SOC 2 Compliance: Definition, Certification, Importance, Cost

If customers require a SOC 2 report before trusting you, this article covers SOC 2 compliance, who it applies to, and why it matters. It outlines requirements, audit and report types, timelines, and costs, plus practical preparation, ongoing maintenance, automation’s role, and what to expect if an audit fails. 

What Is SOC 2 Compliance?

SOC 2 stands for Systems and Organization Controls 2. SOC 2 compliance is an organization’s ability to demonstrate, through an independent SOC 2 audit, that its information security and related operational practices meet the Trust Services Criteria developed by the American Institute of Certified Public Accountants (AICPA). The audit results in a formal SOC 2 report (a type of SOC report) that customers, regulators, partners, and soc managed service providers who monitor and respond to security events for their clients use to evaluate the organization’s data security, security posture, and the design and operation of its security controls. 

SOC 2 compliance is not the same as SOC 1 or SOC 3. SOC 1 focuses on controls relevant to financial reporting, while SOC 3 is a general-use summary report derived from the same underlying framework. In practice, SOC 2 compliance work often starts with a scoped checklist mapped to the chosen Trust Services Criteria and implemented as documented, testable information security controls that can withstand a SOC 2 audit and be evidenced in the resulting SOC 2 report. 

What is SOC2 Certification? 

SOC 2 certification is a common way buyers refer to SOC 2, but the formal deliverable is a SOC 2 examination report issued by an independent CPA firm after testing your controls against the AICPA Trust Services Criteria. 

The five Trust Services Criteria 

1. Security: Controls that prevent unauthorized access and inappropriate system use.  
2. Availability: Controls that support agreed uptime and resilience commitments (such as monitoring and incident handling).  
3. Processing integrity: Controls that help ensure processing is complete, accurate, timely, and authorized for the defined system purpose.  
4. Confidentiality: Controls that protect sensitive information from unauthorized disclosure (often enforced via access control and encryption). 
5. Privacy: Controls that govern collection, use, retention, disclosure, and disposal of personal information per stated commitments. 

What is included in SOC 2 compliance?

SOC 2 compliance includes the defined scope of a SOC 2 engagement, the controls and evidence used to support that scope, and the independent reporting outcome that communicates assurance to third parties, including enterprise buyers evaluating the best soc as a service providers to confirm the provider’s controls and evidence can meet their security due diligence requirements. 

• SOC 2 report type selection: choosing among the types of SOC 2, typically type 1 or type 2 (soc 2 type)

• Type 1 coverage: documentation and testing that shows controls are suitably designed as of a specific date

• Type 2 coverage: documentation and testing that shows controls operate effectively over a defined period (type 2)
• Reporting output: issuance of the SOC 2 report, which is distinct from a SOC 1 report (soc 1 and soc) and is not a “1 report” for financial reporting. 

Why Is SOC 2 Compliance Important?

SOC 2 compliance matters because it gives customers, partners, procurement teams, and managed SOC providers independent assurance that your organization meets defined SOC 2 requirements under the SOC 2 Trust Services Criteria, especially for security and privacy expectations. A SOC 2 audit produces a SOC 2 report that buyers use to decide whether they can trust you with sensitive data and critical services. 

The following points are related to why SOC 2 compliance is important. 

• Trust and faster vendor approval: A SOC 2 report reduces reliance on questionnaires during vendor due diligence, which can shorten sales cycles when prospects require SOC 2 evidence. 

• Proven control maturity: SOC 2 shows controls are defined, in scope, and tested against the SOC 2 criteria, strengthening your security and compliance posture. 

• Stronger assurance with Type II: Many enterprises prefer SOC 2 Type II because it demonstrates controls operated effectively over a period, not just at a point in time like Type I. 

• Clear differentiation from other SOC reports: SOC 2 focuses on system and data trust controls, SOC 1 targets financial reporting controls, and SOC 3 is a general-use summary report. 

• Contract-driven necessity: While SOC 2 is voluntary, RFPs, customer contracts, and partner requirements often make SOC 2 compliance a condition to do business. 

Who needs SOC 2 ?

SOC 2 compliance is for organizations that store, process, transmit, or secure customer data and must prove their security controls through an independent SOC 2 audit and SOC 2 report, including any managed security service provider that operates security tooling and incident response workflows on behalf of clients. 

In USA 

• SaaS and cloud vendors selling to US mid-market and enterprise buyers where a SOC 2 report is a standard procurement requirement. 

• Data processors and managed service providers supporting US customers that require SOC 2 evidence for vendor risk management. 

• Fintech, health-tech, insurance-tech, and B2B platforms that face security questionnaires, contractual security clauses, and strict third-party reviews. 

• Companies expected to maintain Type II because US buyers commonly prefer an operating-period report for ongoing assurance. 

In India 

• Indian SaaS and IT service providers selling to the USA, UK, EU, or large Indian enterprises that ask for SOC 2 during vendor onboarding. 

• Managed service providers and data processors handling customer environments or regulated data where clients require SOC 2 alignment to reduce third-party risk. 

• Startups targeting global enterprise customers where SOC 2 is used to remove deal friction and pass security reviews faster. 

• Companies choosing Type I vs Type II based on target market: Type I is often used to unblock early-stage deals, while Type II is typically required for sustained enterprise procurement. 

How Much Does SOC 2 Compliance Cost?

SOC 2 compliance cost varies primarily by audit scope, the SOC 2 standards criteria you include, and whether you pursue a SOC 2 type 1 report or a type 2 report, especially when an ai driven soc as a service that automates detection and response workflows is included in scope and must provide evidence that those automated controls operate as intended. 

US pricing 

• SOC 2 Type 1 audit (audit fees only): $5,000–$25,000

• SOC 2 Type 2 audit (audit fees only): $7,000–$50,000 (can be higher for large/complex scopes)

• Total SOC 2 compliance program (prep + audit, typical ranges cited): $10,000–$80,000+

India pricing 

• SOC 2 total cost (commonly cited range): ₹4,00,000–₹8,00,000

• Type I (Security TSC) indicative pricing from one India-focused provider: $6,000–$10,000 (varies by headcount band)

How Do You Prepare for SOC 2 Compliance?

To prepare for SOC 2 compliance, you need to set a clear scope, implement and document controls, and be ready to produce evidence during the SOC 2 audit process that supports the auditor’s testing and the final SOC 2 report, including any security operations center as a service that provides continuous monitoring, alert triage, and incident response activities that must be evidenced as operating controls. 

• Confirm what SOC 2 compliance means for your business
  Define which services, products, and customer commitments SOC 2 applies to, and what assurance your buyers expect from the SOC 2 report

• Select the SOC 2 report type you are preparing for
  Decide SOC 2 type 1 vs type 2 based on your timeline and buyer requirements, since Type 2 requires an operating period where controls run and generate evidence

• Define audit scope in writing before you “get a SOC 2”
  Lock the boundaries of the audit, including in-scope systems, cloud accounts, environments, data flows, critical vendors, and the people or teams responsible for each control

• Map your controls to the SOC 2 principles you will claim
  Translate each SOC 2 principle into specific, testable controls and assign control owners, frequency, and evidence requirements

• Document policies, procedures, and control operation
  Write the policies and operating procedures that match how your teams actually work, then ensure the procedures produce consistent records that can be tested

• Run an internal readiness check against the SOC 2 audit process
  Verify that every control has an owner, a repeatable operating cadence, and evidence artifacts that an auditor can validate during fieldwork

• Close gaps before the audit begins
  Remediate missing controls, incomplete documentation, access issues, logging gaps, and vendor oversight gaps so you do not carry avoidable exceptions into the audit

• Create an evidence package that supports audit testing
  Organize evidence by control, time period, and system, so auditors can test efficiently and you can complete a SOC 2 audit without repeated rework

• Align internal stakeholders and timelines
  Coordinate engineering, IT, security, HR, and leadership so approvals, reviews, and evidence requests do not stall audit execution

• Choose the right report pathway based on your buyer needs
  If buyers require ongoing assurance, plan for a Type 2 operating window before you attempt to “get a SOC” report that meets procurement expectations

How Long Does SOC 2 Compliance Take?

SOC 2 compliance typically takes two to twelve months, depending on your starting maturity, audit scope, and which report type you pursue. 

• SOC 2 Type 1 usually takes four to eight weeks once controls are designed and documented, because it evaluates controls at a single point in time

• SOC 2 Type 2 typically takes three to twelve months, as it requires controls to operate effectively over an observation period before a report can be issued

The timeline increases when environments are complex, multiple systems are in scope, or controls must be built from scratch, especially when managed soc services that run continuous monitoring and incident-response workflows are included in scope and must generate consistent evidence. SOC 2 is important because buyers rely on the report for assurance, so timelines are driven by evidence quality, not speed. 

What Is a SOC 2 Compliance Checklist?

A SOC 2 compliance checklist is a structured set of control, documentation, and evidence requirements used to verify whether an organization meets the principles of SOC 2 within the SOC 2 compliance framework before and during an audit. It translates what SOC 2 compliance means into concrete, testable items that auditors review when SOC 2 audits are conducted and that ultimately support what the SOC 2 report shows. 

A typical SOC 2 compliance checklist includes: 

• Defined audit scope and applicability
  Clear identification of in-scope systems, services, data, and teams to confirm where compliance with SOC 2 applies

• Mapped controls to SOC 2 principles
  Documented controls aligned to the applicable SOC 2 principles to demonstrate how the organization protects systems and data

• Policies and procedures
  Written policies and operating procedures that reflect how controls are designed and executed in practice

• Control ownership and operation
  Assigned owners, frequencies, and execution evidence showing that controls operate consistently

• Evidence collection
  Logs, screenshots, records, approvals, and reports that auditors test to confirm control effectiveness

• Vendor and risk oversight artifacts
  Proof that third-party risks are identified, assessed, and managed as part of the compliance framework

• Audit readiness validation
  Internal checks confirming that controls and evidence are complete before the audit begins, recognizing that SOC 2 compliance isn’t automatic and achieving SOC 2 compliance involves sustained operational discipline

How Do You Maintain SOC 2 Compliance?

You maintain SOC 2 compliance by keeping audited controls operating consistently, preserving evidence, and ensuring your SOC 2 scope stays accurate as systems change. 

The following points are related to maintaining SOC 2 compliance over time. 

• Run controls continuously: Controls must operate year-round, not only during audit preparation. 

• Collect and retain evidence: Keep logs, approvals, access reviews, incident records, and monitoring outputs complete and on schedule. 

• Manage scope and system changes: Track infrastructure, vendor, data-flow, and service changes to prevent scope drift. 

• Conduct periodic internal reviews: Validate control performance and evidence quality regularly to catch gaps early. 

• Stay re-audit ready: Treat SOC 2 as an ongoing operating process, not a one-time project. 
• Assign clear ownership: Define responsibilities across security, IT, engineering, and leadership to sustain compliance.

What Is SOC 2 Compliance Automation?

SOC 2 compliance automation uses software and integrations to continuously collect and organize audit evidence, reducing manual, spreadsheet-driven work and keeping artifacts audit-ready. 

• The following points are related to what SOC 2 compliance automation typically covers. 

• Evidence collection and retention: Automated capture of logs, access reviews, change approvals, and monitoring outputs on a defined cadence. 

• Control monitoring: Continuous checks that required controls remain in place as systems and users change. 

• Audit preparation workflows: Evidence mapped to controls so audit requests are fulfilled quickly and consistently. 

What are the cost benefits of SOC 2 automation?

SOC 2 automation delivers cost benefits by reducing the recurring labor and rework required to produce audit evidence and stay audit-ready. 

• Lower internal labor spend by automating repetitive evidence collection and control checks (less time chasing screenshots, exports, and spreadsheets). 

• Lower readiness and re-audit overhead because evidence stays organized continuously, reducing last-minute “audit prep” effort. 

• Reduced auditor back-and-forth and faster request fulfillment, which can reduce billable support time and internal disruption during the audit window. 

• Potential large savings in practice (case studies): vendors cite customer-reported outcomes such as “audit time cut in half” and “well over six figures” saved (these are customer statements, not universal results). 

• Fewer add-on consulting cycles by keeping control testing and evidence mapping current, instead of rebuilding artifacts each cycle. 

What Is a SOC 2 Audit?

A SOC 2 audit is an independent assessment of whether an organization has designed and operated controls that protect systems and data in line with SOC 2 criteria, resulting in a formal SOC 2 report that external parties use for assurance. The audit focuses on whether controls exist, whether they are implemented correctly, and whether they work in practice over the relevant period, which is why SOC 2 is important for vendors that must prove security and operational discipline. 

A SOC 2 audit is different from audits under SOC 1 and SOC 2 reporting. SOC 1 focuses on controls relevant to financial reporting, while a SOC 2 audit evaluates controls tied to security, availability, processing integrity, confidentiality, and privacy. 

What Is the SOC 2 Audit Process?

The SOC 2 audit process is a structured review performed by an independent auditor to assess whether your controls meet SOC 2 criteria and can be trusted by external stakeholders. 

The following points are related to the SOC 2 audit process steps. 

• Scope definition and criteria selection: Define in-scope services, systems, and data, and select applicable Trust Services Criteria. 

• Control design assessment: Auditor reviews whether controls are suitably designed to meet SOC 2 requirements. 

• Operating effectiveness testing: Auditor samples evidence to confirm controls operated as described during the audit period. 

• Exception evaluation and remediation: Document gaps, assess impact, and agree on remediation actions and timelines. 

• Report issuance: Auditor issues the SOC 2 report used by customers and partners for due diligence. 

What Happens If You Fail a SOC 2 Audit?

Failing a SOC 2 audit does not result in a legal penalty or automatic disqualification, but it does mean the issued SOC 2 report contains exceptions that signal control weaknesses to customers and partners. 

When a SOC 2 audit is not passed cleanly: 

• Exceptions are documented in the report
  Control gaps, design issues, or operating failures are explicitly described in the SOC 2 report, which buyers review during security and procurement assessments

• Trust and sales impact may occur
  Because SOC 2 is important for vendor due diligence, exceptions can delay deals, trigger additional security reviews, or lead customers to compare alternatives (SOC 2 vs other vendors)

• Remediation is required before re-attestation
  The organization must fix the failed controls, operate them correctly, and generate new evidence before attempting another audit cycle

• Audit scope and timing may change
  Depending on severity, the auditor may limit the opinion period, require additional testing, or recommend restarting the audit window.
  . 

FAQs 

1. What are the 5 SOC 2 criteria?
   SOC 2 uses the Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. In practice, Security (Common Criteria) is included in every SOC 2 engagement, and the other four are added based on your service commitments.  
2. SOC 2 Type I vs Type II: which do I need?
   Choose Type I if you need a faster, point-in-time assessment of control design. Choose Type II if customers require proof that controls operated effectively over an observation period (commonly months), which is the more persuasive report for vendor risk reviews.  
3. Is SOC 2 mandatory or required by law?
   SOC 2 is not a legal requirement. It is a voluntary assurance report, but it often becomes “required” in practice due to enterprise procurement, RFPs, and contract clauses.  
4. What does SOC 2 cost and how long does it take?
   Cost and timeline depend on scope, readiness, and Type I vs Type II. Many market estimates place audit fees around $5k–$20k (Type I) and a wider range for Type II, and Type II also needs an observation period (often up to a year) before report issuance.  
5. How does SOC 2 compare to ISO 27001 / HIPAA?
   SOC 2 is a CPA-issued assurance report against Trust Services Criteria, while ISO/IEC 27001 is an ISMS certification standard focused on building and continuously improving an information security management system. HIPAA is US law for regulated healthcare entities and business associates, with required safeguards for ePHI; SOC 2 can support trust and due diligence but does not replace HIPAA obligations