What is the Difference Between SOC 2 Type 1 and Type 2?

The SOC 2 Attestation waters can be a little murky, so first let’s clear up a common source of confusion.  There is SOC 1 and then there is SOC 2 (Type 1 and Type 2). SOC 1 and SOC 2 are both types of audits that assess the controls and processes of service organizations.

SOC stands for System and Organization Controls, and the audits are based on standards developed by the American Institute of Certified Public Accountants (AICPA). If you’re asked for an SOC report concerning security and data, it’s safe to assume what they’re looking for is SOC 2. 

In this article we will cover: 

• How are SOC 1 and SOC 2 Different? 
• What is the Difference Between SOC 2 Type 1 and Type 2? 
• SOC 2 Type 1 or SOC 2 Type 2: Which Should You Choose?
  
   

How are SOC 1 and SOC 2 different? 

The main difference between SOC 1 and SOC 2 is the scope and purpose of the audits:  

• SOC 1 focuses on the financial reporting controls of the service organization and is relevant for users who rely on the financial statements of the service organization.  

• SOC 2 focuses on the security, availability, processing integrity, confidentiality, and privacy controls of the service organization, and is relevant for users who are concerned about the protection of their data and systems. BEMO is actually a verified SOC 2 Compliant Company, because we like to lead by example, so who better to explain the topic to you! 

What is the Difference Between SOC 2 Type 1 and Type 2? 

Now we will be specifically focusing on SOC 2 Type 1 and 2, not SOC 1.    

• SOC 2 Type 1  reports evaluate a company’s controls at a single point in time – think of it as a snapshot. It assesses if the security controls are designed properly.  
• SOC 2 Type 2  reports assess how those controls function over a period of time, generally 3-12 months.  

 An SOC Type 1 and Type 2 report are two types of audits that service organizations can undergo to demonstrate their compliance with certain standards and controls.  

A simple analogy can help us understand the difference between SOC 2 Type 1 and Type 2: Imagine you are hiring a contractor to build a house for you. You want to make sure they follow the best practices and meet your expectations.

An SOC Type 1 report is like asking the contractor to show you their blueprint and explain how they plan to build the house. It provides an overview of their design and objectives, but it does not tell you if they actually followed them or not. 

 An SOC Type 2 report is like visiting the construction site and inspecting the work done by the contractor. It provides evidence of how they implemented their design and objectives, and whether they met them or not. It also covers a longer period of time, usually six months or a year, so you can see how consistent and reliable they are. 

 So, an SOC Type 1 report tells you what the service organization says they do, while an SOC Type 2 report tells you what they actually do. Both reports are useful and important, but they serve different purposes and audiences. You can see why the Type 2 report holds more weight and why it takes longer to produce. 

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SOC 2 Type 1 or SOC 2 Type 2: Which Should You Choose? 

There are many factors that go into the decision whether to pursue a Type 1 or 2.  A combination of your goals, cost, and timeline constraints will more than likely dictate the choice. Your customers or partners may make the decision for you by asking specifically for a Type 2.  

Before going any deeper, would you be up for a fun quiz? Take our interactive quiz to learn more about which audit is best for your business. Or if you’d prefer, you can read the factors that come into play when deciding which type of audit you need. 

Need Help Deciding Between SOC 2 Type 1 and 2? 

Our Compliance Experts at BEMO can assist you with the decision of what compliance level fits your needs, as well as assistance with a compliance roadmap that is customized to your business needs. 

 BEMO deploys and monitors the same comprehensive Microsoft 365 security controls, whether you select Type 1 or 2, so your business will benefit from a strengthened security posture, no matter what you choose.  

Get more details on what you'll get with our SOC 2 Compliance Solutions by downloading our brief here.