Understanding SOC 2 Type 2 Reports – Compliance, certification, and audit

According to IBM’s Cost of a Data Breach Report 2024, the average global cost of a data breach reached USD 4.48 million, continuing an upward trend. In the United States, that figure was even higher at USD 9.36 million, marking the most expensive year on record. For growing SaaS companies and cloud-based service providers, this highlights a critical truth: without robust security controls, a single breach can derail growth, damage customer trust, and trigger costly regulatory consequences.

This is where the SOC 2 Type 2 report plays a pivotal role. It evaluates how well your security controls operate over a defined time period, offering trusted assurance to enterprise clients, auditors, and regulators that your data protection practices aren’t just designed well—but actually work.

By achieving a SOC 2 Type 2 report, organizations can reduce sales friction, build trust, strengthen internal operations, and stay ahead of compliance demands—all while safeguarding customer data at scale.

What is a SOC 2 Type 2 report?

SOC 2 Type 2 refers to a third-party audit and report that evaluates how effectively an organization implements and maintains internal controls for securing customer data over a defined period—typically between 3 and 12 months. 

SOC 2 stands for “System and Organization Controls 2,” a framework developed by the American Institute of Certified Public Accountants (AICPA). It is especially relevant for SaaS and cloud-based companies that handle sensitive client data. Potential clients and partners particularly value the report as proof that the company takes data protection seriously.

Unlike a SOC 2 Type 1 report, which assesses control design at a single point in time, Type 2 focuses on the operational effectiveness of those controls. 

SOC 2 reports assess how well a company’s internal controls align with the AICPA’s Trust Services Criteria, covering principles like security, availability, privacy, processing integrity, and confidentiality. With the exception of security, which is mandatory, companies can tailor their SOC 2 Type 2 audit by selecting the criteria that best align with their operations.

The cost of obtaining a SOC 2 Type 2 report can range from $30,000 to over $80,000, depending on the scope, complexity of systems, the size of the organization, and its existing compliance posture. This includes expenses for readiness assessments, remediation efforts, audit platform tools, and auditor fees. To simplify the process and cut costs, many companies use automation platforms that help with evidence collection and control monitoring, significantly reducing internal workload and total expenses.

The timeline typically spans 4 to 16 months, including a readiness phase, an audit observation window, and a review period. Once issued, the SOC 2 Type 2 report is generally valid for 12 months, after which organizations are expected to undergo annual audits to maintain compliance and continued assurance for customers and partners.

Who needs SOC 2 Type 2 reports?

SOC 2 applies to organizations that process, store, or transmit customer data, especially in digital or cloud environments. While not legally required, it’s a widely accepted standard for proving data security and operational integrity. For enterprise-focused businesses, it’s often a contractual requirement and essential for vendor risk assessments. SOC 2 Type 2 reports are most common in North America. In Europe or Asia, SOC 2 may be less dominant than ISO/IEC 27001 but is still important for companies serving U.S.-based clients or global enterprises with high security expectations.

Here are the industries that typically need SOC 2 Type 2 compliance:

• SaaS and cloud service providers ( to prove enterprise-grade reliability and data security to prospective clients).
• Fintech and financial services companies ( to complement other financial regulations and build trust around system integrity)
• Healthcare technology companies (to go beyond HIPAA and offer broader assurance of security and privacy controls)
• Legal tech and law firms handling sensitive data
• Managed service providers (MSPs) to assure clients that their IT environments are handled securely and systematically.
• Data analytics and business intelligence platforms
• HR tech, legal, consulting firms, and payroll processing firms (to protect confidential client data)
• eCommerce platforms handling customer data (to protect customer data, payment information, and reduce reputational risk)
• Marketing tech companies using customer analytics
• Cybersecurity vendors and IT infrastructure providers

These sectors typically handle sensitive customer data and are frequently required—by clients, partners, or regulations—to demonstrate strong internal controls through a SOC 2 Type 2 report.

What are the SOC 2 type 2 requirements?

SOC 2 Type 2 requirements cover the controls, documentation, and operational practices that service organizations must implement—and prove were consistently followed—to pass the audit. These controls align with the AICPA’s Trust Services Criteria and must demonstrate effectiveness over a defined audit period.

SOC 2 Type 2 requirements checklist:

• Identify applicable Trust Services Criteria (TSC): Security (mandatory), Availability, Processing Integrity, Confidentiality, and Privacy
• Define audit scope and perform a readiness/risk assessment
• Implement and document controls for selected TSC categories
• Maintain security policies and operational procedures
• Perform regular risk assessments and address vulnerabilities
• Ensure the availability and reliability of systems
• Maintain data confidentiality and integrity
• Implement access controls (e.g., MFA, least privilege, role-based access)
• Document incident response and remediation plans
• Monitor systems and audit logs continuously
• Train employees on security practices regularly
• Conduct internal audits and maintain detailed records of control activities
• Establish third-party vendor management controls
• Maintain continuous improvement practices to evolve with business or tech changes
• Prepare for auditor evaluation: gather evidence (e.g., access logs, onboarding/offboarding records), and participate in interviews and system walkthroughs conducted by a licensed CPA firm

How is a SOC 2 Type 2 audit performed?

As per the AICPA, organizations should pursue a SOC 2 Type 2 report when their customers seek transparency into internal processes and controls, or when stakeholders need assurance about the company’s security posture. Companies aiming to move upmarket are better off completing the audit proactively—when there’s still time to refine processes, update controls, and embed training without major disruptions.

The SOC 2 Type 2 assessment process involves several critical steps:

1. Planning and scoping

• Define the scope: Identify the systems, processes, and services to be evaluated. Align with the relevant Trust Services Criteria—Security (mandatory), plus others as needed.
• Set the timeline: Coordinate with your CPA firm to establish a realistic audit window, including the observation period (typically 3–12 months).

2. Readiness and risk assessment

• Conduct a readiness assessment (if not already done): Perform a gap analysis to ensure controls are in place and functioning.
• Identify risks: Assess organizational risks related to data protection, system reliability, and compliance.
• Document mitigating controls: Capture the technical and procedural measures used to reduce identified risks.

3. Control testing

• Evaluate control design and effectiveness: Auditors will test whether your controls are appropriately designed and operated consistently over the audit period.
• Testing methods: This includes documentation reviews, process walkthroughs, system log analysis, and sampling.

4. Evidence collection

• Gather documentation: Provide relevant artifacts such as access logs, change management records, incident response reports, and policies.
• Interviews and walkthroughs: Auditors may interview key personnel to validate that controls were executed as described.

5. Reporting

• Draft the SOC 2 Type 2 report: Includes the management assertion, system description, auditor’s opinion, testing procedures, results, and any control exceptions.

6. Remediation and continuous improvement

• Address control gaps: Implement corrective actions for any deficiencies found during the audit.
• Enhance control maturity: Use audit findings to strengthen internal practices and sustain continuous compliance.

To facilitate this process, organizations often utilize a SOC 2 Type 2 compliance checklist.

What is the purpose of the SOC 2 Type 2 Report?

The SOC 2 Type 2 report provides third-party assurance that an organization’s internal controls over data security and privacy are not only designed properly but are operating effectively over time. It builds customer trust, especially for SaaS companies, cloud service providers, and other tech-enabled businesses managing sensitive data. 

The report typically includes a management assertion, system description, auditor’s opinion, detailed testing procedures and results, and a list of controls evaluated during the audit period.

What does the SOC 2 Type 2 report consist of?

A SOC 2 Type 2 report typically consists of the following key sections:

1. Independent auditor’s report – The auditor’s opinion on whether the controls were suitably designed and operated effectively over the review period.
2. Management’s assertion – A statement from the service organization’s management describing the system and asserting that the controls meet the applicable Trust Services Criteria.
3. System description – A detailed overview of the organization’s services, infrastructure, software, people, processes, and data relevant to the controls.
4. Applicable trust services criteria and related controls – A listing of the selected Trust Services Criteria (e.g., security, availability) and the organization’s controls mapped to each criterion.
5. Tests of controls and results – The auditor’s testing procedures and findings, including any exceptions or deviations observed during the audit period.
6. Other information (optional) – Any additional information provided by the organization that’s not covered by the audit, such as future plans or additional system details.

What to do when the SOC 2 Type 2 report expires?

To avoid compliance gaps and maintain trust, start re-attestation prep 3–4 months before your current report expires. Keep controls active year-round, as SOC 2 Type 2 assesses ongoing effectiveness—not just during audits. Engage your auditor early to align on scope and timelines, especially if you’re changing firms or expanding coverage. Update all documentation, policies, and logs to reflect system or process changes since the last audit. If there’s a gap between reports, issue a bridge letter confirming no material changes; clients often accept this for up to 3–6 months. Communicate your audit timeline and bridge measures clearly to clients.

What are the benefits of SOC 2 Type 2?

Achieving SOC 2 Type 2 compliance brings multiple strategic, operational, and commercial benefits to businesses handling sensitive data.

1. Builds customer trust

A SOC 2 Type 2 report demonstrates to clients that your company takes data protection seriously. It assures customers that your security practices are verified and reliable, often serving as a key trust signal in vendor risk assessments.

2. Accelerates sales and partnerships

SOC 2 Type 2 compliance is frequently a prerequisite for landing deals with enterprise clients, especially in regulated industries. A verified report can shorten sales cycles and reduce friction in due diligence processes.

3. Strengthens internal processes

Preparing for the audit encourages organizations to formalize their information security practices. This leads to improved operational resilience, better documentation, and a culture of accountability.

4. Reduces risk of breaches and downtime

By aligning with the SOC 2 controls, businesses proactively identify and mitigate security risks. This can help prevent costly incidents, regulatory fines, and reputational damage.

5. Demonstrates long-term operational consistency

Unlike SOC 2 Type 1 (point-in-time), Type 2 proves that controls are consistently followed over months. 

6. Improves vendor posture and audit readiness

SOC 2 Type 2 makes it easier to respond to security questionnaires and reduces the need for ad hoc audits from prospective customers.

7. Sets foundation for other frameworks

Many of the controls and documentation required for SOC 2 Type 2 align with ISO 27001, HIPAA, and other security standards—making future compliance efforts easier.

SOC 2 Type 2 vs. other frameworks

When evaluating data security and compliance, many organizations compare SOC 2 Type 2 with other leading frameworks to determine which best meets their business, regulatory, and customer assurance needs.

SOC 2 Type 1 vs. SOC 2 Type 2

SOC 2 Type 1 evaluates the design of security controls at a specific point in time, while SOC 2 Type 2 assesses both the design and operational effectiveness of those controls over a defined monitoring period (typically 3–12 months).

SOC 2 Type 2 vs. SOC 1

SOC 1 focuses on internal controls over financial reporting (ICFR), making it relevant for service providers that impact their clients’ financial statements. SOC 2 Type 2 focuses on non-financial controls related to data security, privacy, availability, confidentiality, and processing integrity.

SOC 2 Type 2 vs. HITRUST

SOC 2 Type 2 evaluates the design and operational effectiveness of controls over time. HITRUST is a certifiable framework that combines multiple standards (e.g., SOC 2, HIPAA, ISO 27001, NIST) and uses a maturity model with Corrective Action Plans (CAPs). It’s especially relevant for organizations handling healthcare data. HITRUST certification is valid for two years, with an interim review in year two. 

SOC 2 is more flexible and principle-based, making it ideal for cloud-native or tech-focused companies. Some organizations combine SOC 2 and HITRUST assessments to satisfy broader client needs.

SSAE 18 vs. SOC 2 Type 2

SSAE 18 is the attestation standard established by the AICPA under which SOC 2 audits are conducted and reports are issued. SOC 2 Type 2 is a report issued under SSAE 18, so it’s not a comparison but a relationship.

SOC 2 Type 2 vs. ISO/IEC 27001

ISO/IEC 27001 is an international standard for establishing, implementing, and maintaining an Information Security Management System (ISMS). It results in a certification and is widely used outside North America. 

SOC 2 Type 2, by contrast, results in an attestation report focused on the effectiveness of internal controls over time, and is more commonly used in the U.S. Many global organizations pursue both to satisfy different client and regulatory expectations.

How Scrut helps you achieve SOC 2 compliance

Achieving SOC 2 compliance can be challenging, especially when balancing security requirements, operational demands, and customer expectations. Scrut simplifies the process by removing the uncertainty from compliance, guiding you from documentation to audit readiness.

With over 1,400 pre-mapped controls, ready-to-use policy templates, continuous monitoring, and auditor-approved evidence collection, Scrut reduces manual work and provides clear visibility into your compliance posture at every stage. You’ll know what’s working, what needs improvement, and how to address gaps before the audit begins.

We also collaborate with leading audit firms, ensuring you’re fully prepared for the official SOC 2 audit. Want to build trust, accelerate deal cycles, and maintain audit readiness all year long? Connect with our experts to learn how Scrut can streamline your journey to SOC 2 compliance.

FAQs

Is SOC 2 Type 2 a certification?

No, SOC 2 Type 2 is not a formal certification—it’s an attestation report that confirms the effectiveness of an organization’s internal controls. Unlike certifications based on predefined standards, a SOC 2 Type 2 report is issued by an independent CPA or audit firm with expertise in the AICPA’s Trust Services Criteria (TSC).

Which standards govern the performance of a SOC 2 Type 2 audit?

A SOC 2 Type 2 attestation follows AICPA’s SSAE No. 18 (AT-C Sections 105 and 205) and uses the Trust Services Criteria (TSP section 100) covering Security, Availability, Processing Integrity, Confidentiality, and Privacy. These standards guide the auditor’s review of a service organization’s controls over a defined period.

What are the cost contributing factors for SOC 2 type 2 compliance?

SOC 2 Type 2 cost drivers include: readiness assessments, control implementation, penetration testing, employee training, infrastructure upgrades, and internal resource time. Ongoing costs come from annual audits and monitoring. Automation tools can reduce manual effort and long-term expenses.