What Is SOC 2 Compliance?

Written by Brenna Lee on March 6, 2023

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Safety, reliability, and trustworthiness. 

These are words that virtually all organizations strive to accomplish to satisfy their customers. What’s one of the best ways to demonstrate these qualities? Achieve SOC 2 compliance. 

Systems and Organizations Controls 2 (SOC 2) is a framework of compliance requirements applicable to service companies, particularly ones that touch or manage customer data in the cloud. For example, all cloud-based storage services or software as a service (SaaS) companies should leverage SOC 2 compliance standards to demonstrate that their practices and controls effectively ensure the privacy and security of customer data. 

In this post, we’ll take a comprehensive look at SOC 2 compliance, and discuss important factors for organizations to consider on their path to achieving compliance.  

What Does SOC 2 Compliance Mean?

SOC 2 compliance is a set of compliance standards developed by the American Institute of Certified Public Accountants (AICPA). Its primary goal is to ensure that organizations have the security controls to protect customer data in the cloud. In this regard, compliance with SOC 2 is a minimum requirement for any organization that uses SaaS or cloud service providers (CSPs). 

It’s worth noting that SOC 2 compliance is neither a proxy for the actual security controls nor legal requirements. While SOC 2-based assessment measures cover the core departments and processes that interact with customer data, the standard doesn’t operate like core compliance regulations such as the Health Insurance Portability and Accountability Act (HIPAA).

It only specifies the general criteria that companies can leverage to maintain robust information security. Each organization can then adopt what it considers to be the best practices and processes based on its own objectives and operations.  


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Who Needs a SOC 2 Report?

Companies that need SOC 2 reports include CSPs, SaaS providers, and any organization that stores its customer data in the cloud. The report proves that customers’ data is kept private and protected from unauthorized entities. There is no particular sector that requires these reports. 

However, businesses operating in financial services such as banking, insurance, and investment usually find SOC 2 compliance a valuable undertaking. This is because it helps to establish trust with stakeholders and customers. For example, at any given time, the customer (client company) may ask the service organization to provide a SOC 2 audit report, particularly if private or confidential information is entrusted to the organization.  

When Should You Get a SOC 2 Report?

There is no hard and fast rule regarding the time frame that companies should get a SOC 2 report. However, there is consensus that any SOC 2 audit report older than one year is considered “stale.” This means that if you conducted your initial SOC audit in year one, you should undertake another after approximately 12 months to demonstrate the effectiveness of the organization’s security controls. 

The assumption here is that the intended users of the SOC 2 report, such as prospects and clients, would want to continually gain assurances that the company is still adhering to the best security practices and controls. As such, the assessment of an organization’s internal controls should always be dated to ensure that the report has a limited value of one year. 

What Does a SOC 2 Report Cover?

A SOC 2 report structure has five essential components:

  • An opinion letter from the auditor
  • The description of the system under review
  • The management’s assertion of compliance
  • The description of the tests of controls
  • The results of the audit process.

Each report will be unique to the company and will vary depending on the five Trust Services Principles described in the following sections.

SOC 2 Trust Services Criteria

The Trust Services Criteria (TSC) consists of five trust services categories: 


The security controls category defines measures that protect the system against unauthorized access, disclosure, or damage to systems that can potentially affect other criteria beyond the security category. Some security controls you can leverage include firewalls, multi-factor authentication (MFA), and intrusion detection.  


The availability controls category ensures that the systems are always available for operation and use to meet the organization’s objectives and service level agreements (SLAs). While these controls don’t set the minimum acceptable performance standards, they usually address whether systems should support and maintain system operations such as sufficient backup and disaster recovery measures. 

Processing Integrity

Processing integrity controls ensure that data is processed correctly, free from unexplained or accidental errors. In other words, the processed data should always be accurate and reliable. 


The confidentiality category requires organizations to demonstrate that they protect confidential information throughout its lifecycle, including data collection, processing, and dissemination. In this regard, confidential information includes the organization’s trade secrets and intellectual property (IP). Such data can be protected through encryption and identity and access management (IAM) controls. 


The privacy controls are similar to those of confidentiality. However, they specifically refer to personally identifiable information (PII) that the organization captures from its customers. It specifies the communication, consent, and collection and processing of PII.  

What Is SOC 2 Type 1 Compliance?

A SOC 2 Type 1 is an audit report on the service organization’s system and its suitability in terms of the design of the controls. The report specifies the current system and attests to the controls that have been put in place at a specific point in time. 

What Is SOC 2 Type 2 Compliance?

A SOC 2 Type 2 report proves the accuracy of controls the service organization has put in place over a more extended period (usually more than six months). The report describes the organizational controls and attests to them depending on their operational effectiveness. 

Benefits of SOC 2 Compliance

Organizations that handle customer data can derive numerous benefits from complying with SOC 2 standards. Some of these benefits include: 

Improved Security Posture

A robust cybersecurity architecture relies on high standards. SOC 2 compliance can help organizations enforce the protection of their systems and data against unauthorized access through measures such as firewalls and IAM controls. 

Efficient Processes and Thorough Documentation

By adhering to SOC 2 standards, organizations can demonstrate that their processes are transparent and efficient. It allows the organization to ensure that the business runs continuously and the processes are correct to achieve key goals. 

Brand Positioning

Complying with SOC 2 standards can help an organization promote its brand reputation by minimizing data breaches. In addition, customers concerned with security are likely to be attracted to SOC 2-compliant companies. 

Cost Reduction

Organizations that don’t comply with SOC 2 standards can be forced to pay numerous costs, including fines and settlements, business disruption, productivity costs, and revenue loss. In addition to these costs, such organizations end up damaging their brand reputation. 

Other Compliance Initiatives

SOC 2 compliance requirements often dovetail with other frameworks, including the International Organization for Standardization (ISO)/ International Electrotechnical Commission (IEC) 27001 and HIPAA. Therefore, complying with SOC 2 allows the company to speed up its overall regulatory and other compliance efforts. 

SOC 2 Compliance Challenges

While essential, SOC 2 compliance isn’t straightforward to pursue because of various challenges. Let’s explore some challenges an organization can encounter while complying with SOC 2 standards. 

Underestimating the Scope

SOC 2 compliance usually involves accounting, human resources (HR), and many other departments other than IT. To comply with SOC 2 standards, organizations will require coordinated efforts across multiple departments. This is a significant challenge, particularly for companies that lack experienced IT teams. 

Undefined Responsibilities

Organizations that operate under tight budgets are usually forced to use limited staff. In addition to the limited staff, some companies may struggle further if they don’t assign clear control owners and responsibilities. Undefined roles and responsibilities can result in possible SOC 2 compliance implementation gaps. 

Manual Management and Documentation

With ever-changing regulations and rules, managing all controls and documentation can become disorganized and lead to errors, especially for organizations that use manual methods. Complying with SOC can be costly, time-consuming, and resource-intensive without an effective automated management system. 

Lack of Buy-In

Like any other business initiative, strategic buy-in is essential to successfully implementing SOC 2 compliance. Without the buy-in, some stakeholders in the SOC 2 compliance process won’t be motivated to implement the strategy, while others may not follow it. Everyone from the top down should be bought in and clear about how they contribute to the initiative.

Skipping a Readiness Assessment

A readiness assessment is essential for any company that wants to conduct a SOC 2 compliance audit as it helps ascertain how ready the business is for an audit. However, when SOC 2 compliance stakeholders skip the process, the organization cannot have an accurate picture of where it stands when it comes to compliance. 

How Long Does It Take to Get SOC 2 Compliance?

SOC 2 compliance usually takes between six to twelve months to conclude. In this regard, you can expect to take six months to attain a SOC 2 Type 1 report, while a SOC 2 Type 2 report requires twelve months. However, these timelines may vary depending on the size of the company and the business’ readiness level. Other factors that can affect the timelines include:

  • The number of systems the organization is running
  • The number of locations where the organization runs the system 
  • The sensitivity of the customer data
  • The level of commitment from upper management

How Much Does a SOC 2 Audit Cost?

This question doesn’t have a universal answer. The total costs of a SOC 2 compliance audit — including all the associated expenses — vary, usually between tens of thousands to hundreds of thousands of U.S. dollars. Many variables that can influence this cost include:

  • Company size and the scope of the audit. The larger the company size and systems, the more information the auditor has to review and the greater the cost. 
  • Type of SOC 2 report. In general, SOC 2 Type 2 costs more than SOC 2 Type 1 because it reviews data over a longer period rather than a single moment in time. 
  • The trust services principles to be covered. You need to identify which TSC will be included in the audit scope. Since security is a mandatory feature, you’ll need to factor it in as a base cost and have other principles such as availability and confidentiality that will add between 10% to 20% to the base cost. 
  • The presence (or absence) of compliance tools. Organizations that do not have an easy way to manage security controls, enforce policies, or compile evidence across all users and devices will require more resources to conduct an audit.

Do You Need More Than One SOC 2 Audit?

Yes. SOC 2 audits should be conducted annually. You can start with a SOC 2 Type 1 and then progress to a Type 2. A SOC 2 Type 1 report is a point-in-time snapshot of the company’s controls that auditors validate by tests to determine if they have been designed appropriately. A SOC 2 Type 2 report, on the other hand, looks at the effectiveness of the controls over an extended period. 

SOC 2 Compliance: As Painless As Enforce, Prove, Repeat.

Whether you want to learn more about SOC 2 compliance or you’re ready to start working toward achieving it, JumpCloud’s IT Compliance Quickstart Guide was designed to get IT professionals the resources they need to prepare for an audit or shore up their IT security baseline. 

Brenna Lee

Brenna is a Content Writer at JumpCloud that loves learning about and immersing herself in new technologies. Outside of the [remote] office, she loves traveling and exploring the outdoors!

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