SOC 2 Audit failures and common findings: What Australian organisation need to know

SOC 2 audit failures, sometimes referred to as SOC2 audit issues, usually occur when controls are not implemented or evidenced consistently throughout the audit period. SOC 2 audit failures are rarely caused by a lack of effort. Instead, they usually occur because common findings are identified too late, evidence is incomplete, or controls do not operate as described. As a result, Australian organisations often enter audits confident, only to face unexpected exceptions that delay certification and commercial outcomes.

For SaaS providers, technology firms, and service organisations selling into enterprise or US markets, these SOC 2 audit failures can directly impact revenue. Therefore, understanding the most common SOC 2 audit findings, and how to avoid them, is essential before starting the audit process.

This article explains why SOC 2 audits fail, the most frequent findings auditors identify, and how Australian organisations can prevent costly issues through better preparation and ongoing compliance.

What SOC 2 audit failures actually mean

SOC 2 audits are conducted against the Trust Services Criteria issued by the AICPA, which define the control requirements auditors test throughout the audit period. A SOC 2 audit failure does not usually mean the organisation has “failed” outright. Instead, auditors report one or more control exceptions where required controls did not operate effectively throughout the audit period.

Common outcomes include:

• Qualified opinions in the SOC 2 report
• Exceptions recorded against Trust Services Criteria
• Extended audit timelines due to remediation
• Increased audit and advisory costs

Consequently, even when a report is issued, these findings can reduce its value for customers, partners, and investors.

For organisations preparing for their first audit or remediating prior findings, engaging structured SOC 2 audit and compliance support early can significantly reduce the risk of control exceptions and audit delays.

The most common SOC 2 audit failures and findings

Controls documented but not operating

One of the most common SOC 2 audit failures occurs when controls exist in policy documents but are not followed in practice. While documentation may appear complete, auditors test whether controls actually operated and whether evidence supports them.

Typical findings include:

• Access reviews documented but not performed
• Incident response plans never tested
• Security policies not approved or reviewed
• Control owners unclear or incorrectly assigned

In many cases, organisations relied too heavily on templates without aligning controls to real operational processes.

Poor system scope and boundary definition

SOC 2 audits depend on accurate system descriptions. However, many Australian organisations underestimate how detailed scoping needs to be.

Auditors frequently identify:

• Third-party services missing from scope
• Cloud platforms not clearly defined
• Development and production environments incorrectly grouped
• Data flows undocumented or misunderstood

As a result, scope gaps often lead to additional audit work and delayed reporting. Organisations with established information security management practices, such as those aligned with ISO 27001, tend to experience fewer of these findings because asset and system boundaries are already defined.

Weak vendor and third-party risk management

Vendor risk management remains one of the most common SOC 2 audit failures, particularly for organisations relying on cloud providers, outsourced development teams, or managed services.

Common audit findings include:

• No formal vendor risk assessment process
• Missing security reviews for critical suppliers
• Outdated or incomplete vendor due diligence
• No evidence of ongoing vendor monitoring

Auditors expect organisations to demonstrate not only that vendors were assessed, but that risks were reviewed and managed throughout the audit period. Therefore, ad hoc or informal approaches often result in control exceptions.

Missing or inconsistent audit evidence

SOC 2 Type II audits assess controls over time. Consequently, controls may be well designed but still fail if evidence is missing during the observation period.

Typical evidence-related SOC 2 audit failures include:

• Access reviews completed late
• Logging enabled but not reviewed
• Backup testing performed without documentation
• Change approvals missing for system updates

These issues often arise because evidence collection starts too late. In contrast, organisations that treat SOC 2 compliance as an ongoing programme capture evidence continuously and reduce audit pressure.

Over-reliance on compliance tools

GRC platforms can streamline SOC 2 (SOC2) preparation. However, auditors regularly identify failures where organisations rely on tools without effective governance.

Common findings include:

• Controls marked complete without supporting evidence
• Evidence uploaded without management review
• Control descriptions that do not match operational reality

Tools support compliance, but they do not replace accountability. Clear ownership, oversight, and operational discipline remain essential.

Security testing not aligned to SOC 2 controls

Another frequent SOC 2 audit failure relates to technical security testing. While organisations may perform vulnerability scanning or penetration testing, auditors assess whether testing supports risk management decisions.

Typical issues include:

• Vulnerabilities identified but not tracked
• No remediation evidence for high-risk findings
• Penetration testing conducted irregularly
• Lack of management review of test results

Regular penetration testing, combined with documented remediation and risk acceptance, directly supports SOC 2 Trust Services Criteria and reduces audit findings.

Passing Type I but failing Type II

Some organisations pass a SOC 2 Type I audit but struggle with Type II. This usually happens because controls were designed but not sustained over time.

Common causes include:

• Staff turnover disrupting evidence collection
• Manual processes that do not scale
• Inconsistent control execution across teams

SOC 2 Type II audits require operational maturity. As organisations grow, ongoing security operations and Managed Cybersecurity Services often help maintain consistency across the audit period.

How to prevent SOC 2 audit failures

Begin with a readiness assessment

The most effective way to avoid SOC 2 audit failures is to identify gaps before the audit begins. A structured SOC 2 readiness assessment highlights control weaknesses early, allowing remediation without audit pressure.

As a result, organisations reduce delays, costs, and the risk of qualified reports.

Align SOC 2 with broader compliance frameworks

Organisations that align SOC 2 with established frameworks experience fewer audit findings. For example:

• ISO 27001 supports governance, asset management, and control design
• ISO 42001 assists organisations managing AI-related risks
• Risk-based approaches improve consistency across compliance efforts

Aligning controls across frameworks also reduces duplication and long-term compliance effort.

Treat SOC 2 as an ongoing programme

SOC 2 compliance should not be treated as a one-off project. Instead, it requires continuous oversight, monitoring, and improvement.

Embedding compliance into daily operations through Managed Compliance Services ensures controls continue to operate effectively beyond the audit window and reduces future audit failures.

When to seek SOC 2 audit support

Organisations should consider specialist SOC 2 audit support when:

• Preparing for their first SOC 2 audit
• Transitioning from Type I to Type II
• Recovering from previous audit findings
• Scaling rapidly or entering new markets

Early advisory support helps prevent common SOC 2 audit failures while improving audit outcomes and stakeholder confidence.

Final thoughts

SOC 2 audit failures and common findings are rarely the result of poor intent. Instead, they reflect gaps in execution, governance, and evidence.

Australian organisations that approach SOC 2 compliance strategically, align controls with recognised frameworks, and embed compliance into ongoing operations are far more likely to achieve clean audit outcomes and long-term trust.

Useful Links

• SOC 2 Audit Australia (SOC2): The Definitive Guide for Organisations

Related Services

• SOC 2 Compliance Services

External Resources

• AICPA CIMA Trust Services Criteria
• NIST SP 800-53 Security and Privacy Controls
• ASD Essential 8