Small to Medium Businesses (SMBs)  

The approximate cost for SMBs varies depending on the number of employees, with up to 50 employees costing less than businesses with 50-250 employees. 

SOC 2 Certification Cost for SMBs with up to 50 Employees 

The cost of SOC 2 certification for small to medium businesses (SMBs) with up to 50 employees is estimated to be around $40,000. This includes various expenses such as pre-assessment, external audit, software licenses and installations, penetration testing (although not mandatory), awareness training, and fixing gaps until the SOC 2 Type II audit.  

In addition to these costs, SMBs may need to purchase licensed software ranging from $12,000 to $60,000. Security awareness training is another important aspect of the certification process and typically takes around 3-5 days to complete. 

Achieving SOC 2 certification requires a significant investment for SMBs with up to 50 employees. It’s essential for organizations in this category to carefully budget and plan for the associated costs to ensure a smooth certification process.  

SOC 2 Certification Cost for SMBs with 50-250 Employees 

The estimated cost of SOC 2 certification for small to medium businesses (SMBs) with 50-250 employees is around $60,000. This includes pre-assessment expenses, external audits, software licenses, penetration testing, and awareness training. 

The pre-assessment stage involves conducting a gap analysis and interviews, leading to the preparation of a pre-assessment report. Additionally, SMBs will need licensed software installed from $12,000 to $60,000. 

Engaging external consultants can ease the workload on internal staff and provide valuable assistance throughout the certification process. 

SOC 2 Audit Preparation Timeline 

The SOC 2 audit preparation timeline varies based on the organization’s size. SMBs with up to 50 employees typically take 6-9 months to complete the necessary preparations. 

However, for SMBs with 50-250 employees, the timeline can extend to 9-12 months due to increased operational complexity and audit scope. 

Timeline for SMBs with 50-250 Employees  

SMBs with 50-250 employees can expect the SOC 2 Type II certification process to take 6-12 months. This timeline allows for the necessary preparation and audits needed to ensure compliance. 

Businesses undergo several stages during this period, including gap analysis, interviews, documentation collection, and a pre-assessment report. Security awareness training is also essential to the timeline, typically taking 3-5 days to complete. 

While the duration may seem lengthy, it ensures that all aspects of the certification are thoroughly addressed and that companies have enough time to implement any necessary changes or improvements before undergoing the final audit. 

How to Lower the Cost of a SOC 2 Audit 

Implementing certain strategies and practices can lower the cost of a SOC 2 Audit. Here are some key actions to consider: 

• Engage in thorough pre – assessment preparation, including conducting a comprehensive gap analysis to identify potential weaknesses or gaps in compliance.
• Implement security controls and measures before the audit to ensure readiness and reduce remediation costs.
• Provide regular employee training on security protocols and best practices to minimize risks and improve overall compliance.
• Consider engaging external consultants or vendors with expertise in SOC 2 certification, as their guidance can help simplify the audit journey and reduce internal workload.
• Leverage existing security infrastructure and technologies to meet SOC 2 requirements instead of investing in new tools that may lead to additional expenses.
• Opt for independent auditing firms or service providers offering competitive pricing packages without compromising quality assurance.
• Maintain continuous monitoring and proactive evaluation of security controls throughout the year, rather than solely focusing on compliance during the audit period.
• Regularly review and update policies, procedures, and documentation related to data protection, access controls, incident response plans, etc., which can help avoid costly non-compliance issues.
• Collaborate with peer organizations within your industry to share best practices, resources, and experiences regarding SOC 2 audits, ensuring efficient use of resources while reducing costs collectively.