SOC 1 vs SOC 2: Which SOC Report Is Right for You?
Navigating the landscape of System & Organization Controls (SOC) reports can be complex, yet understanding the differences between SOC 1 and SOC 2 reports is essential for businesses leveraging third-party services. Each report serves a unique purpose, tailored to meet the varied needs of service organizations and their stakeholders.
We help clients unravel and master SOC compliance—guiding you toward the report that aligns best with your strategic goals and regulatory requirements.
SOC 1 vs SOC 2: Key Differences
| Feature | SOC 1 | SOC 2 |
|---|---|---|
| Purpose | Focuses on controls at a service organization relevant to a user entity’s internal control over financial reporting (ICFR). | Evaluates controls related to Security, Availability, Processing Integrity, Confidentiality, and Privacy (Trust Services Criteria). |
| Audience | External auditors, financial reporting teams, management of user entities. | Customers, regulators, governance bodies, business partners. |
| Standards | AICPA SSAE 18 (Attestation Standards). | AICPA Trust Services Criteria. |
| Report Types | Type I (point in time) and Type II (operating effectiveness over a period). | Type I (point in time) and Type II (operating effectiveness over a period). |
| Use Case | Demonstrates strong internal controls for outsourced financial processes. | Demonstrates operational resilience and safeguards for sensitive data and systems. |
When Do You Need a SOC 1 Report?
SOC 1 reports are essential for businesses whose outsourced services impact financial reporting. They provide assurance to clients, auditors, and regulators that internal controls are properly designed and functioning.
SOC 1 Reports are typically required by:
- Third-Party Service Providers needing to prove compliance with financial reporting controls.
- User Entities (Clients) relying on service providers for accurate financial data.
- External Auditors who depend on SOC 1 reports for audit planning and execution.
When Do You Need a SOC 2 Report?
SOC 2 reports extend beyond financial reporting, assessing controls tied to the five trust services principles: security, availability, processing integrity, confidentiality, and privacy. These reports are critical for technology companies, SaaS providers, and any organization entrusted with sensitive data.
SOC 2 Reports are typically required by:
- Management and Governance Bodies seeking assurance on data and system integrity.
- Customers & Regulators demanding evidence of robust safeguards.
- Business Partners who require confidence in operational resilience.
What About SOC 3 Reports?
SOC 3 reports are designed for broad public distribution. They summarize the findings of a SOC 2 report in a simplified, easy-to-understand format without disclosing sensitive details. This makes SOC 3 reports ideal for organizations that want to demonstrate compliance and build trust with prospective customers and partners.
Choosing the Right SOC Report for Your Business
Selecting the right SOC report depends on your industry, stakeholders, and regulatory requirements. Whether you need a SOC 1 to validate financial reporting integrity, a SOC 2 to prove operational resilience, or a SOC 3 for marketing transparency—AAFCPAs can help you make the right choice.
“AAFCPAs is a true partner. They’re always there for us to help us grow and anticipate challenges or changes on the horizon. They’ve worked with us on all types of SOC reports [SOC 1 Type 1 and 2 plus SOC 2 Type 1 and 2] along with special attestations, process assessments, and SOC readiness. And they make audits clear and understandable. But more importantly, they give us context and guidance because they know us—perhaps even better than many of our own employees.”
Michael Marotta | Governance, Risk, and Compliance Officer, Public Consulting Group LLC (PCG)
FAQs: SOC 1 vs SOC 2
SOC 1 focuses on financial reporting controls; SOC 2 evaluates broader operational and data-related controls.
Yes. Some organizations undergo both reports if their services impact financial reporting and handle sensitive customer data.
A SOC 2 audit typically takes 3–6 months, depending on the scope, your organization’s readiness, and whether you pursue a Type I or Type II report. However, timelines can vary. At AAFCPAs, we frequently work with clients who have urgent needs and can help you streamline preparation, focus on the most critical controls, and move efficiently toward issuing your report.
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Getting your SOC 1 or SOC 2 Report doesn’t have to be complicated. AAFCPAs is here to guide you every step of the way. Fill out the form and a SOC specialist will be in touch promptly to discuss your goals and next steps.