• September 16, 2024November 13, 2024
• Betterleg Studios

What Costs Go into SOC 2 Reporting?

As your social impact company grows, securing a SOC 2 report becomes an essential part of building trust with partners, customers, and stakeholders. However, issuing a SOC 2 report can be a significant investment, involving various costs that go beyond just the audit itself. In this post, we’ll break down the key components of a SOC 2 project and explore the different types of costs involved.

1. Closing Compliance Gaps: Tools and Technology

Before you can even begin the audit process, your organization must ensure that it has the proper security controls in place. This could mean investing in key security tools and addressing any compliance gaps in your existing infrastructure. Common security gaps that need to be filled before a SOC 2 audit include:

Key Security Tools

• Firewalls and Network Security: A robust firewall is essential for protecting your internal network from external threats. If your company lacks this, it’s one of the first investments you’ll need to make.
• Logging and Monitoring: A critical part of SOC 2 compliance is the ability to log system activities and monitor them for unusual behavior. You may need to implement logging solutions, such as a Security Information and Event Management (SIEM) system, to track activities and alerts.
• Data Encryption Tools: If you are handling sensitive data, implementing strong encryption protocols for both data in transit and at rest is required.
• Endpoint Protection and EDR: Ensuring all devices in your network are protected with up-to-date security tools like Endpoint Detection and Response (EDR) is vital to your security posture.

These tools not only improve your security posture but are also necessary for meeting SOC 2 Trust Service Criteria. Estimated costs for these tools can range from a few thousand dollars to upwards of $50,000 annually depending on the complexity of your infrastructure.

2. Employee Time and Engagement

SOC 2 reporting is not just an IT project—it involves people across multiple departments. Employees will need to contribute their time to design controls, gather documentation, and attend meetings with the audit team.

Designing Controls

You’ll need input from key employees across IT, HR, Finance, and Legal to design and implement effective controls that meet SOC 2 requirements. These controls might cover everything from data access management to incident response plans.

Time for Audit Meetings

Employees from different departments will also need to participate in audit-related meetings. This includes kickoff meetings, walkthroughs, and evidence collection. Depending on the size of your organization, this could mean significant time commitment, especially from leadership roles.

• Estimated Employee Time:
  • IT and Security teams: 40-100 hours
  • Legal and HR: 20-40 hours
  • Executive/Management: 10-20 hours

While it’s difficult to put a price tag on this, the opportunity cost of pulling employees away from their daily responsibilities is something to consider. For a company with over 50 employees, this can represent thousands of dollars in productivity costs.

3. Governance, Risk & Compliance (GRC) Software

Managing a SOC 2 project manually can be overwhelming, especially when you need to track numerous controls, document policies, and gather evidence. This is where Governance, Risk, and Compliance (GRC) software comes into play.

GRC software platforms help automate the management of your SOC 2 compliance program, making it easier to track control effectiveness, gather necessary documentation, and stay audit-ready. Some popular GRC tools include offer templates and workflows specifically designed for SOC 2 compliance.

Key Benefits of GRC Software:

• Automates evidence collection and control monitoring.
• Provides a central repository for policies, procedures, and controls.
• Simplifies the reporting process and ensures you remain audit-ready.

Estimated Costs for GRC Software:

Depending on the size of your organization and the level of complexity, GRC software typically costs between $10,000 to $40,000 per year.

4. Audit Firm Costs

Once your controls are in place and your organization is SOC 2 ready, the next major cost is hiring a qualified audit firm to conduct the actual audit and issue the SOC 2 report. The cost of hiring an audit firm will vary depending on several factors, such as the scope of the audit, the size of your organization, and whether you’re seeking a Type I or Type II report.

Type I vs. Type II SOC 2 Report

• SOC 2 Type I assesses your company’s controls at a single point in time. It is generally less expensive and quicker but provides a more limited assurance.
• SOC 2 Type II assesses your controls over a longer period (typically 3-12 months), providing a more comprehensive evaluation but costing more due to the extended timeframe.

Choosing an Audit Firm

When selecting an audit firm, look for one with experience in auditing organizations of your size and industry. They should understand the unique requirements of your social impact business and how SOC 2 criteria apply to your specific operations.

Estimated Costs of SOC 2 Audits:

• SOC 2 Type I Audit: $20,000 – $50,000
• SOC 2 Type II Audit: $30,000 – $100,000

These costs cover the entire audit process, including planning, control testing, evidence gathering, and issuing the final report. The more complex your organization and systems, the higher the costs will likely be.

5. Additional Costs to Consider

In addition to the primary costs, there are several other expenses to consider when preparing for SOC 2 reporting:

• Training: You may need to invest in employee training to ensure your team understands the SOC 2 process and knows how to implement the necessary controls.
• Remediation Costs: If the audit identifies gaps in your controls, you may need to invest additional time and money in remediation efforts to close those gaps before receiving your SOC 2 report.
• Consulting Fees: Some companies choose to hire external consultants to guide them through the SOC 2 process, especially if internal resources are stretched thin. Consulting fees can range from $10,000 to $50,000 depending on the level of support needed.

Conclusion

Issuing a SOC 2 report requires careful planning, dedicated resources, and a financial investment. By understanding the costs involved—whether it’s closing compliance gaps, dedicating employee time, investing in GRC software, or paying for the audit itself—you can better prepare your organization for this essential certification.

While SOC 2 reporting can be expensive, it’s also a critical step in demonstrating your company’s commitment to security and compliance. In the long run, it can open doors to new business opportunities and provide assurance to customers and partners that your organization takes security seriously.