What Is SOC 2 Compliance?
SOC 2, short for System and Organisation Controls Type 2, is a globally recognised audit framework designed to ensure that service providers handle client data with consistent, provable security and operational discipline. It was established by the American Institute of Certified Public Accountants (AICPA) as part of its Statement on Standards for Attestation Engagements (SSAE 18). Unlike many technical standards that prescribe “what” must be done, SOC 2 focuses on “how effectively” an organisation’s internal controls operate in practice. It is an attestation report, not a certification — meaning a licensed independent auditor evaluates your organisation’s policies, procedures, and technical configurations to attest whether they meet the Trust Service Criteria (TSC) defined by the AICPA. The trust service criteria are built on the following five principles:| Principle | Objective | Typical Control Domains |
| Security | Protect systems and data from unauthorised access. | Access controls, intrusion detection, firewalls, endpoint protection. |
| Availability | Ensure systems remain available for operation and use as committed. | Uptime monitoring, disaster recovery, and incident management. |
| Processing Integrity | Confirm that systems process data accurately, completely, and promptly. | Input validation, change management, process automation. |
| Confidentiality | Safeguard information designated as confidential. | Data classification, encryption, and restricted data sharing. |
| Privacy | Manage personal information according to policies and commitments. | Data minimisation, consent management, and deletion protocols. |
Types Of SOC 2 Reports: Type I and Type II
SOC 2 audits come in two formats: Type I and Type II. Both follow the AICPA’s Statement on Standards for Attestation Engagements No. 18 (SSAE 18) and evaluate an organisation’s controls against the same five Trust Services Criteria (TSC) — Security, Availability, Processing Integrity, Confidentiality, and Privacy. What distinguishes them is scope and duration.SOC 2 Type I
| Attribute | SOC 2 Type I |
| Scope | Control design and implementation |
| Timeframe | Point-in-time (single date) |
| Evidence | Policies, system settings, configurations |
| Assurance Level | Baseline readiness |
| Use Case | Early-stage companies proving initial maturity |
SOC 2 Type II
- Access-management logs showing user provisioning and de-provisioning.
- Incident-response records confirming timely detection and remediation of security events.
- Change-management tickets validating that system updates were tested and approved.
- Backup and recovery logs demonstrating successful data-restore drills.
- Vendor-risk reviews documenting third-party assurance activities.
| Attribute | SOC 2 Type II |
| Scope | Design + operating effectiveness |
| Timeframe | Typically 6–12 months |
| Evidence | Logs, tickets, incident and change records |
| Assurance Level | Continuous operational assurance |
| Use Case | Mature organisations handling regulated or client-sensitive data |
Issuing Authority And Governance Framework Behind SOC 2 Reports
The Governing Body
SOC 2 audits are authorised and standardised by the American Institute of Certified Public Accountants (AICPA). Every SOC 2 engagement follows the Statement on Standards for Attestation Engagements No. 18 (SSAE 18), which outlines how an independent auditor must assess an organisation’s internal controls. SOC 2 draws its structural principles from the COSO Internal Control Framework, a globally adopted model for designing and evaluating risk and control systems. Together, AICPA and COSO ensure that SOC 2 reporting is consistent, repeatable, and defensible, regardless of the industry being audited. Only licensed CPA firms and AICPA-approved service auditors are permitted to perform a SOC 2 examination. The outcome is an attestation report, not a certificate — meaning the auditor is expressing a professional opinion that carries legal and ethical accountability. This distinction is what gives SOC 2 its credibility: it is independently validated, not self-declared.The SOC 2 Audit Workflow
A SOC 2 engagement typically happens across the following phases:| Phase | Objective | Outcome |
| 1. Planning & Scoping | Determine which systems, products, or services fall under the audit and which Trust Services Criteria (TSC) apply. | Defined system boundaries and scope statement |
| 2. Readiness Review | Identify control gaps, align documentation, and prepare operational evidence before formal testing begins. | Gap assessment and remediation plan |
| 3. Evidence Testing | Examine technical configurations, system logs, and procedural records to verify the existence and performance of controls. | Control testing results and audit workpapers |
| 4. Report Finalisation | The auditor issues an opinion based on findings, supported by management’s assertion and the system description. | SOC 2 Type I or Type II report |
- Unqualified (Clean): Controls were designed and operated effectively.
- Qualified: Minor deficiencies, but overall objectives achieved.
- Adverse: Controls failed to meet stated objectives.
- Disclaimer: Insufficient evidence to form an opinion.
The Trust Services Criteria (TSC)
All SOC 2 reports measure controls against one or more of the five AICPA-defined criteria, as mentioned previously. Organisations choose which criteria are relevant to their services; a payment processor might include Security and Processing Integrity, while a healthcare SaaS platform would also select Privacy and Confidentiality.Structure And Components Of A SOC 2 Report
The SOC 2 report’s format is governed by the AICPA SOC 2 Guide, ensuring uniformity regardless of the industry or the auditor.
Each section has a specific purpose, enabling readers — often CISOs, compliance officers, or client auditors — to assess how well the organisation protects and manages customer data.
1. Independent Auditor’s Opinion
This section presents the auditor’s professional opinion, signed by a licensed CPA firm authorised under SSAE attestation standards.
It specifies:
- The scope of the audit — which systems, period, and Trust Services Criteria were covered.
- The type of report (Type I or Type II).
- The auditor’s conclusion, which may be:
- Unqualified (Clean) – Controls were suitably designed and operated effectively.
- Qualified – Minor exceptions, but overall objectives met.
- Adverse – Controls failed to meet objectives.
- Disclaimer – Insufficient evidence to form an opinion.
A “clean” (unqualified) opinion is the benchmark outcome most organisations aim for.
2. Management’s Assertion
Here, senior management accepts full responsibility for the design and operation of controls.
The assertion typically includes:
- A description of the system or service examined.
- The Trust Services Criteria selected for evaluation.
- Management’s statement confirming that the information supplied to auditors was complete and accurate.
This section is important because auditors attest to management’s statements and do not replace them. It establishes accountability at the executive level for how data and controls are governed internally.
3. System Description
The system description provides a factual narrative of the environment under audit.
It outlines:
- Core systems and infrastructure (networks, applications, databases).
- Business processes supporting the service in scope.
- Logical and physical security architecture.
- Control responsibilities of third-party vendors.
- Any limitations or boundaries of the audit (e.g., regions or systems excluded).
This gives readers a transparent view of how technology and policies combine to deliver security, availability, and privacy commitments.
4. Controls, Tests, And Results
Often presented in a tabular format, this section maps every control to its corresponding Trust Services Criterion and describes how the auditor tested it.
Each control entry contains:
- Control Objective or Description – The purpose of the control.
- Test Performed – How the auditor validated it (inspection, observation, re-performance, or inquiry).
- Result – Whether the control operated effectively during the audit period, with details of any exceptions found.
For Type II reports, this is the most detailed section — it evidences months of operational reliability through sampled logs, ticket reviews, and change records.
5. Complementary User-Entity Controls (CUECs)
SOC 2 recognises shared responsibility between service providers and clients. CUECs specify what clients must do on their side for the audited controls to remain effective — for example, enforcing user password policies or managing endpoint security. This ensures the SOC 2 report cannot be misinterpreted as validating an entire supply chain, only the portion controlled by the service organisation.
6. Other Information And Appendices
The final part may include:
- Notes on corrective actions taken for exceptions.
- Supplementary certifications (ISO 27001, PCI DSS, or HIPAA mappings).
- Diagrams, control narratives, or historical comparisons to prior audits.
These additions help contextualise results and demonstrate a culture of continuous compliance improvement.
How To Read A SOC 2 Report Effectively
For CISOs, vendor managers, and auditors reviewing a SOC 2 report, three focus points matter most:
- Scope Alignment — Are the right systems and Trust Services Criteria included?
- Opinion Strength — Was the auditor’s opinion unqualified?
- Control Evidence — Do the tests and results support consistent control performance over time?
Key Measurement Metrics And Evaluation Criteria In SOC 2
This section outlines how audits under the American Institute of Certified Public Accountants (AICPA) evaluate your controls in a SOC 2 engagement — it focuses on what auditors measure, how they sample evidence, and how performance is judged over time.
Control Objectives and Related Metrics
Every control in a SOC 2 audit must map to a specific control objective (what you aim to achieve) and be measurable or monitorable. Common metrics include:
- Number of unauthorised access attempts — helps measure the effectiveness of access-control mechanisms.
- Mean time to detection (MTTD) and mean time to remediation (MTTR) — show how quickly incidents are spotted and resolved.
- System availability percentage — indicates whether services are meeting the Availability criterion of the Trust Services Criteria.
- Percentage of successful change-management events without rollback — reflects the Processing Integrity criterion.
These metrics, while not mandated verbatim by SOC 2, are illustrative of how operational performance is assessed.
Sampling and Test Procedures
For a Type II report, the auditor performs sampling because it is impractical to review every transaction or system event for the audit period. Typical procedures include:
- Inspection — reviewing documents, policies, configurations, and screenshots.
- Observation — watching a process being carried out (e.g., backup restore test).
- Re-performance — executing a control again to see if it works as intended (e.g., a patch deployment followed by a penetration test).
- Inquiry — talking with responsible personnel to understand roles and controls, and checking if their verbal description aligns with evidence.
Auditors aim for sufficient appropriate evidence over the period, meaning enough samples such that they have confidence that controls worked effectively as stated.
Exception Rates and Their Significance
When auditors test controls, they may find exceptions (instances where the control did not perform as expected). How these are handled is critical:
- A low exception rate (e.g., 2 %) may still allow an unqualified opinion if the organisation can show remediation and risk was managed.
- A high exception rate may lead to a qualified or adverse opinion, which signals to clients that controls were not reliably operating.
The auditor will consider the nature of exceptions (severity, frequency, compensating controls) when forming an opinion.
Audit Period and Evidence Retention
For a Type II engagement, the audit typically spans six to twelve months of operational history — allowing the auditor to evaluate the consistency of controls.
Evidence must be retained and available for this period — including logs, tickets, change-records, vendor-assessment files, etc. If the evidence window is shorter, the auditor may issue a limited-scope report or decline to provide an unqualified opinion.
Operational Maturity Indicators
From a cybersecurity expert’s angle, the following indicators signal that a SOC 2 audit is built on a mature control environment:
- Controls are automated where feasible (for example, alert escalation, user-de-provisioning, backup verification).
- Continuous monitoring is in place, with dashboards showing compliance trends, incident volumes, and change-control exceptions.
- Regular remediation loops — documented follow-up on failed controls or exceptions from prior audits.
- Third-party oversight — vendor assessments, subcontractor controls mapped to your audit scope.
- Audit-ready documentation — evidence is stored in a consistent, searchable manner, enabling the auditor to quickly validate.
The Business Value of SOC 2 Type II Compliance
1. Builds Enterprise-Level Client Trust
Enterprise buyers increasingly demand continuous evidence of data-handling discipline.
While the AICPA does not publish adoption statistics, multiple independent vendor-risk studies confirm that SOC 2 Type II has become a de facto requirement in enterprise procurement, particularly within finance, healthcare, and technology sectors.
A current SOC 2 Type II report allows security teams to provide third-party-verified proof of control performance during due diligence. This directly reduces friction in onboarding, as many enterprise RFPs accept a valid SOC 2 Type II instead of bespoke audit questionnaires — an efficiency supported by every major compliance-automation provider.
2. Strengthens Security Posture and Control Discipline
Because SOC 2 Type II examines real evidence — access logs, incident tickets, backup validations — it forces operational accountability. Controls cannot exist only on paper; they must produce audit-ready artefacts for six to twelve consecutive months.
Organisations completing annual Type II cycles typically show demonstrable improvement in:
- Incident-response readiness and documentation,
- Change-management consistency, and
- Reduction of configuration drift across production systems.
3. Reduces Long-Term Risk and Insurance Burden
With the global average breach cost reaching USD 4.45 million, rising by 15 % over three years, SOC 2 Type II controls directly mitigate the root causes of these losses.
While exact discounts vary by underwriter, possessing a recent SOC 2 Type II report typically qualifies organisations for favourable risk scoring and coverage terms — because it evidences control reliability verified by an external CPA.
4. Creates Efficiency Through Continuous Assurance
When organisations integrate monitoring and documentation tools — for example, centralised ticketing for change control or automated log retention — audit preparation time drops sharply after the first cycle.
Multiple reports suggest that clients who maintain year-round SOC 2 readiness reduce subsequent audit workloads by 30 – 50 %. This converts compliance from a reactive cost into a predictable, repeatable operating process.
5. Enhances Market Credibility and Investor Confidence
For publicly listed or investor-funded companies, an unqualified SOC 2 Type II opinion serves as tangible evidence of governance maturity. Investors and partners view it as assurance that leadership oversees security and privacy with the same rigour applied to financial reporting.
Because the report is issued by an independent CPA firm under SSAE standards, it carries professional liability, making it far more credible than internal certifications or self-assessments.
6. Positions the Organisation for Regulatory Alignment
The AICPA Trust Services Criteria map closely to major regulatory and security frameworks — including:
- ISO 27001 (Information Security Management Systems),
- NIST SP 800-53 Rev. 5 (Security and Privacy Controls), and
- EU GDPR and India’s Digital Personal Data Protection Act 2023 (privacy and accountability principles).
Challenges And Best Practices For Sustaining SOC 2 Type II Compliance
SOC 2 Type II compliance is not a one-time project but an ongoing commitment.
Many companies complete their first audit successfully but struggle to maintain the same standard year after year.
Below are some common challenges and practical ways to overcome them.
Defining The Right Scope
One of the biggest mistakes organisations make is setting too narrow a scope. Sometimes entire systems, third-party tools, or environments are left out because teams assume they’re “non-critical.”
However, the AICPA standard requires the audit to reflect all systems that handle customer data. The fix is simple — keep a clear inventory of every platform that processes or stores sensitive information, update it regularly, and make sure new integrations are included before each audit cycle.
Managing Evidence Properly
SOC 2 auditors don’t rely on verbal assurance; they rely on evidence. A missing access log or an outdated incident ticket can lead to exceptions even if the control worked in practice.
Create a central folder or tool for evidence storage, label everything by control area, and update it continuously. Automating evidence collection through ticketing or monitoring systems helps avoid last-minute issues.
Keeping Control Owners Accountable
Controls fail most often when ownership is unclear. Each control should have a specific person responsible for its execution and documentation. When people move roles, ownership should move with them. It’s also good practice to review control ownership quarterly — it keeps accountability fresh.
Watching Vendor Dependencies
Even if your internal systems are perfect, your vendors can cause problems. Cloud providers, payroll processors, or analytics platforms all play a part in your control environment. Always review their SOC 2 or ISO reports and document how you rely on them. This protects your report from being qualified due to “carve-outs” or third-party risks.
Handling Audit Exceptions
Finding a few exceptions is normal. Ignoring them is not. Auditors will always ask how those issues were corrected. Track every finding, note what caused it, who fixed it, and what changed to prevent recurrence.
Keeping Leadership Involved
SOC 2 is a management responsibility, not just an IT exercise. Leadership should review the control dashboard every quarter, approve updated policies, and stay aware of open risks. Auditors often mention the strength of “tone at the top” — visible executive engagement helps the entire compliance culture stay active.
Making Compliance Part Of Everyday Work
Finally, compliance should not feel like a separate event. Train employees to treat access reviews, change approvals, and incident documentation as normal workflow, not extra paperwork. When these habits become routine, audit readiness happens naturally.
Cost Considerations For SOC 2 Type II Reports
Achieving SOC 2 Type II compliance involves a mix of external and internal costs that reflect the depth of the audit and the maturity of your control environment. The overall expense depends on the organisation’s size, number of systems in scope, and how many of the five Trust Services Criteria are covered.
| Cost Component | Typical Range (USD) | What It Covers |
| External Audit (CPA Attestation) | 12,000 – 100,000+ | The independent SOC 2 audit was conducted by a licensed CPA firm under SSAE standards. |
| Readiness Assessment | 5,000 – 15,000 | A pre-audit gap analysis to identify missing controls and documentation before the formal engagement. |
| Remediation & Control Implementation | 10,000 – 100,000+ | Internal work to implement or strengthen policies, monitoring systems, access controls, and data-handling practices. |
| Automation & Compliance Tools | 7,000 – 25,000 per year | Evidence-collection and monitoring platforms that maintain continuous audit readiness. |
| Internal Labour & Opportunity Cost | Variable | Staff time for gathering evidence, supporting remediation, and managing the audit. |
| Annual Renewal / Continuous Monitoring | 30 – 40 % less than the first cycle | The ongoing cost once controls and tooling are embedded in regular operations. |
What To Expect
- Type II audits cost more than Type I, since they evaluate performance over several months instead of a single date.
- Scope has the biggest impact — including more systems or Trust Services Criteria increases audit depth and cost.
- Readiness lowers future spend — once automated evidence management and control ownership are established, subsequent renewals become faster and cheaper.
- The investment yields returns in faster enterprise onboarding, smoother vendor assessments, and lower security-assurance overheads in future deals.
How SOC 2 Type II Compliance Builds Trust And Strengthens Security At AuthBridge
As a leader in the identification verification industry, AuthBridge handles vast amounts of sensitive data daily. To maintain its position at the forefront of the market, we not only focus on innovative solutions but also on ensuring that the data we process is secure, confidential, and handled with the utmost care. This is where SOC 2 Type II compliance comes in, providing clients with the assurance that AuthBridge operates with the highest levels of security and privacy.
Why SOC 2 Type II Becomes Non-Negotiable For Businesses
For organisations seeking verification solutions, SOC 2 Type II compliance acts as a safety buffer, ensuring that their sensitive data is handled according to the highest standards of security and integrity. By meeting SOC 2 Type II requirements, AuthBridge demonstrates that it has implemented robust security measures, including access controls, encryption, and regular system monitoring, to protect data from potential breaches.
This transparency in security practices offers peace of mind to clients, knowing their data is secure in the hands of a trusted partner. For industries that deal with highly sensitive information, such as BFSI (Banking, Financial Services, and Insurance), this level of security is of the highest priority, making SOC 2 Type II compliance a critical factor in their decision-making process.
A Strategic Advantage In A Competitive Market
For AuthBridge, this certification not only reinforces its credibility but also sets it apart from competitors. It signals to potential clients that AuthBridge prioritises data protection and adheres to rigorous security protocols, which is particularly important for companies looking to protect sensitive personal information. By being SOC 2 Type II and ISO/IEC 27001:2013 compliant, AuthBridge not only ensures that its clients’ data is secure but also strengthens its position as a market leader in identification verification services.
Conclusion
SOC 2 Type II compliance demands that an organisation’s promises about security and privacy are not assumed but demonstrated — consistently, over time, under real-world conditions. In this sense, the framework is about building proof of trust.
SOC 2 Type II compliance showcases AuthBridge’s commitment to operational integrity. It means every data flow, every process, and every client interaction operates within a verified structure of control and accountability. The certification doesn’t just attest that our systems are secure — it confirms that security is built into how we work, not layered on top. That’s the difference between compliance and confidence — and it’s the standard we hold ourselves to.
