The Hidden Risks of Low-Cost SOC Engagements
Service Organization Control (SOC) reports have become a common part of modern business operations, providing assurance to clients, business partners, and stakeholders regarding the security and integrity of an organization’s systems and processes. When it comes to SOC reports, businesses often find themselves tempted to select the cheapest option. While this might seem like a sound business decision, opting for the lowest-priced SOC report can lead to significant challenges, unexpected costs, and potential business impacts.
This article explores the common pitfalls of low-cost SOC engagements and provides guidance on making informed decisions to balance cost with quality.
Immediate Hidden Expenses of Low-Cost SOC Reports
1. Insufficient Planning and Scoping
Rushed Readiness Assessment
A rushed readiness assessment can significantly undermine the effectiveness and value of a SOC engagement. When service auditors do not take the appropriate amount of time to comprehend your business environment, they may only gain a surface-level understanding of operations, leading to a superficial review of internal controls that fail to capture system complexity. This rushed approach often results in critical systems and processes being overlooked or misunderstood, creating gaps in the examination's scope and increasing the risk of inadequate findings.
Inadequate Risk Assessment
A lack of a comprehensive risk assessment can exacerbate existing issues, leaving key threats and vulnerabilities unidentified or misevaluated. Business objectives will not fully align with the overall business strategy when the risk assessment is insufficient. This could result in a SOC examination that fails to address your organization’s strategic needs or stakeholder requirements. These shortcomings, at the preliminary stage of the SOC process, can cascade throughout the entire SOC examination, potentially resulting in costly remediations and scope adjustments later.
Incomplete Control Identification
Incomplete control identification can create critical weaknesses in your SOC examination and resulting report.
Missing key controls leaves essential activities unmonitored, while under-appreciated automated controls can lead to over-reliance on manual processes.
Inadequate coverage of critical processes creates significant gaps in your control framework, and unclear control hierarchy weakens overall effectiveness.
Insufficient identification of compensating controls leaves your organization vulnerable when primary controls fail.
These shortcomings result in an incomplete SOC examination that fails to provide stakeholders with necessary assurance.
Misaligned Scope with Business Objectives
A misaligned SOC scope can severely limit the value and effectiveness of your report.
Failing to consider customer requirements results in a report that does not address specific assurance needs or compliance obligations.
Overlooked regulatory requirements create potential exposure to legal, financial,
and operational risks.
Disconnects between controls and business processes can lead to examining irrelevant controls.
Inadequate coverage of critical services leaves key areas without proper assurance.
Missing stakeholder requirements results in a report that fails to meet the needs of essential users, leading to costly additional assessments.
Additional Fees for Scope Modifications
Unexpected scope modifications can significantly increase the total cost of a SOC examination beyond the initial budget. These hidden costs often arise when critical systems or processes are identified late in the engagement, leading to unplanned expenses and delays.
Change orders arise when critical systems or processes are identified after the engagement begins, with extra charges being incurred when additional systems require assessment.
Extra assessment fees are incurred when newly discovered gaps necessitate further testing or expanded audit procedures.
Unexpected consulting fees accumulate when addressing newly discovered gaps.
Expanded testing costs emerge when the original procedures prove insufficient, leading to additional resource allocation.
Supplemental documentation charges may be assessed for additional evidence collection and review.
These unplanned expenses not only strain budgets but can delay SOC examination completion. Ensuring a thorough scoping process upfront can help mitigate these risks and prevent costly modifications later.
2. Limited Provider Expertise
Inexperienced Auditors Requiring More Time
Inexperienced auditors prolong SOC examinations by requiring explanations of industry concepts, making excessive evidence requests, and conducting inefficient interviews. Misunderstanding complex controls leads to inappropriate testing approaches and redundant explanations, adding unnecessary time and cost to your examination.
Lack of Industry-Specific Knowledge
A lack of industry-specific knowledge can compromise the quality of your SOC examination.
Auditors unfamiliar with sector requirements may misevaluate controls, provide misaligned recommendations, and overlook industry-specific risks.
Poor risk assessments and inadequate compliance mapping leave your organization exposed to system deficiencies and vulnerabilities.
Limited industry experience prevents auditors from offering meaningful insights and best practices.
Poor Guidance on Control Implementation
Poor control implementation guidance can undermine the value of your SOC examination.
Generic control suggestions that overlook your operations often lead to ineffective controls.
Impractical recommendations ignoring your organization's size and resources make implementation difficult.
In SOC 1 reports, misaligned control objectives create framework gaps, while poor internal control execution causes inconsistencies in system processes.
Lack of awareness of best practices deprives your organization of valuable insights that could enhance your control environment.
Insufficient Understanding of Complex Systems
Insufficient understanding of complex systems can seriously jeopardize your SOC examination's effectiveness.
A superficial or inadequate technical review often misses critical control points and system vulnerabilities.
Overlooked system dependencies can mask key system component interactions.
Poor understanding of system integration and data flows can result in missed control points and risks.
Limited infrastructure knowledge often leads to gaps in controls assessments.
These gaps and inefficiencies weaken your overall SOC examination and diminish the effectiveness of your controls.
A Strong SOC Report Starts with the Right Provider
While the appeal of a lower-priced SOC examination may seem attractive for your budget, the hidden costs of inferior quality, increased effort, and potential rework can far exceed any initial savings. Remember, the right provider should serve as a trusted partner who not only delivers a reliable report but also adds value through insights and recommendations that strengthen your control environment. Investing in quality from the start helps avoid costly pitfalls and delivers a SOC report that serves its intended purpose while supporting your organization's goals.
Need expert guidance for your SOC engagement?
Contact Clark Schaefer Consulting today to ensure a seamless, high-quality SOC examination that aligns with your business objectives.
Expert Contributors
Amanda Hornung
Manager
Kourtney Nett
Managing Director
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