How Technology Companies Can Improve Their SOC 2 Audit and Stay Competitive
This article was updated January 22, 2025.
System and Organization Control (SOC) 2 examinations, or SOC 2 audits, are increasingly important for technology companies. New technologies provide more opportunities for customers to outsource services but also makes them increasingly reliant on the controls at these technology companies. Customers want to know that the systems provided are secure and their information in the systems is kept confidential.
Although these audits can be comprehensive and often require a significant time investment, they tackle IT and operational risks while bolstering customer trust in security, availability, processing integrity, confidentiality, and privacy policies and practices.
This article will explore strategies your technology company can take to enhance your SOC 2 audit report to increase credibility, optimize the audit exercise, and maintain a competitive edge.
SOC Audits Allow Your Technology Company to Assess its Control Environment
SOC 2 audits can help customers gain confidence in your company’s control environment, which is assessed against the American Institute of Certified Public Accountants’ (AICPA) SOC 2 criteria.
The SOC 2 report provides a comprehensive evaluation of the design and operational efficiency of your technology company’s internal controls over one or more selected categories.
The design and operating effectiveness of key internal controls are examined, and the auditor issues an opinion. This helps your customers understand the design and effectiveness of your internal controls.
AICPA-Defined Trust Services Categories
Security
Controls over physical and logical access as well as incident handling, system monitoring, change management, and network security. Physical access controls are often not applicable or minimal for technology companies that use a cloud provider. In these cases, technology companies would refer to the controls in the cloud provider’s SOC 2 report.
Availability
Controls over monitoring availability of information and systems, backups and restoration testing, disaster recovery, and business continuity planning.
Processing Integrity
Controls to verify the data processed is complete, valid, accurate, and timely; may be in the form of key reports. This category is often not applicable to the services provided by technology companies. They need to evaluate if they perform transactions or process data on behalf of customers and if the accuracy and completeness of that processing is critical.
Confidentiality
Controls protecting data designated as sensitive or confidential, which is especially relevant in multi-tenant environments.
Privacy
Controls over privacy, which is especially relevant for environments that deal with personally identifiable information (PII) or protected health information (PHI). Much of the privacy category is often not critical to technology companies and including only the confidentiality category may be adequate. The privacy category becomes key when technology companies interact directly with data subjects.
Does Your Technology Company Need a SOC 2 Audit?
SOC audits have become an expected standard for nearly all technology companies that interact with or operate as vendors that store, process, or maintain client data. For example, Software as a Service (SaaS) companies that develop financial reporting systems often must store, process, and maintain confidential financial data.
Regardless of your company’s line of services—from SaaS to Intelligent Autonomous Systems (IAS)—if you have ongoing interactions with customer data or third-party providers, you will likely need an annual SOC 2 report. This helps your company remain competitive in the marketplace and to forego the numerous vendor audit and security questionnaires.
Common Triggers for a SOC 2 Audit
Technology companies usually start getting requests for a SOC audit as early as when they are entering into agreements with new customers. Basically, technology companies want to have a SOC 2 audit as they enter the market, so if this is a requirement customers ask for, they already have the audit or they have a plan to get one.
Improve Your Outcome
Following three key preparation steps can greatly reduce the associated stressors of undergoing a SOC 2 audit and improve your outcome.
1. Understand the Timeline
The timing associated with SOC 2 testing varies based on a company’s controls and preparation, as well as timing preferences based on customer demand or business cycles.
Your company should begin preparing for the SOC 2 report with your service auditor two to three months before the fieldwork takes place. In addition, be in contact with your auditor at least quarterly to discuss system changes, updates, or significant events, such as new products, change in ownership, or changes in cloud providers.
You should plan for a SOC 2 audit every 12 months once the initial schedule has been determined.
SOC 2 Fieldwork
The length of time for fieldwork varies based on the selected categories, the size and complexity of the company’s control set, and the number of personnel involved in the operation of the controls. A small SOC 2 with 40 to 60 controls will typically take one to two weeks of testing, whereas a large engagement with several SOC 2 reports and/or several products within the SOC 2 report could take several weeks.
2. Perform Ongoing Analysis
Last-minute discoveries can derail the best-laid plans.
Timing delays can often result in a SOC 2 audit taking longer than initially estimated and may result in control failures. However, there are steps your company can take on an ongoing basis to prevent or address these potential issues.
How to Combat SOC 2 Delays
- Monitor your internal controls on an ongoing basis. Create a team of professionals in charge of consistently monitoring controls, collecting relevant evidence, and addressing unintended changes or threats if they occur.
- Enable configuration-change notifications. In the event of a change in your company’s control environment due to an error or fraud, immediate notifications to your service auditor can help your company prevent or reduce damage.
- Apply consistent technology across all locations. This allows different locations to exchange data and information with fewer compatibility errors or mistakes.
- Stay up to date with technology upgrades. Your infrastructure can become vulnerable as technology becomes outdated. It’s important to update your systems with software upgrades and adopt new technology systems as cyberthreats evolve.
- Document system changes. With a SOC 2 audit, evidence of controls operating during the full examination period will be expected. Discuss significant system changes, updates, or entity-level changes with your service auditor to understand the expected evidence to retain before and after a significant event.
3. Look Externally
Maintaining controls throughout the year can be challenging in the fast-paced technology industry, but it presents particular challenges for the following companies:
- Start-ups that don’t have designated compliance personnel or can’t maintain the appropriate segregation of duties.
- Technology companies that recently experienced a merger or acquisition, or other material changes to the control environment.
- Enterprises that issue SOC reports and other compliance reports for various products and/or have very decentralized controls.
In these instances, technology companies can benefit from outsourced services.
While your service auditor must remain independent in their approach, they can offer valuable assistance to your company through complementary consulting engagements. These may consist of readiness assessments in which the examiner can help identify and map your control activities to the AICPA’s prescriptive criteria.
The service auditor can also leverage their understanding of management processes and the control environment to help craft the system narrative, which is often a stumbling block for first-time examinees.
We’re Here to Help
To learn more about how to prepare for and improve your next SOC 2 report—or for assistance with another type of SOC report—contact your Moss Adams professional.