How Much Does a SOC 2 Audit Cost in 2021?

How Much Does a SOC 2 Audit Cost in 2021?

Are you considering a system and organization (SOC) 2 certification, but are concerned about the cost? For many companies a SOC 2 certification is low on the list of priorities, especially when budget is involved. However, with the changing environment and increased focus on remote working, cybersecurity is a top concern for businesses. A SOC 2 report will provide detailed information on if organizations are meeting the trust services criteria and implementing organizational controls or capabilities related to security, availability, processing integrity, confidentiality, or privacy of customer data. This is a standard for AICPA (the American Institute of Certified Public Accountants) and key to assessing if a company is managing security and compliance correctly. Ultimately the purpose of SOC standards is to provide confidence for organizations when they are dealing with third-party vendors that they are handling customer information securely and correctly. 

The AICPA advises that SOC 2 compliance plays an important role in an organization’s oversight, vendor management, their internal corporate government and risk management processes, and regulatory oversight. A SOC 2 audit is also an important component in internal management and risk management

There are two types of SOC 2 audits, and the main difference in the audits is time — both how much time is taken to conduct the audit and the amount of time covered within the audit review. Learn how to identify the key factors that affect SOC 2 audit cost — including the time consideration, where your company currently stands with regard to audit readiness, and additional internal costs — to determine which SOC 2 review is the right one to pursue. 

What Does a SOC 2 Audit Cost Nowadays?

In 2021, a total cost for a SOC 2 audit varies based on the size of the company being audited and the complexity of the audit. SOC 2 audits fall into two categories: Type 1 and Type 2 — sometimes written as SOC 2 Type I and Type II. SOC 2 certification cost can vary quite a bit depending on which type a company pursues, how much advance work an internal team has completed, and the company’s overall size and scope.

Typically a report cost for a Type 1 audit is less expensive than a Type 2 audit because the report is tested to only cover the company at a point in time, instead of over a review period. Making itself less extensive than a Type 2. Overall, quotes range from $10,000-$60,000 for Type 1 reports and $30,000-$100,000 for Type 2 reports. 

Due to so many variables, most experts agree that a set price should not be quoted without additional, specific context about a company’s needs and goals. There’s no one-size-fits-all approach to the audit, and resulting SOC 2 reports will vary in total cost and total length — often ranging anywhere from 25-100+ pages. 

Ultimately, price is going to vary based on which type of report a company pursues, with the decision of a Type 1 or Type 2 audit depending on the company’s needs — which we’ll examine in more detail in the following sections.

How Much Does a SOC 2 Type 1 Audit Cost?

The SOC 2 audit cost for a Type 1 typically has a starting cost anywhere from $10,000-$60,000. That SOC 2 certification cost — which certifies that a company’s policies, technology and procedures comply with requirements as of a certain point in time— does not include the additional cost of a readiness assessment and the many internal expenses. A readiness assessment is a review to determine if a company is prepared to pass SOC 2 security and compliance reviews, and can be done in-house, but most companies outsource that work at estimates that often start at $10K. Internal team expenses include time spent with team members dedicated to the project or liaising with consultants, all technical work and training that may be put into place to meet requirements, and legal labor associated with vendor document reviews. 

A Type 1 report is a security snapshot that represents an auditor’s review of a company at that moment in time, and estimates usually start at $10,000. A Type 2 audit is more expansive — showing that a company not only understands the security procedures but follows them over a period of time, up to twelve months. One thing to consider: many vendors and clients require the stronger Type 2 report, so if that is a possibility for your business then it may be more cost-effective to skip Type 1 and go directly to Type 2 reports.

How Much Does a SOC 2 Type 2 Audit Cost?

The SOC 2 audit cost for Type 2 reports usually has a starting range anywhere from $30,000-$100,000. The key difference in the Type 2 reports is the expanded review timeline of 3-12 months, and that extra timing and review can be the reason behind the higher cost. The Type 2 reports also have the same readiness assessment and in-house team labor costs as the Type 1 SOC audit cost breakdown above.

What Are Other Potential SOC 2 Costs?

Outside of the overall audit vendor and consulting fees, there are other costs to bear in mind. Adding and implementing security tools, internal team training, legal fees and the opportunity cost to the business are all additional SOC 2 costs.

  • Security Tools: While prepping for the audit, companies may need to acquire additional tools to reach compliance. Some examples are software assisting with background checks for team members, employee laptop security upgrades like hard drive back up and encryption, antivirus software, and more.
  • Implementation Efforts: If required security changes, improvements or adjustments need to be made to meet certification requirements, then team time spent toward making those changes is an additional cost.
  • Team Training: Many teams decide to do internal security awareness training, either in-house or through an outside firm. Ideally this will incorporate data security practices into team processes, and comes at an added cost, but can be critical to maintaining internal controls
  • Legal Fees and Time Spent: An in-house legal team or outside lawyers will need to spend time reviewing agreements with clients and outside vendors, ensuring that all criteria are met.
  • Internal Team Opportunity Cost: Another report cost to consider is opportunity cost for internal employees launching any new initiatives or delaying projects already in flight. Whatever time team members devote to assisting with SOC 2 compliance will be time spent away from other duties and responsibilities, and that may mean other projects are delayed or deprioritized. 

How Long Does a SOC 2 Audit Take to Complete?

Because they are often less involved and less time-consuming, SOC Type 1 reports are usually completed faster than SOC Type 2 reports. The additional 3-12 month review required in a Type 2 audit is the key factor increasing the timeline for the overall review. Internal preparation for the audit typically takes anywhere from 1-5 months depending on the size and scope of the company. After that, a rapid SOC 2 Type 1 report may be completed in as little as four weeks, and an expanded SOC 2 Type 2 audit takes as much as 18 months. How long it takes to achieve SOC 2 compliance is ultimately answered based on whether or not you choose Type 1 or Type 2 and the scope and size of the project, and can range anywhere from one month to over one year.

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What Does a SOC 2 Audit Include?

A Type 1 report — the snapshot audit, or test of design— generates a report just based on one date. The Type 2 audit, or test of operating effectiveness — carried out over multiple months — is an expanded report. Reports should include an opinion letter, management assertion, a detailed description of the system or service, details of the selected trust services categories, tests of controls along with the results of that testing, and other additional detail as needed. The audit also specifies whether or not the organization is in compliance with the AICPA SOC 2 trust services criteria. The length of the final report can range anywhere from 25-100+ pages, or even outside of that. 

How Often Are SOC 2 Audits Done?

SOC 2 reports often begin with a Type 1 report and are followed up the next year and in subsequent years with Type 2 reports. It’s recommended that companies run a SOC 2 annually because any report older than one year is considered stale, and is not valuable for the company or their partners and vendors.

How Is a SOC 2 Audit Different With AuditBoard?

SOC 2 audit cost varies widely based on a company’s readiness assessment state, timeline, the size and scope of the company and whether they choose a Type 1 or Type 2 audit to reach SOC 2 compliance. Yet, the SOC 2 price is a worthwhile investment, as certification positions a company to be more attractive to partners and vendors in a competitive marketplace where maintaining customer data security and compliance is more important than ever.

Many businesses consider how to keep the cost of a SOC 2 audit down. One thing to consider is that a SOC 2 audit is different when companies use a cloud-based governance, risk management and compliance platform like AuditBoard. Companies can lower the cost of a SOC 2 audit with the benefit of compliance management software that helps companies accelerate their compliance goals, increase efficiency and improve overall compliance culture. See how AuditBoard can help position your company to kick off a readiness assessment and gear up to lock in a SOC 2 review.