If the cost of a SOC 2 audit is stopping you from pursuing the compliance audit, then we have a comprehensive guide right here that will answer all your questions.
Where to start: Time, money, and understanding
Often business owners are aware of the benefits that come with getting a SOC 2 Audit completed, but are apprehensive about starting the compliance process due to the cost of the audit. Yet the many benefits of the SOC 2 audit, including increased trust with customers, protection against possible risks, and data regulation, persuade them to start the process.
While there are several obvious benefits to maintaining a strong Infosec posture through SOC 2, the entire process of getting SOC 2 certified is an investment of both time and money. So, to help you get started and ease the process for you, we have compiled the best possible way to go ahead with SOC 2 audit certification.
SOC 2 certification costs explained: Phases of an audit
There can not be a fixed price for SOC 2 reports because the amount of work involved in completing the audit varies across organizations. CPA firms would typically carry out a quick assessment of the company’s environment through a questionnaire, based on which the exact cost for an attested report would be determined.
To understand the breakdown of the cost involved in the process of gaining a SOC 2 audit, we need to understand the phases the audit goes through. A SOC 2 audit isn’t cheap by any means, and most of the organizations look to achieve compliance based on a standard cost-benefit analysis, which we’ll be looking at in detail in a while.
Here are the three phases of a SOC 2 audit procedure
Phase 1 – Gap assessment
This phase involves the preparation of gap identification. Depending on the nature of your business, you’ll first decide which trust principles you want to get yourself audited for. While SOC 2 does not have a formal Statement of Applicability (SOA), you will need to identify what controls apply to your business, and subsequently carry out the gap assessment.
In this phase, you need to assess and ask questions like- how secure is your data storage facility? Who has access to your customer’s data? How are your employees handling sensitive data? Since data breaches can cause a lot of damage, financially and reputationally, it is also vital that you go through the risk assessment process in an effort to minimise the potential risks and trouble of handling them.
Now, can you do the gap and risk assessment yourself? Or do you necessarily need to engage an external auditor? The tradeoff here is really time against money. There are clearly established benchmarks and SOPs around how your Infosec posture could be tightened, and you could also refer to our quick guides on Infosec gap assessment and preparing and maintaining a risk register.
However, if you want to work with a consultant in carrying out gap assessment, the typical charges would range from $5k to $10,000 for the gap and risk assessment. Whether you really need to work with a consultant or not depends on the size and complexity of your organization, the current baseline of your Infosec controls, and also the urgency around getting SOC 2 compliant. You could also use GRC automation tools to automate several parts of the process. You could also speak with us for a free diagnostic session, before you spend a ton of money on this step.
Phase 2 – Audit readiness
Now that you’ve identified the gaps and the risks, you can plan out the course and prepare to implement security measures. The act of identifying the security risks, mapping out the remediation actions then putting into place security controls for continuous compliance based on that is known as audit readiness.
Most consultants would do the lengthy task of writing policies that bring in place the right Infosec practices. It could cost your organization around $15,000 to $30,000. However, it depends on the quality of work, bargaining possibility and the kind of service you wish to employ to complete the phase.
It is important to note that a higher cost of service does not necessarily mean that the quality of work would be better. If your organization only receives a cookie-cutter from the internet upon paying thousands of dollars, then you have put your money in a ditch.
Settling for average is never the right way to conduct business, and you must perform adequate research, do a quality check, test reputable consultant firms before placing your trust in one. We could help identify the pitfalls here, schedule a free consultation with us.
In addition to the cost of the consultants, you would need to budget for the cost of additional tools or cloud services that you may need to subscribe to (for e.g, MDM tools like Jumpcloud). Also, the remediation process would consume anywhere between 20-50 person-hours of effort across various teams, excluding the time required for Infosec training.
Phase 3 – The SOC 2 audit
Here is where the bells and whistles begin! The third phase of the SOC 2 report is to get an auditor, usually from a third party independent audit firm specializing in compliance security, to assess your security controls and their effectiveness. This process begins with the auditor collecting evidence for the implementation of controls to check whether you comply with the SOC 2 audit.
Some of you may be wondering, why can’t I do it myself? It is fairly simple: you are biased because it’s your firm. To gain compliance, you must have the ability to check for flaws without any obstruction of thought, which is why auditors are supposed to be independent, who can only review your controls and not order you around as to what needs to be done where.
However, belonging to a third party firm does not mean your contribution is dead. You must perform adequate research before choosing the auditor or CPA firm for your firm. It should be a person who will work with you rather than you. Since some certification firms only specialize in certain industries, it is always viable to check for which one serves you best. Similarly, if you pick an auditor who is aware of the ins and outs of your industry, you will save time and money.
Experience, specialization, and accreditation are important aspects of selection that must not be overlooked. We would recommend you to go through the profiles of multiple vendors and spend some time understanding who can be the best fit for your organization. It is important to find someone who doesn’t wish to buy the business from you but genuinely wants to implement security controls.
The charge for these vendors starts somewhere from $15,000 and goes up to $60,000, depending on their experience and availability. If you do not compare the prices and profiles of multiple auditors, you can easily end up paying more than the desired amount.
Cost-benefit analysis of SOC 2 audit
If you’re thinking that the SOC 2 audit process is just about draining money and time, then you’re not entirely wrong but also not entirely right. The entire process, from defining the scope of attaining an audit to implementing security controls to maintaining the effectiveness of compliance after an audit, comes at a cost, which you can evaluate using a cost-benefit analysis.
Many companies seek their compliance based on the same logic, and this is how a positive SOC 2 report can help you redeem your investment:
- Gaining an audit will provide you with more businesses’ trust who would eventually want to work with you.
- You will have security controls in place preventing any data breach, which under normal circumstances can cost millions to handle
- The SOC 2 report will distinguish between you and your competitors, making you gain trust from your clients.
Factors that influence the cost of a SOC 2 audit
Each SOC 2 audit is unique and follows a variable pattern, which is why its cost fluctuates with every company. Despite the phases of the SOC 2 audit procedure, there are certain underlooked factors that influence the cost of a SOC Audit, and these are as follows.
1. Readiness assessment
This step is like dropping a nugget in the oil to test if it is ready to fry. It comes extremely in handy for organizations who want to ensure that their security practices are ready for an audit. You can totally skip this step, but it isn’t something we would recommend you do since it could lead to problems like unawareness of which trust service criteria apply to your firm in the first place.
It is also important to move towards gap analysis, the next step in SOC 2 report. A professional audit readiness assessment could cost you around $15,000.
2. Compliance costs
There is always a cost attached when you have to fix things, and that is what we call compliance costs. Once you’ve found out the gaps that are there in your way to achieving a SOC 2 audit, the next step is to fill them. This can include buying more security tools, training your employees, hiring more workforce, and more similar responsibilities.
If you decide to go ahead and fix the gaps before audit compliance using an informed source, then it could cost you around $25,000 to $85,000, depending on the extent of work and quality.
3. Audit prep costs
Preparation for an audit does not only include doing a readiness assessment but also laying out the security policies. Determining the proper controls, writing security policies for them, and training employees according to the security policies all fall under the audit prep costs.
We all are well aware that time is money in business, and as a part of SOC 2 compliance, you spend a lot of time and money in gaining the audit. This also requires hiring a team of software developers, data analysts, technical writers and legal experts. So you can imagine paying them around $80,000/year, which will not be directly reflected in your audit pricing.
4. Maintenance costs
After prep, gap analysis, and assessment, follows maintenance of compliance. If you thought once you get the compliance and that’s it, then you’re mistaken. The period of 12 months for which the SOC 2 compliance is valid can go through a lot of changes which locks in your budget for a long time. Since it also needs to be renewed every year, your money is going nowhere.
What is the cost difference between SOC 2 Type I and Type II?
One of the biggest factors that determine how much you end up paying for your SOC 2 report certification is the Type of report you go for.
Service organization control is a standard measure that analyses the effectiveness of the ‘controls’ a company has in place to protect sensitive data and information.
In the case of a SOC 2 Type I report the appointed auditor analyses the documented controls of the organization in question and compares it against the applicable trust services criteria (TSC) relevant to that organization during that time frame. The final conclusion is based on the auditor’s assessment of how well your security controls match when compared to the TSCs.
Since the Type I report is largely focused on what the organization has documented, it gets over relatively fast, most times in less than a month. The average cost for a SOC 2 Type I audit is somewhere between $10,000 and $40,000.
A SOC 2 Type II report, on the other hand, is more in-depth and subsequently takes longer to complete. It assesses an organization between a period of 3 to 12 months, which makes it more expensive as well. In the Type II report, the auditor conducts rigorous tests in addition to studying the documents to decide how well-balanced the policies of that organization stand against real-world security threats.
A SOC 2 Type II audit can take up to $30,000 to $100,000 in cost and will go on till even a full year before the full report is ready.
Conclusion: Ultimate cost for SOC 2
To get a SOC 2 report, the traditional way would need you to select Type I audit. The first expense would be bringing in the auditor that would take around $30,000 but don’t forget you may be spending $15,000 on readiness assessment already.
Add this to the cost of the team of people you employ to handle your SOC 2 compliance process, which stands at around $28,000 per month. Putting it all together will leave you with $83,000 in expenses, which isn’t unusual. In 2021, the nominal quote for the SOC 2 audit tended to be somewhere between $10,000 and $60,000, but you would be paying for a lot more than just an auditor.
Reducing the cost of SOC 2
Compliance automation software like Scrut Automation helps companies automate tasks around continuous monitoring and evidence collection for audits, simplifying the process. Ready-to-use, customizable policy templates, automated security training, cloud integrations and integrations with third-party applications ensure that companies don’t have to deal with multiple consultants and also save internal bandwidth in carrying out these tasks.