With businesses increasingly adopting cloud-first strategies, Microsoft 365 has become a foundational tool for productivity, communication, and collaboration. But with that convenience comes an expanded attack surface that cybercriminals are eager to exploit. Phishing attacks, unauthorized user access, and misconfigured security settings can all lead to serious data breaches if left unchecked. That’s why conducting a routine Microsoft 365 security audit isn’t just a best practice—it’s a necessity.
A comprehensive audit helps organizations evaluate their overall security posture by reviewing access controls, user accounts, and the implementation of essential security measures. Features like audit logging, multi factor authentication, and Microsoft Defender offer built-in protections, but these tools are only effective when properly configured and actively monitored. Without a clear understanding of who has access to what, or how data flows between Microsoft Teams and other connected services, organizations are at risk of exposing sensitive data.
In today’s compliance-driven environment, meeting regulatory requirements demands more than basic setup. Businesses must implement robust security controls that not only detect potential threats but also mitigate risks proactively. Whether you’re a small business looking to scale securely or an established enterprise aiming to tighten cloud governance, understanding how to perform a thorough Microsoft 365 security audit is key to building resilience.
This article will walk you through the most important areas to examine, highlight common missteps to avoid, and provide actionable insights to improve your 365-security long term. By the end, you’ll be equipped with the knowledge to enhance your security solutions, protect against emerging threats, and ensure your Microsoft 365 environment is both secure and compliant.
Review and Enable Audit Logging
A critical component of any Microsoft 365 security audit is confirming that audit logging is properly enabled and configured across your tenant. Without audit logging, your organization lacks visibility into actions taken by users, administrators, and external collaborators. These logs serve as your first line of defense in identifying unusual behavior, tracking changes to security settings, and providing evidence during incident investigations or compliance audits.
Microsoft 365’s built-in audit capabilities—especially those available through Microsoft Purview Audit (Standard and Premium)—allow businesses to capture user and admin activity across Exchange Online, SharePoint, OneDrive, and Microsoft Teams. For example, you can monitor file access, login attempts, mailbox rule changes, and role modifications. These insights help organizations stay ahead of potential threats and understand how data is being accessed and used.
Enabling audit logging not only supports security best practices but is also essential for meeting many regulatory requirements, such as HIPAA, GDPR, and CMMC. As discussed in this article on evolving compliance standards, aligning your logging policies with industry frameworks ensures you’re equipped to demonstrate due diligence during audits or investigations. Make it a habit to review audit logs regularly and integrate alerts into your security operations for proactive threat detection.
Enforce Multi Factor Authentication for All User Accounts
Multi factor authentication (MFA) is one of the most effective tools for securing Microsoft 365 environments—yet many businesses still fail to implement it across all user accounts. MFA adds a critical layer of security by requiring users to verify their identity using two or more methods, such as a password and a mobile device prompt. Even if credentials are compromised, MFA dramatically reduces the likelihood of unauthorized access.
As part of your security audit, evaluate your organization’s current MFA policies. Is MFA enabled for all users, or only for admins? Are Conditional Access policies being used to enforce MFA based on location, device compliance, or user role? Businesses that don’t take full advantage of MFA leave themselves vulnerable to phishing attacks, brute-force login attempts, and session hijacking—especially for remote users accessing Microsoft Teams and cloud-based services.
It’s not enough to simply enable MFA; it must be monitored, tested, and enforced organization wide. Microsoft Defender for Identity and other 365 security tools can help detect and alert you to login attempts that bypass or fail MFA checks. As covered in our discussion of layered security measures, MFA should be seen as the baseline—not the finish line—for account protection.
Evaluate Access Controls and User Permissions
As organizations grow and evolve, it’s easy for access permissions to sprawl out of control. Over-permissioned user accounts are one of the most common—and dangerous—oversights in Microsoft 365 environments. A thorough audit should include a detailed review of who has access to what, how those permissions were granted, and whether they’re still appropriate based on the user’s role.
Start by auditing your global admin accounts and high-privilege roles—these accounts are prime targets for attackers. Then move on to Microsoft Teams, SharePoint Online, and OneDrive environments, where sensitive data is frequently shared internally and externally. It’s crucial to identify users with excessive rights or shared links that provide broad access to documents and folders. Poor access controls not only increase the risk of internal misuse but also make it easier for external attackers to move laterally if they gain access to a single compromised account.
To improve your overall security posture, adopt the principle of least privilege and ensure that user access is reviewed periodically. Leverage Azure Active Directory’s role-based access control (RBAC) features and security groups to streamline permission management. This process ties directly into your organization’s ability to meet regulatory requirements and reduce the likelihood of data exposure. As highlighted in our article on proactive IT strategies, effective access management is foundational to long-term cyber resilience.
Assess Microsoft Defender Security Configurations
Microsoft Defender provides a suite of security tools that, when properly configured, can significantly enhance your organization’s defense against modern threats. However, many businesses fail to fully utilize its capabilities. As part of your Microsoft 365 security audit, take time to evaluate how Microsoft Defender for Office 365 and Microsoft Defender for Endpoint are configured and integrated into your environment.
Defender for Office 365 protects against phishing attacks, malicious attachments, and links within emails and Microsoft Teams messages. It includes features like Safe Attachments, Safe Links, and anti-phishing policies that can detect suspicious behavior before it impacts users. Defender for Endpoint adds another layer of protection by offering advanced threat detection, behavioral analysis, and automated investigation and response.
Review the current policies in place, such as anti-malware rules, threat protection settings, and real-time reporting options. Make sure alerts are enabled and routed to the appropriate teams for timely action. Failing to configure these features correctly leaves the environment exposed, even if licenses are in place. A well-tuned Defender setup is not only a strong security measure but also a vital part of mitigating risks across your Microsoft 365 ecosystem.
Test Anti-Phishing Measures and User Awareness
Phishing attacks remain one of the most common entry points for data breaches in Microsoft 365 environments. Even with advanced filters and security solutions in place, a single user clicking on a malicious link can compromise the integrity of your network. Your security audit should include both a technical and behavioral assessment of phishing defenses.
Technically, verify that anti-phishing policies are configured in Microsoft Defender, and that impersonation protection is enabled for key users such as executives and finance staff. Check that domains are properly authenticated using SPF, DKIM, and DMARC to reduce the likelihood of spoofed emails reaching your inboxes. Review quarantine policies and ensure that suspicious messages are appropriately flagged and isolated.
On the human side, evaluate how well users are trained to recognize phishing attempts. Regular phishing simulations and awareness training sessions help reinforce best practices and reduce click rates over time. A strong focus on user education is a critical layer of defense that complements your technical security controls. Together, these efforts help protect sensitive data and improve your overall security posture.
Align Security Settings with Regulatory Requirements
A Microsoft 365 security audit isn’t just about reducing risk—it’s also an opportunity to ensure compliance with industry and legal regulations. Whether your organization falls under HIPAA, PCI DSS, FINRA, or other frameworks, Microsoft 365 offers several tools and configurations to support these obligations. However, many businesses fail to map their security controls to these requirements, leaving compliance gaps that could lead to fines or legal issues.
During your audit, review key compliance-related settings such as data retention policies, eDiscovery configurations, email encryption, and role-based access control. Utilize Microsoft Compliance Manager to benchmark your environment against relevant standards and identify areas needing improvement. Pay close attention to how sensitive data is classified, stored, and shared within Microsoft Teams, SharePoint, and Exchange Online.
Ensuring regulatory alignment is not only essential for avoiding penalties but also demonstrates to clients and stakeholders that your business takes data protection seriously. It reinforces trust and helps position your organization for long-term success in today’s increasingly regulated digital landscape.
Build a Long-Term Security Strategy for Microsoft 365
While periodic audits are essential, your organization should also focus on building a long-term security strategy for Microsoft 365. This means moving beyond reactive fixes and implementing proactive practices that adapt to evolving threats and business needs. Start by establishing a consistent review cadence—quarterly or bi-annually—to reassess security configurations, user access, and compliance standing.
Automate wherever possible using tools like Microsoft Secure Score, which offers tailored recommendations to improve your security posture based on real-time configurations. Incorporate security baselines and change control processes to prevent configuration drift and unauthorized changes over time. Implement alerting and monitoring to stay ahead of potential threats and assign ownership to ensure security doesn’t fall through the cracks.
A long-term approach isn’t about achieving perfection—it’s about continuous improvement. By prioritizing a culture of cybersecurity awareness and accountability, supported by strong technical controls, your organization can maintain a resilient Microsoft 365 environment that stands up to both current and future threats.
Conclusion
Conducting a thorough Microsoft 365 security audit is one of the most impactful steps your organization can take to protect sensitive data, meet regulatory requirements, and strengthen your overall security posture. By focusing on critical areas like audit logging, multi factor authentication, user access controls, Microsoft Defender configurations, and phishing defenses, you can uncover hidden vulnerabilities and implement practical solutions to mitigate risks.
As threats continue to evolve, a one-time review isn’t enough. Building a long-term strategy that includes regular audits, user training, and continuous optimization of your security controls is essential for staying ahead of potential threats. Whether your goal is to improve compliance, prevent data breaches, or simply gain better visibility into your 365 environments, a proactive approach to security is key.
Investing the time and effort into a Microsoft 365 security audit now will pay dividends in resilience, trust, and operational stability for years to come. If you need support in getting started or want expert guidance throughout the process, our team at Technology Solutions is here to help.
