Solving the Most Common CMMC Level 2 Audit Challenges

EXECUTIVE BRIEF

As of April 2025, 85 companies have achieved Level 2 certification and nearly 100 other companies have had their assessments delayed due to being unprepared. So where are contractors struggling when it comes to Level 2 audits? Here's what defense contractors need to know: 

• It is important to understand the timeline needed to implement and document the changes and tools needed before scheduling your assessment
• Ensuring your documentation is organized, continuously updated with changes, and matches implementation exactly is key to passing a Level 2 audit
• It is imperative to prepare for all three assessment methodologies with your team to ensure you're prepared to demonstrate compliance with CMMC practices
  

Dig deeper and continue learning below! 

Cybersecurity is one of the most pressing challenges for businesses of all sorts, with rising threats demanding heightened vigilance across industries. Recent statistics reveal that in 2024 alone, over 276 million healthcare records were compromised, the equivalent of 81% of the U.S. population—a stark reminder of the vulnerabilities even in critical sectors.

These heightened threats underscore the importance, not to mention the growing regulatory necessity, of properly safeguarding Controlled Unclassified Information (CUI) in the defense industrial base (DIB). For contractors supporting the U.S. Department of Defense (DoD), achieving CMMC Level 2 certification represents a significant step up in cybersecurity sophistication, demanding not just plans and intentions but real, auditable implementation.

On March 10, we here at ISI became one of the first managed service providers (MSPs) to successfully pass a Level 2 assessment under the new standards outlined in CMMC 2.0. If you’re preparing for a CMMC Level 2 audit, this guide leverages our expert insights and practical knowledge to help you approach the process confidently and secure compliance smoothly.

What Is a CMMC Audit?  

A CMMC audit is an official evaluation of your organization’s cybersecurity posture conducted to determine whether you meet the DoD’s cybersecurity maturity framework requirements. Audits are performed by a Certified Third-Party Assessment Organization (C3PAO) accredited by the CMMC Accreditation Body (the Cyber-AB).

Why does this matter? Without proper certification, your organization may be disqualified from bidding on DoD contracts. Achieving compliance protects sensitive information from cyber threats and positions your business as a trusted partner within the DIB. 

Does CMMC Require an Audit?  

Most CMMC Level 2 certifications require an audit by a C3PAO. A limited subset of Level 2 subcontractors may qualify for a self-assessment, but this applies to fewer than 5% of relevant subcontractors. Given that Level 2 is designed for those managing sensitive CUI tied to defense contracts, most contractors will undergo a formal audit.  

The audit’s goal is simple but rigorous: demonstrate your organization’s compliance with 110 security controls and 320 objectives across 14 domains outlined in NIST SP 800-171.  

What Should I Expect During a CMMC Level 2 Audit? 

Understanding the audit's structure is critical. A typical CMMC Level 2 assessment occurs in four key phases. 

1. Pre-assessment

The pre-assessment phase focuses more on your readiness than on whether you will pass an audit. Your C3PAO’s assessment team will look for a few key indicators, including:

• Reviewing and finalizing the scope of your audit
• System Security Plan (SSP)
• Availability of artifacts and documentation
• Shared responsibility matrix (if working with a partner like ISI)

2. Assessment  

The C3PAO evaluates compliance using three methods:

• Examine: Reviews policies and evidence of implementation.  
• Test: Confirms the actual functionality of controls.  
• Interview: Verifies that employees understand and apply cybersecurity processes.  

3. Post-Assessment

Following the assessment, the auditors provide their findings. Their findings will result in one of three outcomes: final certification, conditional certification, or a failing score. Ten days after the conclusion of your closeout meeting with your C3PAO, they will submit their findings and recommendations for certification.

If your organization receives conditional certification or fails the audit, your C3PAO can explain which controls you failed and why, but they cannot offer you guidance on how to remediate the issue. 

ISI Insight: Defense contractors have 10 days after their audit to address any issues before the C3PAO submits their findings into the eMASS system.

4. Certification

Successful contractors are granted full certification by the Cyber AB. These Certificates of Status are valid for three years, with annual affirmations required to sustain compliance. 

Who Can Conduct a CMMC Level 2 Assessment? 

CMMC audits for Level 2 must be completed by C3PAOs accredited by the official CMMC Accreditation Body, now known as the Cyber AB. These organizations follow rigorous standards to evaluate compliance. 

Here are some tips for choosing the right C3PAO:

• Ensure they are officially certified by the Cyber AB.  
• Look for firms with a proven track record in assessing similar organizations.  
• Verify their availability aligns with your compliance timeline.

Remember: You can’t choose the same organization to both audit you and consult with you on preparing for the CMMC assessment. 

How Long Will CMMC Compliance Take?  

Preparation for CMMC Level 2 can take anywhere from 6 to 12 months, depending on your organization’s initial cybersecurity posture and complexity.  

Some strategies for streamlining the process include:

• Conduct a Gap Analysis: Assess where you currently stand compared to CMMC requirements and prioritize remediation.  
• Develop a Robust POA&M: Address deficiencies with clear timelines and accountability.  
• Work with Certified Service Providers: Partnering with a Level 2-certified service provider can reduce your scope and simplify audits. 

Common Challenges and How to Overcome Them  

Challenge #1 - Misunderstanding the Timeline

A common misconception among DoD contractors is that achieving CMMC certification can be completed in just a few months. Many generalists and non-specialized advisors offer misleading promises of a 90-day timeline, which can lead organizations to postpone their preparation until it's too late. However, the CMMC 2.0 framework requires extensive alignment with security requirements, detailed reviews, and adherence to stringent timelines, particularly for those pursuing CMMC Level 2 certification.  

Solution: Start the certification process as early as possible and plan for a realistic timeline of 9–12 months. This allows contractors sufficient time for a thorough gap analysis, proper implementation of required cybersecurity practices, and preparation for the official CMMC assessment. Regular check-ins and progress tracking with a qualified third-party assessor can also keep efforts on schedule. 

Challenge #2 - Thorough and Accurate Documentation  

With CMMC, it’s not enough to simply be secure. You have to prove it.

Consequently, documentation is one of the most overlooked aspects of the CMMC framework. Policies, procedures, SSPs, and audit logs are all critical to meet the security requirements for proper access control and information systems. Failure to maintain accurate, up-to-date records can lead to audit failures during the assessment process.  

Solution: To overcome this challenge, contractors should implement a centralized documentation system and consistently update all policies, procedures, shared responsibility matrices, and audit logs to reflect current cybersecurity practices. An effective SSP is the baseline for your entire CMMC program, detailing configurations, incident response protocols, and access control mechanisms. Regularly reviewing this documentation ensures alignment with the latest standards outlined in NIST 800-171. 

Challenge #3 - Resource Constraints  

Small and medium-sized businesses (SMBs) often struggle with limited resources, both in terms of personnel and technical expertise, to meet the sophisticated requirements outlined in the CMMC 2.0 framework. This can delay critical tasks such as implementing the necessary controls, maintaining backups, performing risk assessments, or preparing for third-party assessments.  

Solution: Work with Managed Service Providers (MSPs) who have demonstrated experience in CMMC compliance and cybersecurity standards. MSPs can help you develop tailored policies, conduct mock audits, and implement technical solutions efficiently. Leveraging external expertise allows SMBs to bridge resource gaps while ensuring progress on the certification process. Also, MSPs can offer significant cost savings compared to building an in-house compliance team. 

Challenge #4 - Preparing for "Three Assessment Methods"  

The "Examine, Test, Interview" methodology is central to the CMMC assessment process. It requires an organization to showcase proficiency in technical control implementation and their ability to explain and demonstrate how these controls are enforced daily. For organizations unfamiliar with these methodologies, such assessments may feel overwhelming.  

Solution: Conduct mock audits regularly with assistance from CMMC-certified assessors. Mock audits are invaluable in identifying weak points, training staff on compliance expectations, and validating security controls. Mock interviews and technical reviews ensure teams are prepared to handle questions or scenarios raised during the assessment process. Comprehensive preparation across all three dimensions reduces the likelihood of deficiencies during formal evaluations. 

Challenge #5 - Managing Costs  

The CMMC certification process can incur significant expenses, particularly for contractors navigating remediation, compliance tool implementation, the final rule reviews, and working with C3PAOs. These costs can be a challenge for businesses already operating on tight budgets.  

Solution: Partner with CMMC-certified service providers to share the financial burden. Providers experienced with the CMMC program can often spread costs across multiple clients, making the process more affordable for individual contractors. Additionally, businesses should prioritize cost-effective risk assessments to identify essential steps and focus on addressing critical areas such as authentication, incident response protocols, and securing sensitive data in the supply chain. 

Preparing for Your CMMC Level 2 Audit

Preparing for a Level 2 CMMC audit might seem daunting, but it’s achievable with the right strategies and support. From conducting gap analyses to organizing mock audits, proactive preparation pays off.  

At ISI, we specialize in guiding defense contractors through the complex compliance landscape. As a Level 2 certified MSP with over 300 years of combined compliance experience and 900+ customers in the DIB, we help you secure contracts and streamline your path to certification.  

Managing the CMMC Level 2 audit process doesn’t have to be overwhelming. Contact ISI today to simplify the compliance process and stay ahead in a competitive industry!

FAQs about CMMC Level 2 Audits

What Is the Difference Between CMMC and SOC 2?  

While both frameworks assess organizational security, CMMC was created by the federal government, and it focuses on technical control implementation for defense contractors, requiring proof through documentation and testing. SOC 2 is a cybersecurity compliance framework developed by the American Institute of Certified Public Accountants (AICPA), and it focuses on trust service criteria, general practices,  and informational security—it’s not prescriptive about technical controls. All frameworks care about the results, but CMMC wants you to prove how your implementation leads to the desired outcome of all required documentation.

What Are the CMMC Level 2 Controls?  

To achieve CMMC Level 2 compliance, contractors must implement 110 controls across 14 distinct categories, emphasizing the protection of CUI. These categories include Access Control, Media Protection, Incident Response, and System and Communications Security, among others. Level 2 represents a bridge between the foundational practices of CMMC Level 1 and the advanced security frameworks of CMMC Level 3, which require adherence to highly rigorous compliance requirements. Contractors should consult the official CMMC assessment guide for detailed information about these controls.

How Is the CMMC Level 2 Certification Different from Level 1?  

There are three key differences between the certification processes for CMMC Level 1 and Level 2. First, Level 1 certification is exclusively through self-assessment, while Level 2 will almost definitely need a C3PAO assessment (with few exceptions). Second, Level 1 assessments only validate 17 security controls, while Level 2 assesses 110 controls and 320 unique objectives. Last, Level 1 certifications are renewed annually, while Level 2 certifications are valid for three years with annual affirmations submitted annually.

How Often Do I Need to Undergo CMMC Audits?  

CMMC Level 2 certifications are valid for three years, with ongoing compliance maintained through annual affirmations. These compliance requirements ensure that defense contractors continuously meet security standards to protect CUI within their systems. Regular updates to your Supplier Performance Risk System (SPRS)score are also essential for demonstrating ongoing adherence to the latest requirements and maintaining readiness for future audits.

What Role Does DFARS Play in CMMC Compliance?  

A common misconception is that CMMC sets new compliance standards for defense contractors. The truth is that the Defense Federal Acquisition Regulation Supplement (DFARS), specifically DFARS 252.204-7012, established the regulatory requirements for safeguarding CUI and reporting cyber incidents for defense contractors in 2017. 

The role DFARS has in CMMC is that it requires defense contractors to adhere to NIST 800-171A Rev 2 and FedRAMP Moderate Baseline standards. CMMC is verifying whether you have actually implemented the standard and can demonstrate your ability to protect CUI.