SOC 2 audits are crucial for tech businesses that store customer data in the cloud and offer services to various organizations.
SOC 2 audited companies certify that they use adequate data security measures to ensure that customer information is secure from any kind of manipulation, unauthorized access, theft, and misuse.
Their claims are verified through a SOC 2 audit by an independent audit firm commissioned by the American Institute of Certified Public Accountants (AICPA)
How much does a SOC 2 audit cost? Unfortunately, there’s no simple answer to this question since it depends on various factors.
In this in-depth guide, we’ll break down all the primary factors that impact a SOC 2 audit cost to help you determine a ballpark figure for budgeting.
Let’s dive in.
What is the SOC 2 Audit Cost Anyway?
Quoting an exact amount for SOC 2 audit cost is impossible without understanding the nature of the audit.
SOC 2 audit is a company-wide certification that evaluates an organization’s standards regarding its core data security infrastructure, information handling practices, consumer privacy, and confidentiality.
For this purpose, an SOC 2 auditor needs to evaluate various aspects of a company’s systems and processes. Some of them are:
- Server management and infrastructure
- Data access rights
- Data security checks
- User accessibility hierarchy
- Data handling processes and documentation
- Information access details and protocols
- Disaster management plan
Apart from these areas, an auditor also evaluates the expertise and skill levels of a company’s data security teams and any employees involved in customer data handling.
Because of these variables, the ultimate cost of the SOC 2 audit heavily depends on the size of an organization and its existing security protocols.
Larger organizations with more complex hierarchies often have to spend more on their audits than startups and smaller tech companies.
The final cost can fall anywhere between $10,000 to $50,000 depending on various factors.
Plus, the audit duration also varies from 3-4 months to a year or even 18 months. Once again, this depends heavily on an organization’s size and SOC 2 audit type.
How SOC 2 Audit Costing Works
As we’ve mentioned, the SOC 2 audit cost depends on an organization’s size and its existing security systems.
But more than anything else, the type of SOC 2 audit report you want to commission significantly impacts the audit costs.
There are two types of SOC 2 audit reports.
The Cost Of SOC 2 Type 1 Audit Report
SOC 2 Type 1 audit report evaluates the security practices, infrastructure, employee skill level, and an organization’s overall ability to securely manage customer data at a specific date.
SOC 2 Type 1 reports are usually smaller in size, cost significantly less money than a Type 2 report, and give the readers a snapshot of a company’s data privacy standards at a given date.
A SOC 2 Type 1 report’s estimated cost is anywhere between $10,000-$60,000 depending on the company’s size and existing privacy standards.
It can take a company between 2-6 months to prepare for a Type 1 audit. At the same time, the audit itself can take 4-6 weeks to complete.
However, this is only the audit cost and does not include many pre and post-audit expenses that we will cover separately later in this article.
The Cost Of SOC 2 Type 2 Audit Report
SOC 2 Type 2 audit reports are much more comprehensive and detailed than Type 1 audits. Unlike Type 1 reports, SOC 2 Type 2 audits analyze an organization’s data security and consumer privacy practices over a more extended period of approximately 6-12 months.
It serves as a complete manual for any organization willing to investigate your company’s information security standards before working with you.
It evaluates the consistency and reliability of your systems, effectiveness of your policy implementation, skill development of your teams, and various other important aspects related to the security of customer data.
A SOC 2 Type 2 audit report’s estimated cost can be anywhere between $30,000 to $100,000. Once again, the final costs will be determined by the company’s size, existing policies and systems, and the audit scale.
The preparation time for a Type 2 audit is similar to a Type 1 audit. However, the duration of a Type 2 audit is significantly longer and can take between 6-18 months, depending on the scope of the audit.
To get a clearer idea of a SOC 2 audit’s cost, let’s break down the expenses and see how the overall pricing works.
How to Get Started With SOC 2 Audit Costing
SOC 2 certifications are comprehensive audit reports created by independent third-party auditors after an extensive analysis of your organization’s security and privacy standards.
Many organizations make the mistake of considering only the financial costs of a SOC 2 audit.
To calculate the actual cost of SOC 2 audits, you need to consider the various expenses you’ll need to bear before, during, and after the audit process.
Plus, you also need to consider the time your employees will dedicate to this audit and its impact on their original operational activities.
Here’s a detailed breakdown of the different stages of the SOC 2 audit and their costs.
The pre-audit phase of the SOC 2 audit consists of activities that an organization needs to perform to ensure it is ready for the audit.
This is where you’ll be spending the bulk of your money, especially if your organization doesn’t have existing security infrastructure or is investing in a SOC 2 audit for the first time.
Here are some of the main costs you’ll need to incur at this stage.
Internal Team Development
When your organization starts preparing for a SOC 2 audit, it needs to create an internal team of employees to oversee and manage the whole process.
This team would be responsible for every task related to the SOC 2 audit preparations. Ideally, it should be led by a senior executive in your company or a decision-maker with complete authority so that it can act fast without unnecessarily waiting for approvals and other bureaucratic hurdles.
This team should consist of members from your core data security, server management, legal, customer services, and product teams. They’ll work independently to ensure that your organization is fully prepared for the SOC 2 audit when you finally initiate it.
Since SOC 2 audits can take anywhere from six months to more than a year, your internal team will need to work on this project diligently to ensure it gets done in time.
Your company would also need to ensure that there are no unnecessary changes to the team so that its members can work smoothly without any interruptions.
When calculating a SOC 2 audit cost, you’ll need to consider the payroll and overhead costs associated with these team members.
Internal Requirement Gathering
Once your internal audit team is formed and ready to go, it needs to start work by doing a comprehensive analysis of your existing security standards given the SOC 2 certification requirements.
For this purpose, the team would need to get familiar with the SOC 2 audit requirements and evaluate each aspect of your company’s systems to see where you currently stand.
This process could take anywhere from a few weeks to several months, depending on the size of your company.
At the end of this step, you should have an assessment report by your internal team that clearly highlights how your systems and processes stack up against the recommended standards of SOC 2 certification.
Preparing for a SOC 2 audit and complying with the minimum requirements often means that companies need to upgrade their hardware and software infrastructure.
This could mean investing in a completely new system or bringing the existing systems in line with audit requirements.
You also may need to invest in better servers, security software, and technologies such as two-step authentication and biometric verification. You’d also need to set up backup servers, refine your access controls, and invest in various software licenses to ensure that your consumer data is completely secure.
The total cost of these upgrades would depend on your hardware and software choice, plus the scale of implementation.
Nevertheless, you’ll need to consider these costs as a part of the pre-audit process.
Hiring, Training, And Team Building
SOC 2 audit also requires that you appoint skilled and well-trained professionals to oversee the data security in your company.
For this purpose, you might need to hire new employees, train the existing resources to improve their skill set and work on the overall team building for your company’s information security team.
The cost of this step would again depend on your team’s existing skillset and structure.
Processes And Documentation
SOC 2 audit requires that a company has well-defined and documented processes for collecting, securing, managing, and accessing customer data.
If you haven’t documented your security processes yet, you’ll need to do it before going into the audit process. Your internal team could do this in coordination with a processes and documentation expert.
Once you’ve aligned your company’s procedures and systems with the requirements defined in SOC 2 audit certification, you should ideally go for a professional readiness assessment before heading into an official audit.
Most organizations hire external firms to conduct a readiness assessment in coordination with their internal team. However, your internal team can also perform a readiness assessment if it has the necessary skillset.
SOC 2 Audit Cost
After the pre-audit phase is complete, you’ll head into the audit phase that comes with its own set of costs and expenses.
Let’s break them down one by one.
Choosing An Auditor
Only an AICPA approved audit firm can conduct a SOC 2 Type 1 and Type 2 audit. However, you still have various options when choosing an audit firm.
If you go for one of the world’s top firms like KPMG or Fergusons, your audit cost could up significantly (in several hundred thousand dollars.)
If you’re looking for a cheaper option, you could go for a smaller firm approved by the AICPA and has the necessary expertise in information security audits.
You could also hire an AICPA approved consultant firm or a cybersecurity CPA firm with experience in conducting SOC 2 audits. Many of these firms only conduct SOC 2 and other related information security audits and are much cheaper than the bigger audit firms.
We’ve already discussed SOC 2 audit types and their costs in detail. Your overall audit costs rely heavily on the type of audit you’re performing. Many organizations go directly for a Type 2 audit to save money since it covers both Type 1 and Type 2 audits requirements.
Managing The Audit Process
Your internal team will remain engaged with the audit firm throughout the SOC 2 audit process. The auditors will either visit your premises or stay in touch with you over the internet.
In either case, your internal team will need to accompany them and assist them throughout the process.
Your company might also bear any overheads and entertainment expenses of the auditors if they choose to conduct the audit on your office premises.
Legal Fees For Contract Reviews
SOC 2 audits also govern your company’s various contracts and agreements with other service providers and vendors. You’ll need to pay separately for the legal review of these documents by a competent legal firm/expert.
The bulk of your SOC 2 audit costs are incurred in the pre-audit and audit phases. However, the post-audit phase also includes certain charges.
Becoming a SOC 2 certified company means you’ve committed to specific information security and data privacy standards. Your primary expense in the post-audit phase is maintaining the minimum standards required in a SOC 2 certification.
SOC 2 certified companies need to apply for a re-audit every year to keep their certification active. The re-audit phase does not cost as much as the first audit since you’ve already invested in your infrastructure and personnel. However, you’ll still need to pay the audit fees to remain a SOC 2 certified company.