What is a SOC 2 Audit?
A System and Organization Controls for Service Organizations 2 (SOC 2) audit evaluates how well a service provider’s internal controls protect customer data’s privacy and security. Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 is essential for SaaS companies, cloud providers, and other service organizations that handle sensitive customer information.
A SOC 2 auditor measures your organization’s controls against the Trust Services Criteria, producing an attestation report that states whether your controls adequately protect data security.
The Five Trust Services Criteria
- Security – Protection against unauthorized access (physical and logical)
- Availability – System uptime and operational reliability as committed
- Processing Integrity – Complete, accurate, timely, and authorized system processing
- Confidentiality – Protection of information designated as confidential
- Privacy – Proper collection, use, retention, and disposal of personal information
Types of SOC Reports
SOC 1 vs SOC 2 vs SOC 3
SOC 1 focuses on internal controls affecting financial reporting. If you provide financial processing services, clients may require SOC 1 to ensure accurate financial transactions.
SOC 2 assesses data security practices across the five Trust Services Criteria. The security criterion is mandatory; the other four are optional based on your services and risks.
SOC 3 covers the same areas as SOC 2 but produces a shorter, public-facing report suitable for marketing purposes.
Type 1 vs Type 2 Reports
Type 1 provides a snapshot of your controls at a specific point in time, assessing whether they’re properly designed.
Type 2 tests whether those controls work effectively over a period (minimum 6 months, typically 12 months).
Most organizations start with Type 1, then proceed to Type 2 for ongoing compliance demonstration.
Why SOC 2 Matters
SOC 2 compliance delivers critical business benefits:
Trust & Competitive Advantage – Demonstrates your commitment to data security, often required by enterprise customers before they’ll do business with you.
Risk Management – Identifies vulnerabilities in your data management and security practices before they become incidents.
Regulatory Alignment – Supports compliance with frameworks like HIPAA, PCI DSS, and GDPR.
Cost Prevention – The average data breach costs $4.45 million (IBM, 2023). SOC 2 helps prevent these costly incidents.
Market Access – Many industries now consider SOC 2 a baseline requirement for service providers.
Operational Efficiency – The audit process helps streamline processes and improve overall security posture.
The Audit Process & Timeline
Preparation Phase (1-3 months)
- Define Scope – Determine which Trust Services Criteria apply to your organization and services.
- Gap Analysis – Compare existing controls against SOC 2 requirements to identify deficiencies.
- Policy Development – Create or update security policies, procedures, and documentation.
- Technical Controls – Implement necessary security measures:
- Access controls and authentication
- Encryption and data protection
- Monitoring and logging systems
- Backup and recovery procedures
- Vulnerability management
- Evidence Collection – Gather documentation proving control effectiveness:
- Security policies and procedures
- Access control records
- Training materials and certifications
- Vendor agreements and assessments
- Incident response documentation
Audit Execution Phase (6-8 weeks)
- Auditor Selection – Choose a qualified CPA firm with SOC 2 experience in your industry.
- Fieldwork – Auditors will:
- Review documentation and policies
- Interview key personnel
- Test control effectiveness
- Inspect facilities and systems
- Analyze change management processes
- Remediation – Address any identified gaps or weaknesses.
- Report Issuance – Receive your official SOC 2 attestation report.
Total Timeline
- Type 1 Audit: 4-6 months from start to finish
- Type 2 Audit: 7-12 months (includes 6+ month control operation period)
Costs & Requirements
SOC 2 Compliance Costs
Audit Fees:
- Type 1: $20,000 – $60,000
- Type 2: $30,000 – $75,000
Additional Costs:
- Gap analysis and consulting: $5,000 – $20,000
- Technology and security tools: $10,000 – $100,000+
- Policy development: $5,000 – $25,000
- Training programs: $1,000 – $10,000
- Ongoing maintenance: Variable
Cost Factors:
- Organization size and complexity
- Number of Trust Services Criteria in scope
- Current security maturity level
- Number of locations and systems
- Remediation requirements
Key Requirements
- Controls must align with applicable Trust Services Criteria
- Type 2 requires minimum 6-month operational period
- Must use independent, licensed CPA firm
- Comprehensive documentation of policies and procedures
- Evidence of control operation and effectiveness
- Management assertion of compliance
- Annual re-assessment recommended
Choosing the Right Auditor
Essential Qualifications
Licensed CPA Firm – Only CPAs can perform SOC 2 audits per AICPA requirements.
SOC 2 Experience – Look for firms with proven track records in your industry and organization size.
Technical Expertise – Ensure the team understands current cybersecurity threats and controls.
Quality Controls – Verify the firm undergoes peer reviews and maintains AICPA standards.
Evaluation Criteria
- Experience: Industry-specific SOC 2 audit history
- References: Client testimonials and case studies
- Pricing: Transparent fee structure aligned with your budget
- Timeline: Realistic project schedules
- Support: Availability for questions and remediation guidance
Red Flags to Avoid
- Conflicts of interest (providing implementation services)
- Lack of cybersecurity expertise
- Unrealistic timelines or pricing
- Poor communication or responsiveness
- No industry-specific experience
Frequency & Maintenance
How Often Do You Need SOC 2?
Standard Schedule:
- Initial Type 1 audit
- Type 2 audit annually thereafter
- Reports are valid for 12 months
More Frequent Audits May Be Needed When:
- Operating in high-risk industries (healthcare, finance)
- Experiencing rapid growth or system changes
- Customer contracts require semi-annual reports
- Recovering from security incidents
Ongoing Compliance
Maintaining SOC 2 compliance requires continuous effort:
- Monthly: Review security metrics and logs
- Quarterly: Conduct internal control assessments
- Annually: Prepare for external audit
- As Needed: Update policies for system changes
Key FAQs
Q: Is SOC 2 legally required? A: No, SOC 2 is voluntary. However, many enterprise customers require it contractually before doing business.
Q: How long is a SOC 2 report valid? A: SOC 2 reports are valid for one year from the issue date. Reports older than 12 months are considered “stale.”
Q: Can we perform SOC 2 internally? A: No, SOC 2 audits must be performed by independent, licensed CPA firms to maintain objectivity and credibility.
Q: What’s the difference between SOC 2 and ISO 27001? A: SOC 2 focuses specifically on customer data protection controls, while ISO 27001 is a broader information security management system standard.
Q: Do we need all five Trust Services Criteria? A: Security is mandatory. The other four (availability, processing integrity, confidentiality, privacy) are optional based on your services and customer requirements.
Q: What happens if we fail the audit? A: You won’t “fail” – instead, you’ll receive findings that need remediation. You can address these issues and continue the audit process.
Who Needs SOC 2?
SOC 2 is essential for service organizations that handle customer data, including:
Technology Companies:
- SaaS providers
- Cloud computing services
- Data centers and hosting providers
- IT managed services
Business Services:
- Financial processing
- Healthcare claims processing
- Customer support services
- HR and payroll services
Professional Services:
- Legal firms handling sensitive data
- Accounting and auditing firms
- Consulting organizations
- Document management services
If your organization stores, processes, or transmits customer data – especially sensitive information – SOC 2 compliance is likely necessary for business success.
Next Steps: Streamline Your SOC 2 Journey
Managing SOC 2 compliance manually through spreadsheets and emails is time-consuming and error-prone. ZenGRC’s compliance management platform automates and streamlines the entire SOC 2 process.
Key Benefits:
- Get audit-ready in under 30 minutes
- Automate evidence collection and control monitoring
- Real-time compliance dashboards and reporting
- Integrated support for multiple frameworks (SOC 2, ISO 27001, PCI DSS, HIPAA)
- Collaborative workflows to reduce staff burden
Ready to simplify your SOC 2 compliance? Schedule a demo today to see how ZenGRC can accelerate your audit process and maintain ongoing compliance with confidence.