How much can you expect to pay for a SOC 2 report? What are the main drivers of the cost? 

Let’s start with a reality check: SOC 2 represents a significant investment. The report requires a CPA firm to sign off, it covers a broad operational perspective, and it’s based on guidance that’s several hundred pages long. The signatory to the report carries legal liability to a broad range of users. 

SOC 2 Type 1 and Type 2 report fees can often start in the five figures, and it’s not uncommon to see Big-4 firms charge on the higher end of this spectrum. There are a lot of different factors that make up the cost of a SOC 2 audit, which makes it hard to say exactly what an audit would cost. We dive into the different factors below, but we wanted to start with our approach to SOC 2 and how pricing comes into that.  

We believe that SOC 2 should be attainable for any business, and our pricing reflects this. Our approach isn’t a one-size-fits-all; we tailor the offering (and price) to suit your needs and stage of business. Combining our best in technology and an experienced team, we offer startups a low barrier entry into SOC 2, and on the flip side, we work with enterprises with thousands of staff across the globe. No matter what stage of business you’re in, we’ll meet you there with a viable option for SOC 2 attestations.  

In short, cost shouldn’t be a barrier to working with a good compliance partner. 

There are a few main drivers of the cost of SOC 2 audits. Without going into all the details, the scope is the biggest cost driver. A Software as a Service provider with a single app, outsourced infrastructure, small headcount and limited supporting system components will have the lowest cost. The number of people, processes, and systems are the key indicators of the scope and work involved. 

As headcount grows, processes become more dispersed, larger in scale and the audit work typically requires more coordination and review meetings, etc. The number of systems increases the volume of work in many of the SOC 2 areas, but in the logical security area, which is the highest volume of the SOC 2 criteria to audit. 

The service organization can, to a large degree, determine the scope of the SOC 2 audit. It may cover, for instance, a single service offering or application rather than the full company’s services. However, within that scope, all the relevant systems, data, processes, and people must be included. If some of that is outsourced, it can be excluded using the carve-out method. 

Let’s look at the report in detail: 

There are five Trust Services Principles: Security, Availability, Confidentiality, Processing Integrity, and Privacy. Security is required for all reports, so that’s treated as the base cost. Availability and Confidentiality are the most common additional principles and tend to add about 10-20% to the base cost for each. Processing Integrity and Privacy can vary much more as many firms want to avoid reporting on these more complicated and risky areas. Those that do report on them add about 20-50% each to the base cost. 

In theory, a SOC 2 report is supposed to be prepared wholly by the service organization. The auditor then comes in to review that work and provide an opinion. It rarely works like that in practice, though, as the auditors’ experience is often needed to guide the process.  

The less support needed, the lower the time and costs of audit consultants. Support includes identifying and reporting issues, providing high-level recommendations for remediation, performing multiple reviews during the lead up, and reworking the report itself from the auditor’s feedback. Consultants are expensive, so this can be a significant difference and a key driver of cost in first-time SOC 2 reports. 

Most products and services are priced near competitors in the market. This is not the case with SOC 2 audit services, as illustrated by the broad cost ranges noted above. It wouldn’t be appropriate to mention any fees on behalf of other providers, but there are general differences that influence the costs: 

While cost is an important consideration when choosing an SOC 2 auditor, it shouldn’t be the only thing you evaluate. Other important factors include your potential audit partner’s reputation for audit quality, client service, technology enablement, ease of working together, and other important factors.  

Customer reviews can also provide important insights, as can recommendations from allied service providers such as GRC platforms.  

Since end customers rely on SOC 2 reports during their vendor due diligence, working with a respected, high-quality auditor is important in your SOC 2 report providing the desired marketplace assurance about your security commitment and practices.  

To learn more about SOC 2 reports and choosing the best provider for your needs, contact us. 

A SOC 1 audit examines the internal controls over financial reporting (ICFR) a service provider has in place to ensure transaction processing or data manipulation on behalf of its customers is done consistently and reliably. A clean SOC 1 report provides assurance that transaction and data processing is performed consistently, and the information and can be relied upon by the service organization’s customers and their financial statement auditors.

Planning for an effective SOC 1 audit involves answering a series of questions:

Scoping conversations about your SOC 1 audit should take place early in the process and will typically involve your auditors. Often times, the scope of the SOC 1 can be determined by the purpose of the SOC 1, who is requesting the SOC 1, and what business functions they want coverage over.

An effective SOC 1 audit starts with the readiness phase. Before the audit, you’ll want to establish control objectives, identify the appropriate controls to meet those objectives, and draft control language. Ensuring your controls are best suited and assigned for the purpose of your software and planning for your auditors to walk through your processes, paves the way for a smooth and successful SOC 1 audit.

Most service organizations will have controls within several broad categories:

If a service organization has a completed SOC 2 audit, many of these controls can be mapped over to a SOC 1 report.

If your company only needs a SOC 1, it may make sense to obtain project management resources to work with the company on the core elements of a SOC 1 control environment, such as policies and procedures, entity-level controls, and other key details. Someone with SOC and controls experience can greatly benefit the company.

To learn more, our guide, Getting Your First SOC 1 Report, highlights the compelling benefits a SOC 1 report provides service organizations, and the value of leveraging a completed SOC 2 audit to launch a SOC 1 audit. 

In this part of our change management blog series, we look at the change review and approval process. These are essential parts of development in the constantly changing Software as a Service (SaaS) industry, ensuring the effects of any changes are considered on the platform’s functionality, user experience, security posture, and compliance with standards such as SOC 2. This connects innovation with operational reliability and accountability.

Before exploring the change review and approval procedure, it helps to understand the SOC 2 compliance context. SOC 2, created by the American Institute of CPAs (AICPA), addresses five criteria topics: security (where change management generally sits), availability, confidentiality, processing integrity, and privacy of customer information. SOC 2 compliance is not just a badge of honor for SaaS companies, but also a fundamental component of reliability and security.

Justification of changes

Change proposals or requests usually include a description of the change, the impact, required resources, and the intended outcome or benefit of the change. This stage is essential in clarifying the key points of the suggested feature or modification and laying the groundwork for a thorough assessment. Technical specifications, acceptance criteria, potential customer impact, and impact assessments should be covered in detail. This is especially important when considering the processes and controls required for SOC 2 compliance.

Impact assessment

It is critical to conduct a detailed impact assessment that evaluates the impact the change could have on the organization’s system and its users. The results of the assessment should be used to influence the extent and type of change testing and approval required, any mitigating technical or operational controls required, and communication required internally and externally. 

Change review

A collaborative review based on the type of change and the expected impact, including stakeholders from operations, security, development, and compliance, can ensure the right stakeholder buy-in, awareness, and planning, and increase the likelihood of a successful change design and implementation. The broader the impact or complexity of a change, the more consultation and review may be required with the relevant stakeholders.

Change approval

It’s crucial to establish precise criteria for approving changes. To align with the SOC 2 criteria requirements, changes to data, software, infrastructure, and supporting procedures should be approved prior to implementation. This approval may include stakeholders from the development, security, compliance and/or operational parts of the organization, based on the predetermined criteria (e.g., impact and nature of the change).

This can also involve specifying who has the final approval in the process, typically someone other than the change developer, and making sure they have access to the key data when making their final approval decision. 

Change documentation

For reference and compliance, it is essential to record each stage of the change management process, including development requirements, review, approval, and testing requirements, as well as the rationale for any key decisions during the process. This documentation, which shows due diligence, is a key part of SOC 2 compliance. Technical documentation such as logs in a version control system and audit trails can also be a key reference.

For SaaS companies navigating the change review and approval process with an emphasis on SOC 2 compliance, a comprehensive change management process can be a challenging but crucial step. It is foundational in ensuring that enhancements and developments are safe, compliant, in line with company objectives and technically sound.

When carried out successfully, this can build user and stakeholder trust and reaffirm the SaaS company’s dedication to security, dependability, and ongoing compliance.

To learn more about SOC 2 compliance and change management, contact us.

When it comes to maintaining the integrity and trustworthiness of your organization’s information security practices, SOC 2 attestation is a critical component to help provide assurance to customers, their auditors, and potential business partners.

However, there are instances where the reporting period of a SOC 2 audit does not align perfectly with a company’s fiscal year or dating requirements of other stakeholders. This is where bridge letters come into play.

Before diving into bridge letters, let’s recap what SOC 2 is. SOC 2 (System and Organization Controls 2) is a type of audit report that evaluates an organization’s controls relevant to the AICPA’s Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.

Obtaining SOC 2 attestation is crucial for service organizations that handle sensitive customer data because doing so assures clients and stakeholders that the service organization maintains robust data security measures. Many customers, especially large enterprises, consider a clean SOC 2 report as a basic requirement as they evaluate potential service providers.

To gain a deeper understanding of SOC 2 reports and their components, please refer to our article, “Key Elements of a SOC 2 Report”.

A bridge letter, also known as a gap letter, is a document provided by a service organization (not the service auditor) to address the gap between the SOC 2 audit reporting period and the current date. The bridge letter provides interim (and unverified) assurance that the controls evaluated in the last SOC 2 audit report are still in place and operating effectively.

Bridge letters provide several benefits, including continuity of assurance. Clients and stakeholders rely on SOC 2 reports to assess the security posture of a service organization. A bridge letter ensures there is no gap in assurance between the end of the audit period and the next scheduled audit.

Bridge letters also help service organizations meet their Contractual obligations. Many contracts and regulatory requirements stipulate continuous compliance with internal controls. Bridge letters help organizations provide assurance they are meeting these obligations during the interim period.

They also support business continuity during situations such as mergers, acquisitions, or new business deals, where having an up-to-date assurance of SOC 2 compliance is crucial. A bridge letter provides the necessary assurance for participants to proceed with confidence.

A well-crafted bridge letter typically includes the following elements:

Service organizations issuing bridge letters should keep the following in mind:

Bridge letters play a crucial role in maintaining continuous assurance of a service organization’s SOC 2 control environment. They provide customers, stakeholders, and regulatory bodies with assurance the organization’s controls remain robust and effective between audit periods.

By understanding and using bridge letters effectively, service organizations can provide ongoing trust and compliance in their data security practices.

To learn more about SOC 2 audits and the role of bridge letters, get in touch with our team.

For service organizations that process transactions, manipulate data or store financial information on behalf of their customers, a SOC 1 (short for Service Organization Controls) report provides assurance that the processing of those transactions and data is done consistently and can be relied upon by your customer, and even more relevantly, your customer’s auditors.

A SOC 1 examination centers on the internal controls over financial reporting (ICFR) a service provider has in place to ensure transaction processing or data manipulation is done consistently and reliably. The SOC 1 standard is established and maintained by the American Institute of Certified Public Accountants (AICPA) and the examination is typically conducted by auditors from an independent accounting firm.

SOC 1 engagements require specialized auditor skills, including understanding the relevant standards as well as the business processes of their clients. The auditor provides an opinion upon completion of a SOC 1 engagement with the objective of a successful engagement offering a “clean” opinion that is attached to the SOC 1 report.

A SOC 1 report may be completed in one of two forms. A SOC 1 Type 1 report examines the service organization’s ICFR at a specific point in time and provides evidence on whether the controls are designed properly. A SOC 1 Type 1 report is usually done, if at all, on the initial SOC 1 engagement and as a precursor to the SOC 1 Type 2 report.

However, when your customer asks you for a SOC 1 report, they almost invariably mean a SOC 1 Type 2 report. The fundamental difference is that a SOC 1 Type 2 report tests those controls and their performance over a period such as six months or a year. As such, the SOC 1 Type 2 not only covers whether the controls are properly designed; the controls are also tested to determine if they are operating effectively over the relevant period. SOC 1 Type 2 engagements are by far the most common report, with most covering one year.

SOC 1 and SOC 2 reports have some overlap, but there are fundamental differences with SOC 1 vs. SOC 2.

A SOC 2 report reviews the controls that address the Trust Services Criteria (primarily security, but there are five criteria to choose from) and is relevant for service organizations that have custody of their customer’s data. The Trust Services Criteria provide a framework that can be applied to a wide range of service providers.

On the other hand, a SOC 1 report is focused on business processes specific to the service organization and thus there is significantly more variability because the control environment, and the related controls, will be specific to the service organization.

The testing procedures for a SOC 1 will focus on financial controls and transaction processing, while a SOC 2 will examine general IT controls (ITGC) testing and validation. This is where the overlap comes in. As most SOC 1 systems are built on information technology systems, many controls from a SOC 2 report can be mapped to a SOC 1 report.

Depending on the industry a service organization serves and its customer expectations, a provider may need to obtain both types of reports. If so, there can be efficiency and cost benefits to undergoing both types of audits at the same time.

Because a SOC 1 report is focused on financial reporting controls, it’s best suited for organizations that process or store financial data on behalf of their customers. Typical types of service organizations that may need a SOC 1 include:

Beyond these organizations, any company that processes or stores financial data for a customer may be asked for a SOC 1 report. Often the request for a SOC 1 report will be generated from your customer’s accounting and finance function, or you may get direct requests from a customer’s financial statement auditors (the intended reader of a SOC 1 report). For more information on who needs SOC 1 reports and why they matter watch the video below.

Obtaining independent verification that a service organization’s ICFR is performing effectively, known as a “clean” audit report, can provide several benefits such as:

Beyond compliance, a clean SOC 1 report can provide compelling benefits in attracting and retaining customers:

To learn more about SOC 1 reports and the benefits they can provide your service organization, contact us.

When pursuing SOC reporting, businesses often ask whether to start with a Type 1 or go straight to a Type 2. Both SOC 1 and SOC 2 frameworks offer two report types:

All businesses are looking for the most cost-effective approach. Why spend more than what’s necessary, particularly when it comes to a “compliance” activity? Many businesses see it as a “tick-the-box” where the costs, in terms of external fees and internal time investment, are best minimized.

The industry standard approach to SOC reporting is to first issue a Type 1 report to confirm the design of your control practices, followed by a Type 2 report to confirm the ongoing operating effectiveness. Most customers or end users expect the Type 2 reports to be provided on an annual basis to confirm ongoing effectiveness with continuous coverage.

The first Type 2 period usually starts from the day after the Type 1 report date. But the SOC reporting approach, dates and period(s) are flexible for the business to decide. This should be informed by the end users’ expectations and requirements.

An organization may consider skipping Type 1, but following the path from Type 1 to Type 2 provides the following advantages:

It may seem counterintuitive, but skipping the Type 1 report can cost more over time.

Consider this simplified example:

Client Y incurs more costs—plus a readiness assessment, typically over $10,000, is often needed before launching a Type 2 without a Type 1 foundation.

Type 1 reports provide a controlled environment to identify and resolve issues before the clock starts on your Type 2 reporting period.

Going straight to a Type 2 can leave you exposed. Without a Type 1, you may face gaps in documentation or audit evidence. While a readiness review can help, it’s not a substitute for a full audit and often lacks the rigor needed to instill confidence

Type 1 reports can be issued much sooner—often 3 to 6 months earlier than Type 2. Since Type 2 requires a full reporting period to pass before testing can begin, it naturally takes longer to produce.

If your customers or sales prospects request a SOC report soon, issuing a Type 1 early can satisfy their needs and keep deals moving.

The first audit always takes the most effort. Starting with a Type 1 spreads out that lift.

Type 1 audits focus on testing the design of controls, requiring fewer samples and less testing than Type 2. This gives your team time to get comfortable with the process before scaling up to a full operational audit.

Many first-time Type 2 reports cover only 3–6 months. That limited window often results in “disclosures of non-occurrence,” such as:

These aren’t audit findings, but they can reduce the perceived assurance of your report.

Starting with a Type 1 allows you to demonstrate control design upfront, then follow with a full 12-month Type 2 that shows consistent operation—without gaps.

Controls that pass a Type 1 may later need refinement in a Type 2, where auditors test for operational effectiveness. Starting with Type 1 gives you time to:

This staged approach supports maturity over time, rather than expecting perfection from day one.

We typically recommend clients start with a SOC Type 1 report before moving to Type 2. It’s a strategic way to manage costs, reduce audit friction, and build compliance readiness with confidence. That said, some organizations may still opt to go straight to Type 2 based on urgency or specific customer demands—and that’s fine, too.

Want help determining the best approach for your SOC reporting journey? Contact us. We’re here to help you get it right the first time—and add value beyond the audit.

One of the most effective ways for Software as a Service (SaaS) companies to demonstrate the reliability, accuracy, and security of their services is by obtaining a SOC 1 report.

The Service Organization Controls (SOC) 1 report centers on the controls an outsourced service provider has in place to ensure the transactions or data processing that affect a customer’s financial reporting are completed accurately and reliably. A SOC 1 report focuses on processes and controls specific to the service organization and demonstrates that the provider uses industry-recognized best practices to assess and manage data accuracy risks.

The service organization’s customer is commonly known as a user entity, who typically uses a SOC 1 report’s findings during vendor selection and reviews. Additionally, a SOC 1 report is generally requested in financial reporting audits.

SaaS companies vary from email and CRM providers to companies offering accounting and ERP applications. The risk profile of the SaaS provider varies according to the applications they provide and the data they generate or process for their customers. SaaS platforms that affect their customers’ financial reporting (i.e., commission platforms, or sales and revenue platforms) need to reassure their customers and prospects that their data is accurate, and transactions are processed reliably.

The scope of a SOC 1 audit will include the SaaS provider’s internal controls over financial reporting (ICFRs) and its IT general controls (i.e., change management, logical access, system operations). The provider’s management will identify control objectives that address specific risks they wish to mitigate, as well as controls that are in place to support these control objectives.

Examples of ICFR-related controls for SaaS providers may include data input validation, record maintenance, and transaction reconciliations, or any other measure designed to ensure the validity of financial data and the provider’s security practices.

During the examination, the independent audit firm will review those objectives, test controls, and issue an opinion on the operating effectiveness of the controls that are in place.

Unlike a SOC 2 report, in which a service organization’s practices are compared against specific Trust Services Criteria, SOC 1 control objectives are flexible so providers can align with specific services affecting customer data and industry best practices.

In order to design SOC 1 control objectives effectively, SaaS providers need to focus on the features that effect their clients’ financials. Often times, this can be a daunting and overwhelming task that takes time and effort from the company. However, with the help of Sensiba and our SOC 1 readiness program, we provide consulting services for designing control objectives and identifying supporting controls.

For SaaS companies, a SOC 1 report can provide several benefits:

Providing a SOC 1 report is becoming a common contractual requirement as customers want assurance their financial data will be processed consistently and accurately.

To learn more about SOC 1 reporting for SaaS companies and how it can benefit you, contact us.

The ISO 27001 certification and the SOC 2 report are perhaps the leading frameworks for companies to demonstrate their commitments to securing customer data. Some service providers, depending on their customers and the types of information they handle, can benefit from obtaining both.  

Understanding the uses of each framework, where they overlap, their intended audiences—and whether an organization needs one, the other, or both—can play a large role in helping a service organization enhance its risk management efforts and highlight its security capabilities to current and prospective customers. 

A SOC 2 report provides service organizations with an external opinion on their compliance with a standardized set of industry-neutral controls based on the AICPA’s Trust Services Criteria—security, availability, processing integrity, confidentiality, and privacy.  

Under SOC 2, only the security criterion is mandatory. Deciding whether to include any of the other criteria depends on the types of information a service provider handles and its customers’ requirements.  

SOC 2 is not a certification. Instead, it is an audit opinion on the description of the system (a written narrative describing the infrastructure, data, people, processes, and boundaries of the system), and the controls implemented. 

An ISO 27001 Information Security Management System certification provides service organizations with a framework that’s more prescriptive than the SOC 2 criteria. ISO 27001 helps organizations manage and protect their information assets by developing policies, procedures, and controls to protect information from unauthorized access, alteration, theft, or destruction. 

An ISO certification requires a statement of applicability, risk assessment, internal audit, and management review. The certification also prescribes the number of days, primarily based on the organization’s headcount, an audit will require.  

A key difference between the two is that SOC 2 is not a certification. A SOC 2 report is an attestation by an independent audit firm as to whether the organization under review reasonably meets the standards outlined in the SOC 2 criteria.  

Both reviews look at the following:

ISO 27001 adds the following requirements:

SOC 2 adds the following:

The ISO certification is a three-year certification standard, starting with two stages in the first year. The stage one process is essentially a readiness review to ensure the organization has the information needed for the stage two audit. This will include, for example, items such as the organization’s internal audit function, risk assessment, and key policies and procedures.  

If this initial review identifies any areas of concern, the organization will typically have 30 to 60 days to remediate those issues. Once the areas of concern are addressed, the deeper-dive stage two audit will occur.  

After an organization receives ISO 27001 certification, surveillance audits are required for two years before its compliance needs to be recertified.  

ISO is an international standard, while SOC 2 focuses on North America. Service organizations supporting international customers outside of North America will benefit from an ISO certification.   

Similarly, companies based outside North America hoping to do business in the U.S., Canada, or Mexico will likely have an ISO certification but should consider obtaining a SOC 2 report to capture market opportunities in those markets.  

Service organizations operating globally would benefit from undergoing both audits. The good news is the types of information each review requires are similar enough that an organization undergoing one review will be about 70% of the way toward completing the other.  

Under the ISO 27001 standard, internal audits are required annually and must be conducted by someone who is both competent in auditing against the 27001 standard, as well as independent from the information security management system being reviewed.  

Because of these two requirements, most organizations interested in ISO certification outsource their internal audit function to a third party. For all but the largest organizations, someone on staff who is competent in the ISO standard is unlikely to be independent. In addition, outsourcing the internal audit function often results in a more thorough evaluation of their management system.  

Organizations interested in pursuing ISO 27001 and SOC 2 reviews can streamline the process by scheduling both examinations carefully. For instance, SOC 2’s higher sampling requirement means the information gathered for that audit can also be used as part of the ISO certification, if the audits are timed correctly.   

Similarly, the organization should align the periods when auditors will be reviewing evidence with less-busy times of the fiscal year. Conducting both reviews at once can reduce the administrative overhead on their internal teams.   

Service organizations that process personal health information and need to demonstrate compliance with Health Insurance Portability and Accountability Act (HIPAA) security and privacy safeguards can also incorporate that examination with a SOC 2 audit.  

To learn more about ISO 27001, SOC 2, and the potential benefits of undergoing both reviews, contact us.