When companies handle customer data or provide technology services, SOC audits are often required. This guide explains what SOC audits mean and how to prepare, especially for small businesses without large security teams.
What is SOC?
SOC (System and Organization Controls) is an auditing framework created by the American Institute of Certified Public Accountants (AICPA). There are three types:
- SOC 1: Focuses on controls related to financial reporting
- SOC 2: Evaluates controls around non-financial criteria, including security, availability, processing integrity, confidentiality, and privacy (most relevant for small businesses)
- SOC 3: A shorter, public-friendly version of SOC 2
Type I vs. Type II Audits
- Type I: Evaluates control design at a single point in time
- Type II: Evaluates how effectively controls operate over a period (typically 3-12 months)
Most companies start with Type I, then progress to Type II after a year of implementing controls.
SOC 2 Audit Costs
Typical pricing ranges from $10,000 to over $100,000, with most organizations spending $25,000-$50,000 for Type I audits. Type II costs are generally higher. These figures cover only the audit itself, not preparation services.
Seven-Step Preparation Framework
Step 1: Define Scope and Objectives
- Identify which systems or services handle customer data
- Select relevant Trust Services Criteria (at minimum: Security)
- Consider additional criteria like Availability or Confidentiality based on business needs
Step 2: Create or Update Written Policies
Essential policies include:
- Information Security Policy
- Access Control Policy
- Change Management procedures
- Incident Response plan
- Data Retention and Disposal guidelines
- Endpoint Protection Policy
Policies must reflect actual practices—auditors verify compliance with documented procedures.
Step 3: Implement Controls in Practice
Technical Controls:
- Firewalls and network monitoring
- Data encryption (in transit and at rest)
- Security Information and Event Management (SIEM) systems
Administrative Controls:
- Security training programs
- Documented system change approvals
- Background checks during hiring
- Vendor security assessments
Automation of controls simplifies audit preparation.
Step 4: Document Everything
Required documentation includes:
- Onboarding/offboarding checklists
- Change logs
- Incident reports
- Audit trails showing access records
Organized documentation saves significant time during formal audits.
Step 5: Select a Reputable SOC 2 Auditor
Choose auditors based on:
- Experience with similar-sized organizations
- Industry-specific knowledge
- Straightforward, educational approach
Only licensed CPA firms can issue official SOC 2 reports.
Step 6: The Audit Process
SOC 2 Type I audits typically take 60-120 days. The process includes:
- Evidence collection (policies, logs, access reviews)
- Staff interviews and process observations
- Control testing (for Type II audits)
Organization and team alignment ensure smooth audits.
Step 7: Review, Remediate, and Maintain
After audit completion, address any exceptions (control failures). Security and compliance require ongoing maintenance, with SOC 2 reports typically renewed annually or biannually.
Key Takeaways
- Define your audit scope and objectives carefully
- Develop comprehensive, realistic security policies
- Implement both technical and administrative controls
- Maintain thorough documentation throughout
- Choose auditors experienced with your business type
- Plan for continuous improvement post-audit
- Budget appropriately for audit and preparation costs