What is SOC Compliance? Basic Overview for Businesses

SOC compliance (which stands for the System and Organization Controls (SOC) compliance) is an auditing framework created by the American Institute of Certified Public Accountants (AICPA). It examines and audits service organizations to ensure that controls and processes are in place to protect client data that they have access to. The SOC compliance framework helps organizations know what they need to do or how they can improve to increase the security of data in their possession.

For managed service providers (MSPs), SaaS companies, and other service-based businesses, SOC compliance is not a regulatory requirement; it’s proof of trustworthiness.

Obtaining a SOC compliance report and certification provides evidence to your customers that you have the proper actions and protocols in place to protect their data. There are currently 3 types of SOC compliance, which are:

Types of SOC compliance

SOC 1

SOC 1 is a framework for the internal security controls and handling of financial data, including statements and reporting. A SOC 1 report attests that an organization has the necessary controls in place.

SOC 2

SOC 2 is a more generalized framework than SOC 1, and it’s a standard for service organizations. It covers the “Trust Services Criteria,” which includes the five categories of security, availability, processing integrity, confidentiality, and privacy. A SOC 2 report is a “restricted use” report, meaning that only the organization and current clients have access to the report.

SOC 3

SOC 3 covers the same information as SOC 2, but the generated report is for “general use.” When organizations are SOC 2 compliant and would like to use their compliance for marketing purposes, they require a SOC 3 report. SOC 3 is less formal and provides less detail, but it can be used widely.

What is a SOC audit?

A SOC audit, conducted by a Certified Public Accountant (CPA), is an assessment of an organization to determine whether they have effective systems and controls in place to comply with the SOC requirements.

How to prepare for a SOC audit

To prepare for a SOC audit, gather your company’s policies, procedures, systems, and controls that will be needed. Identify areas in your processes and actions that might be problematic and cause issues during the SOC audit, and seek to resolve the gaps. Once you have prepared and have a solid security strategy in place, contact a SOC auditing firm.

Preparation often begins with a readiness assessment or gap analysis. This step helps highlight weaknesses in your controls before the official audit begins. For example, you may discover that certain access controls aren’t documented properly, or that incident response procedures are outdated. Addressing these issues early allows you to go into the audit with more confidence.

We also recommend ensuring that your technical safeguards, such as monitoring systems, encryption standards, and user authentication, are functioning consistently and can be demonstrated to auditors.

SOC audit results explained

When the audit is complete, the results are delivered in the form of an auditor’s opinion. The four possible outcomes are:

1. Unqualified opinion

This is considered the “clean” report and is the best outcome. An unqualified opinion means the auditor found that your organization’s controls were both properly designed and operating effectively during the audit period. Receiving this opinion demonstrates to clients that your systems are reliable and trustworthy. It is the strongest proof of compliance and the outcome most businesses aim for.

2. Qualified opinion

A qualified opinion means that while most of your controls are operating effectively, there are some exceptions or deficiencies noted by the auditor. These issues might not be severe enough to cause failure but still require remediation. Clients may still accept a qualified opinion, but it shows there is room for improvement in your compliance efforts.

3. Adverse opinion

An adverse opinion is a serious finding. It indicates that your controls failed to meet SOC requirements in significant ways, and as a result, your organization did not demonstrate the necessary safeguards to protect client data. This outcome can damage credibility and often requires immediate corrective action before the business can pursue new client relationships.

4. Disclaimer of opinion

A disclaimer occurs when the auditor cannot issue an opinion at all, usually because the organization did not provide sufficient documentation or evidence to support its controls. This may also happen if the scope of the audit was too limited to form a conclusion. While less common, a disclaimer raises concerns with clients and can delay or block business opportunities until the issues are resolved.

⚠️ Checklist: What can influence an SOC auditor’s opinion?

Several factors can influence whether your SOC audit results in an unqualified, qualified, adverse, or disclaimer opinion. We’ve listed some factors that could influence your audit. Keep in mind, however, that these are not extensive or comprehensive.

• Documentation quality: Are policies, procedures, and controls clearly documented and available for review?
• Evidence availability: Can the organization produce logs, reports, and system records that demonstrate controls were followed?
• Consistency of processes: Are security measures consistently applied, or do gaps exist in daily operations?
• Score of controls: Were all relevant systems, services, and data-handling processes included in the audit scope?
• Remediation efforts: Were the identified issues addressed in advance, or left unresolved before the audit?
• Employee training and awareness: Do staff understand compliance procedures, or are they unclear on responsibilities?

By preparing for these factors ahead of time, MSPs and IT enterprises increase their chances of receiving an unqualified opinion and demonstrating strong SOC compliance to clients?

When does an organization need a SOC audit?

Companies need to prove to their customers that they are very careful with their data; it helps them to be more reputable and trustworthy. The reports generated through SOC audits demonstrate to clients that the security of their data is important to the business and ensured through proper actions.

Here are other considerations: 

• Organizations typically pursue an SOC 2 audit when enterprise customers, regulated industries (such as financial services or healthcare), or channel partners include SOC 2 in their procurement requirements or when conducting a vendor assessment. 
• Service providers that handle, process, or store customer information use SOC 2 to shorten security questionnaires and accelerate contract cycles. (They are also important when maintaining HIPAA compliance). 
• Even when not strictly required, SOC 2 can be a strategic differentiator during RFPs, proof-of-concepts, or security reviews by prospective clients. 
• Common triggers include signing your first major enterprise deal, expanding into regulated markets, or managing multi-tenant environments.

How long does it take to get SOC compliant?

The timeline for becoming SOC compliant varies depending on the report type you wish to pursue, your current security maturity, and how much remediation is needed (if any).

Even so, here are some general timeframes to keep in mind:

• SOC 2 Type I typically includes a readiness or gap assessment and remediation (often 4–10 weeks depending on scope), followed by evidence collection and the audit itself (often 2–4 weeks). In practice, well-prepared teams can complete a Type I in roughly 1–3 months from kickoff.
• SOC 2 Type II takes longer because it tests whether controls operate effectively over a period of time. After readiness and remediation (commonly 4–12 weeks), you’ll need an observation window—most organizations choose 6–12 months—during which you consistently run and document your controls. Once the period ends, auditors perform testing and finalize the report (often 2–6 weeks). End-to-end, many teams see 6–12 months for Type II, and up to 12–18 months if significant remediation is required.
• SOC 1 timelines are similar in shape to SOC 2: a focused readiness phase, then either a Type I point-in-time report or a Type II period-of-time report.
• If you plan to use SOC 3 for public marketing, it typically follows from your SOC 2 results, so its timing generally rides on your SOC 2 schedule rather than adding substantial extra time.

3 benefits of SOC compliance

1. Create and implement effective controls

Adhering to the SOC compliance framework and becoming certified, it enables you to establish controls and processes in your organization that effectively protect customer data. The requirements of SOC are fairly strict, standardized, and well-established, so they will help guide your business as you establish how client data is handled. You can feel confident when you’re working to become SOC compliant, or are already SOC compliant, you’re taking the necessary actions.

2. Evaluate and improve data security

Another benefit of becoming SOC compliant is that you’ll be able to evaluate your organization’s management of data and look for ways to improve it. The aim of SOC compliance is to protect your customer data by ensuring data privacy and preventing data breaches. The process of a SOC compliance audit and eventual certification allows you to assess your current procedures, determine whether they’re secure and align with the SOC framework, and make the necessary changes.

3. Obtain and keep clients

A SOC compliance certification shows other businesses and potential clients that you’ve gone through the process of adhering to the SOC framework. This is an external validation of your business’s controls, and more businesses will be open to working with you. Current clients are also more likely to keep doing business with you if they know proper actions have been taken to protect their information.

3 challenges of SOC compliance

1. Understanding the requirements

The requirements of SOC compliance can be extensive and hard to understand. For example, SOC 2 compliance has five different categories that service organizations must meet the requirements for, and it can be a challenge to know what the expectations are in each category as well as whether your business meets the expectations.

2. Difficult to obtain

SOC compliance is not something that businesses can easily obtain. Getting you SOC compliant and then validating that you’re SOC compliant is a difficult and lengthy process. Usually, you will need assistance from outside experts to help ensure you have the right controls in place to be compliant.

3. Expensive to conduct

Secureframe reports, “the average quote for a SOC 2 audit runs between $5,000 and $60,000.” That cost doesn’t include other preparation costs, training costs, and other costs that may come up. Since the compliance certification isn’t free or easy to obtain, SOC compliance is an investment for your organization.

Watch what is SOC compliance and get the facts behind data protection frameworks.

Use NinjaOne to help you achieve SOC compliance

SOC compliance is challenging to achieve, but the payoff is well worth it. If you’re a service organization that handles customer data, determine whether you should become SOC compliant, which SOC framework you need, and establish what needs to happen for your business to be certified. Additionally, check out our guide to customer data protection.

NinjaOne is SOC-2 certified and can help you effectively manage your customer data and achieve SOC compliance. Sign up for a free trial today to discover how you can better protect and manage your client data using our software.