Posted on November 21, 2024November 21, 2024

If you’re just starting out in the B2B space as a vendor or pivoting your current operations to offer data-driven services, you might be getting questions about “SOC 2 Compliance”. A compliance standard, SOC 2 signals to any potential business partners that you are serious about data security. It’s become the baseline standard for showing your company is protecting sensitive data in some meaningful way. This means not being SOC 2 compliant is a major red flag for anyone looking to hire you as a vendor and you’ll be unlikely to win much business without it.

Though it’s just a baseline, becoming SOC 2 compliant is not a walk in the park. With complex requirements and fees reaching the $20,000 range, you’ll want to make sure you have your ducks in a row instead of rushing to get started.

If you’re just beginning your cybersecurity journey or simply need more information about this specific compliance standard, we’ve created a handy guide to give you all the relevant details about SOC 2 and offer some expert guidance to help make the path to compliance a bit easier.

In this blog, we’ll dive into the details of:

• What SOC 2 is, how you should approach the compliance process, and how much it generally costs.

• Why SOC 2 compliance signals basic vendor responsibility.

• Key benefits for companies that achieve SOC 2 compliance.

Hopefully, by the end of this blog, you’ll have a better sense of how to approach achieving SOC 2 compliance and be able to get moving toward that goal with confidence.

What is SOC 2 Compliance?

SOC 2 (Service Organization Control 2) is an auditing standard developed by the American Institute of Certified Public Accountants (AICPA) that assesses a service organization’s controls related to information security, privacy, and processing integrity.

Designed with flexibility, SOC 2 doesn’t prescribe a specific set of strict security controls to follow; instead, it requires you to demonstrate that you meet the specific Trust Services Criteria relevant to your business.

This means you can decide which security areas (like data protection, system uptime, or privacy) are the most important for your company and focus on proving that you’re handling those areas responsibly.

The Five Trust Service Criteria

The SOC 2 framework is built around five Trust Services Criteria—also known as the Trust Service Principles—that address essential aspects of security and client trust. The five categories are:

• Security: Protection against unauthorized access to systems and data.

• Availability: Ensuring that systems are operational and accessible as expected.

• Processing Integrity: Verification that data processing is complete, accurate, and authorized.

• Confidentiality: Restricting and safeguarding sensitive information.

• Privacy: Managing personal information responsibly, from collection to usage.

By focusing on these Trust Services Criteria, SOC 2 helps your service organization zero in on the most critical aspects of data protection while also allowing for flexibility in how you achieve compliance.

SOC 2 Type I vs. Type II: What’s the Difference?

SOC 2 also offers two types of audits based on where your company is in its compliance journey.

Type I Audit

This audit evaluates your organization’s SOC 2 controls at a single point in time. It assesses whether you have the necessary security controls in place and whether those controls are designed effectively. Type I is usually quicker and less expensive because it focuses on a snapshot of your current security practices.

When to Choose Type I:

• If you’re just starting out with SOC 2 compliance.

• If your potential clients or partners mainly need confirmation that controls are in place.

• If you want a fast way to demonstrate commitment to security while preparing for a Type II audit later.

Type II Audit

This audit evaluates your controls over an extended period (usually six months to a year). It audits both the design and operating effectiveness of your controls over time. Because it requires ongoing monitoring and testing, Type II takes longer and typically costs more.

When to Choose Type II:

• If your clients require proof that your controls are reliable over time.

• If you’ve already done a Type I audit and are ready to demonstrate long-term effectiveness.

• If you’re aiming for a higher level of credibility, especially with larger clients or regulated industries.

Which Audit Type Should You Choose?

Start with Type I: If you’re new to SOC 2 and want to get compliant quickly. Type I lets you establish a foundation and show clients you’re serious about security.

Go for Type II: If you already have your security controls in place and they are operating smoothly. Many larger clients, especially in customer data-heavy industries like finance or healthcare, prefer a SOC 2 Type II report because it demonstrates ongoing compliance.

How SOC 2 Compliance Works

Understand the Standard SOC 2 Framework

Service organizations seeking SOC 2 compliance should start by reviewing the SOC 2 framework to understand the Trust Services Criteria and specific control requirements.

How to Begin:

Access the SOC 2 Framework: The framework isn’t a public checklist, but you can access the SOC 2 framework materials through CPA organizations or certified public accountants who specialize in SOC audits. You can either purchase access to the framework materials through these channels or work with compliance consultants who can help guide you through the requirements.

Identify Your Most Relevant Trust Services Criteria: SOC 2 compliance allows you to select the criteria that best apply to your business. For example, a company focused on handling sensitive personally identifiable information (PII) may prioritize security criteria and confidentiality, while one focused on service uptime may want to add availability to the audit scope.

Complete a Gap Assessment: Conducting a readiness assessment can help identify any gaps in the service organization’s controls. You can do this alone or with the help of a third-party consultant, who can help outline the specific policies and practices you’ll need to implement to comply with SOC 2.

Follow Explicit Guidance on Controls: While SOC 2 is flexible and allows service organizations to tailor controls to their operations, the guidance provides detailed criteria for each Trust Service Principle. For example, it will outline control objectives related to access controls, system monitoring, data encryption, etc., providing examples of what auditors expect to see in place.

Preparing for the Audit

The preparation process for SOC 2 will require significant man-hours to assess the gaps in your security profile (“gap assessment”), implement internal controls, and perform internal testing to gauge effectiveness. With audit fees ranging anywhere from $5,000 to upwards of $60,000 and total compliance costs often reaching six figures, this preparation is critical to make sure you don’t end up wasting your time and money.

Engaging with an Auditor

When you’re ready, you’ll hire a third-party auditor–usually a CPA firm specializing in SOC 2 audits–to review evidence of your compliance with the SOC 2 framework. Once you and the auditor set an audit schedule, you can begin providing documentation, evidence, and access to systems so they can be reviewed.

Audit and Report Process

Your auditor will then assess whether the company’s controls comply with SOC 2’s trust principles by reviewing evidence, interviewing key staff, and testing the effectiveness of security controls over time. This thorough evaluation ensures that all relevant Trust Services Criteria are met. After completing the assessment, the auditor issues a final report detailing the organization’s SOC 2 compliance, including any areas for improvement. This report assures clients that their data is secure and gives you a valuable asset to demonstrate your commitment to data protection and risk management to potential business partners.

Breaking Down the Potential Cost of SOC 2 Compliance

SOC 2 compliance costs can vary widely depending on a few different factors:

Type of SOC 2 Audit (Type I or Type II): Type I audits evaluate your organization’s controls at a single point in time, while Type II audits examine the design and operating effectiveness of your internal controls over time, often increasing the cost.

Scope and Trust Services Criteria: Including additional trust principles in the scope of the audit generally raises the total cost.

Size and Complexity of the Organization: Larger service organizations with more complex systems and controls face higher audit fees.

Outsourced Services and Preparation: Companies frequently hire CPA firms for risk and readiness assessments, with typical fees of $20,000 for a SOC 2 Type I audit and $30,000 for a Type II, plus $15,000 for gap assessments.

Remediation and Security Upgrades: Closing gaps found during your gap assessment might involve updating security tools, improving data handling processes, or implementing new policies, which can require both time and extra investment.

Associated Security Tools and Testing: Many auditors recommend additional security measures, like penetration testing and employee training, to fully ensure compliance, which can also increase your service organization’s total investment.

Typical Breakdown of SOC 2 Costs

Considering both direct and indirect expenses, the cost for SOC 2 compliance can quickly approach or exceed six figures. Here’s a breakdown of some of the typical costs:

Readiness Assessment: $15,000

Risk Assessment: $10,000 – $20,000

Penetration Test: $15,000

Compliance Preparation Costs: $25,000 – $85,000

Formal Audit: $5,000 – $60,000 (or more, based on scope and type)

Annual Maintenance: $10,000 – $60,000

Altogether, SOC 2 compliance often represents a significant investment for any service organization. This is why it generally makes sense for companies to seek out expert guidance to avoid unnecessary costs.

Key Benefits of SOC 2 Compliance for Vendors and Clients

Establishing Trust with Potential Clients

SOC 2 compliance plays a critical role in building trust with potential clients, especially in data-sensitive industries. For businesses seeking vendors, SOC 2 serves as a signal that a company has rigorous controls in place to protect customer data and ensure data security.

Achieving SOC 2 compliance not only demonstrates your commitment to safeguarding client information but also sets you apart in a competitive market where security is increasingly prioritized. Clients can feel confident that their valuable data is handled responsibly, reducing potential risks of data breaches. This trust factor can be a deciding factor in winning new business and strengthening client relationships.

Reducing Liability and Risk

SOC 2 compliance reduces the risk of data breaches, which can result in costly fines, lawsuits, and long-term reputational damage. By maintaining SOC 2 standards, service organizations also demonstrate that they’ve taken steps to manage risk, a key component of reducing liability in today’s security-focused environment.

Improving Operational Standards

Pursuing SOC 2 compliance encourages service organizations to formalize and improve internal processes. By adhering to the service organization controls outlined in SOC 2, you immediately enhance your operational standards while fostering a culture of security awareness and risk management.

Giving You a Security Foundation

While SOC 2 serves as an excellent entry point for cybersecurity, it also provides a foundation for building towards other more robust frameworks, such as CMMC or ISO 27001. Achieving SOC 2 compliance can simplify future compliance processes by establishing strong security habits and giving you an understanding of the compliance process.

The Case for Expert Help with SOC 2 Compliance

Achieving SOC 2 demonstrates you’ve made a commitment to protect customer data, in turn, builds potential client trust. Yet SOC 2 compliance is a significant investment, and for many companies, expert help is crucial to navigating the process.

With complex requirements, high client expectations, and detailed security controls to implement, the journey to SOC 2 compliance can be overwhelming if you’re new to handling sensitive data or compliance jargon. An experienced partner can provide the insights, resources, and strategic guidance needed to avoid costly missteps and streamline your path to compliance.

Having been through the compliance journey ourselves several times over and ultimately achieving one of the top service organization compliance standards, the CompTIA Cybersecurity Trustmark, RTS intimately understands how demanding the compliance process can be.

If you’re looking for a strategic partner to help you implement cybersecurity technologies and strategies that are in line with those needed to comply with SOC 2 standards, we can help. With years of compliance and cybersecurity expertise, we can simplify complex requirements and help ensure that you start your compliance journey with confidence.

Looking to build toward SOC 2 compliance? Contact Krister Dunn at kristerd@reliabletechnology.co. RTS can help you get started.