The SOC 2 attestation waters can be a bit murky, so let's clear up a common source of confusion. SOC 2 Type 1 and SOC 2 Type 2 are both audits that assess the controls and processes of service organizations, but they focus on different points in time.
This is not to be mistaken with SOC 1 and SOC 2. SOC 1 focuses on financial reporting controls, while SOC 2 evaluates security, availability, processing integrity, confidentiality, and privacy of data for service organizations.
Although we’ll cover the difference between SOC 1 and SOC 2 briefly, the main goal is to help you understand what sets SOC 2 Type 1 and Type 2 apart.
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, of which there are two types.
SOC 2 Type 1 assesses security controls at a single point in time, while SOC 2 Type 2 evaluates their effectiveness over a period (usually three to twelve months).
So, what’s the difference between SOC 2 Type 1 and Type 2? Keep reading to find out more!
In this article, we will cover:
SOC stands for System and Organization Controls, a set of auditing standards developed by the American Institute of Certified Public Accountants (AICPA). These reports evaluate how well an organization protects sensitive data and ensures security, availability, processing integrity, confidentiality, and privacy.
If your company provides services that involve handling customer data,. such as cloud computing, IT security, or financial processing, SOC compliance can be crucial.
Businesses in industries like finance, healthcare, technology, and government contracting often require SOC audits to prove they have strong security controls in place.
Whether you're looking to build trust with clients, meet regulatory requirements, or gain a competitive edge, a SOC report helps demonstrate your commitment to data security and compliance. There are both SOC 1 and SOC 2, and within SOC 2, there is both Type 1 and Type 2. Before we discuss SOC 2 Type 1 and 2, let’s quickly differentiate SOC 1 and SOC
The primary difference between SOC 1 and SOC 2 lies in their focus and purpose:
If your business affects clients' financial reporting, SOC 1 is key. If protecting customer data and system security is your priority, SOC 2 is the better fit.
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!
Now that we know what SOC 1 and SOC 2 are, let’s differentiate between SOC 2 Type 1 and SOC 2 Type 2.
SOC 2 Type 1 serves as your organization's security control validation at a specific moment. Think of SOC 2 Type 1 as your security program's first big photo opportunity.
It's the auditor taking a snapshot of your controls on a specific day, checking if you've set things up right.
You're essentially showing that you've created the proper security blueprint. This means your policies look good, you've implemented the right measures, and your security design fits the Trust Services Criteria you're aiming for.
If you're just getting your compliance program off the ground or need to show clients you're serious about security without waiting months, Type 1 is your go-to option. You get to prove you've done your homework without the long-term commitment.
When you're ready to prove you're not just talking the talk but walking the walk, SOC 2 Type 2 is your path forward. SOC 2 Type 2 goes beyond design to evaluate the operating effectiveness of your security controls over an extended period, typically between three and twelve months.
It's like having someone check your security habits repeatedly to make sure you're sticking to your promises.
Your auditor will regularly peek at your operations to verify you're consistently following your own rules.
If you're dealing with clients who need serious reassurance about their data, Type 2 tells them, "Hey, we've been doing this right consistently, not just on our best day." Yes, it takes more of your time and resources, but the trust you build is absolutely worth it.
Enlist the help of BEMO to get SOC 2 certified today!
Below is a perfect summary of what sets SOC 2 Type 1 and Type 2 apart.
The main difference between SOC 2 Type 1 and Type 2 is the time period that your organization is assessed over.
Simply put, 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 2 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 2 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 2 Type 1 report tells you what the service organization says they do, while an SOC 2 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.
Deciding between SOC 2 Type 1 and Type 2 involves considering several critical factors:
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
When choosing between SOC 2 Type 1 and Type 2, you must consider several factors like the maturity of your business, the expectations of your customers and stakeholders, the complexity of your services, and the cost.
Here’s how to make an informed choice.
If you are a new or emerging business, you may want to start with a SOC 2 Type 1 audit to establish a baseline for your controls and identify any gaps or weaknesses that need improvement.
A SOC 2 Type 1 audit can also help you prepare for a future SOC 2 Type 2 audit by giving you feedback on your control design and implementation.
If you are an SMB that has recently undergone significant changes in your systems, processes or personnel, an SOC 2 Type 1 report may be sufficient to help you document the impact of these changes on your controls and show that you have updated them accordingly.
If your customers or stakeholders require evidence of your control effectiveness over a period of time, you may need to opt for a SOC 2 Type 2 audit. A SOC 2 Type 2 report can provide more assurance and credibility to your customers or stakeholders than a SOC 2 Type 1 report, as it demonstrates that your controls are not only designed well, but also operate consistently and reliably.
If your services are complex or involve multiple processes, systems, locations, or third parties, you may benefit from a SOC 2 Type 2 audit. A SOC 2 Type 2 audit can capture the variability and changes that may occur in your service delivery over time and show how your controls adapt and respond to those changes.
A SOC 2 Type 2 audit is more costly and time-consuming than a SOC 2 Type 1 audit, as it requires more testing and documentation.
You may need to allocate more resources and personnel to support the audit process and ensure that your controls are maintained and monitored throughout the audit period. You may also need to engage with an external auditor more frequently and extensively than for a SOC 2 Type 1.
If you are an SMB that has a contractual or regulatory requirement to obtain a SOC 2 report, but do not have enough time or resources to prepare for a Type 2 report, a SOC 2 Type 1 report can help you meet the minimum requirement and buy you some time to plan for a Type 2 report in the future.
To help you with the process, below is a checklist that will help you prepare for SOC 2 compliance.
Ready to get started with SOC 2 certification, but not sure where to begin? We've got you covered! Preparing for a SOC 2 audit doesn't have to be overwhelming when you break it down into manageable steps.
Whether you're pursuing a Type 1 or Type 2 report, this practical checklist will help you navigate the compliance process:
Remember, good preparation not only makes the audit smoother but also strengthens your overall security posture!
Depending on your organization, it may be recommended or required to transition from SOC 2 Type 1 to Type 2, and below we provide tips on how to do just that.
Ready to take your compliance to the next level? At BEMO, we've helped dozens of companies successfully transition from SOC 2 Type 1 to the more comprehensive Type 2 certification. This upgrade represents a significant milestone in your security maturity journey and sends a powerful message to your clients about your ongoing commitment to data protection.
Most organizations naturally evolve from Type 1 to Type 2 as their security program matures. While Type 1 validates your security design, Type 2 proves you're consistently practicing what you preach. Our BEMO experts will guide you through this transition with our proven methodology:
Remember, while the leap to Type 2 requires more effort, the payoff in customer trust and competitive advantage is substantial. BEMO's clients who make this transition report winning more security-conscious customers and facing fewer security questionnaires.
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.
Speak With a Compliance Expert
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.
Choosing between SOC 2 Type 1 and Type 2 depends on your business needs, security goals, and customer expectations.
If you need quick validation of your security controls, SOC 2 Type 1 is the way to go. But if you want to demonstrate long-term security effectiveness, SOC 2 Type 2 provides a more in-depth evaluation.
By achieving SOC 2 compliance, you show your customers and partners that you take data protection seriously. It also helps you meet industry regulations and gives you a competitive edge.
Whether you're just getting started or looking to transition from Type 1 to Type 2, BEMO can guide you through the process. Ready to secure your organization’s future? Speak with a BEMO expert today and take the next step toward stronger security and compliance.
A SOC 2 Type 1 audit typically takes between a few weeks to a couple of months, as it involves assessing controls at a single point in time. The duration can vary based on the organization's readiness and the scope of the audit.
Yes, you can proceed directly to a SOC 2 Type 2 audit if your controls are well-established. However, starting with a Type 1 audit can help identify any gaps before moving to the more extensive Type 2 audit.
Achieving SOC 2 compliance enhances your organization's reputation, meets contractual obligations, and offers a competitive advantage by demonstrating your commitment to data protection.
SOC 2 Type 1 audits evaluate controls at one point in time, whereas Type 2 audits assess their effectiveness over a period, usually ranging from 3 to 12 months.
SOC 2 audits should be performed annually to maintain compliance, as reports are generally valid for 12 months. This annual process ensures that organizations can renew their compliance status and continue to demonstrate their commitment to security and operational best practices.
While you can't technically "fail" a SOC 2 audit, the auditor will issue an opinion on your compliance. An adverse opinion indicates significant issues and non-compliance, requiring substantial remediation efforts. A qualified opinion points out areas of concern that need addressing to achieve full compliance.
A common myth about SOC 2 is that it is a certification, when in reality, it is an attestation report. Another misconception is that you can rely solely on your vendor's SOC 2 report instead of obtaining your own. Finally, many believe SOC 2 is a rigid, one-size-fits-all checklist, but it's actually a flexible framework that should be tailored to each organization.