What SOC 2 report is and how much it costs

What SOC 2 report is and how much it costs

SOC 2 is basically one of those audit reports that helps regulate and audit data regarding a Service Organization Security (SOC). According to UnderDefense, it also controls the presence, probability of the processing speed in the service organization and security controls. Additionally, when we speak about the SOC 2 report cost, it all depends on the type of record. What kind of information is to be kept within and what can be made public is also the task of the report and also affects the SOC 2 report cost. It regulates the compliance with AICPA (American Institute of Certified Public Accountants) and their trust criteria.

Auditing is a complex task, including a sophisticated set of rules and regulations. Therefore, the American’s institute’s TSC (Trust Services Criteria) has come up with assured standards for auditing that are in line with the principles and categories. So let’s get into the basics!

Basics to get into

The SOC 2 report, simply means, an affirmation that the client’s services are effective and sustainable. The clientele is usually the investors who would want to invest in the services need to know if it is worth buying or investing in the services. We are going to talk about the types, how it is created and how much SOC 2 report costs.

That is where this report comes in handy. Reading the report, one can know if these services are going to stay in the market and if their services are suitable or not. Also, the integrity, privacy and security controls are reported in it and are equally crucial for the clients. There are 2 types:

  • Type 1: this one is done on a specific date
  • Type 2: it is carried out over a longer period of time (like 6 months or a year)

What is included?

Now that you understand what is an SOC 2 report, let us go into some details of the same. As discussed, it portrays the quality of the service and other regulatory factors of the organization’s services. Following is included:

  • a letter that describes the opinion of the service
  • how assertive is the management
  • a comprehensive report of their services
  • a detailed testing of all the controls
  • the results of all sorts of testing
  • other data regarding the organization, if required

The process

SOC 2 report is a comprehensive set of data put together of the organization’s services. That alone tells the complexity and the process. Based on the type of report, it can be done in one day (Type 1) or take several months (Type 2) which is a cumulative assessment of the services. The process includes the following steps:

Step 1: Reviewing the audit

When the audit of the SOC is done, it is reviewed by the experts if all the details have been audited and if all the information has been covered in the auditing process. That is why the auditing stage is the most important stage of such a report.

Step 2: Plan for the project

The next step is to develop a plan for the project. Once the audit is done, based on that the plan could be developed. It requires all the experts to talk about the services, the designs, how effective the service is going to be and the functionality. This stage is time intensive and is one of the most important stages of creating a report.

Step 3: Testing the design

Once all the details are discussed in the planning phase, a blueprint of the designs are created. The next step requires testing the designs extensively. The testing phase is crucial to find out problems with the design and to make corrections before releasing the service for the clients.

Step 4: Recording the results

Following the order, once the testing phase is over, it is time to record all the results for interpretation. The task of the report is to just present the findings without any interpretations or suggestions for changes.

Step 5: Submitting the report

Finally, after the whole planning and testing, the report is submitted to the client. Usually, all this is done within the deadline provided by the company or the client. Keeping the extensibility of the work and data required, the submission period is narrow but doable.

Step 6: Talking about the report with the client

It is important to communicate with the client once the report is completed and submitted. It is possible that the client would want some changes or maybe something is not clear about the report. Being vocal and talking about the report is, therefore, a crucial section of the report creation.

How much does SOC 2 cost?

Now that you understand the basics and the process, let us have a look, how expensive or how cheap it is. The average cost of SOC 2 report, type 1 would be around $90,000 to $180,000 and may take up to a year to prepare. This price includes all the costs, including the staff and the auditor.

The type 1 is mostly directed towards the documents and prioritizes the changes that are to be made. Once the problems have been sorted out, then type 2 can be prepared. SOC 2 type 2 takes longer, almost 15 months, and this one costs around $32,000.

Why is the price less although it takes longer? Well, it has everything that was in type 1. That means half of the report is already prepared. Additionally, it includes the changes, the assurance that the service is functional and operates as expected. It takes longer because SOC 2 type 2 audit is a cumulative finding of SOC 2 type 1 for over 6 months.

Final thoughts

In general, SOC 2 reports are important to test the sustainability and functionality of a service. There are mainly two categories, one for a specified time and the other one for a longer period of time. The report preparation for both may take about a year on average.

Based on the difficulty and type, it might take less (6 months) or more (15 months). As UnderDefense states, these audits are important to detect the deficits and to make necessary changes for better functionality of the service.

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