SOC 2 Type 1 vs Type 2: Which Do You Need

SOC 2 Type 1 vs Type 2: Which One Do You Need?

Deciding which SOC 2 report type is right for your company (SOC 2 Type 1 vs Type 2) is the first step before starting your SOC 2 journey. Demonstrating SOC 2 compliance can help you win new business because it tells potential customers that your organization can securely manage and protect client data.

Use this quick guide to help you make the right choice. If you’re still unsure and you’d like some help with this decision and your SOC 2 journey, book a no-obligation chat with our team.

SOC 2 Type 1 vs. Type 2 Basics: What is SOC 2?

Put simply, Service Organization Control 2 (SOC 2) is an independent auditing procedure that checks whether a service provider can securely manage customer data and protect the interests and privacy of its clients based on five Trust Services Criteria (security, availability, processing integrity, confidentiality, and privacy). It is based on standards set forth by the Auditing Standards Board of the American Institute of Certified Public Accounts (AICPA).

SOC 2 provides a level of assurance to other businesses that want to work with your organization, and it can give your sales and business development teams a competitive advantage. Many businesses, especially enterprises, will only work with other service organizations that are SOC 2 compliant.

What is SOC 2 Type 1?

SOC 2 Type 1 assesses a service organization’s compliance at a specific point in time. The goal of this audit is to check whether the internal controls that safeguard customer data are sufficient and designed correctly. In other words, this audit aims to answer the question: “If these controls were working properly, would they fulfill their intended purpose?”

A SOC 2 Type 1 Audit is quicker and simpler than a Type 2 Audit because it only examines the design of an organization’s controls without also checking the operating effectiveness of those controls.

What is SOC 2 Type 2?

SOC 2 Type 2 assesses both the design and the operational effectiveness of controls over a period of time (usually 3-12 months). During a SOC 2 Type 2 audit testing period, the auditor will examine how the controls are implemented and how effective they are. The auditor looks for deficiencies within those items and creates recommendations to improve them if necessary.

SOC 2 Type 2 audits involve more work, time, and resources than their Type 1 counterparts. The trade-off is that Type 2 reports provide greater detail and reassurance that a company’s data will remain secure when they do business with a SOC 2-compliant organization.

SOC 2 Type 1 vs Type 2: What’s the Difference?

Here’s a closer look at the differences between SOC 2 Type 1 vs Type 2.

Scope

SOC 2 Type I reports on the description of controls provided by the management of the service organization and attests that the controls are suitably designed and implemented. A SOC 2 Type 2 goes much deeper, reporting on the description of controls provided by the management of the service organization, attesting that the controls are suitably designed and implemented, and attesting to the operating effectiveness of the controls.

Speed

SOC 2 Type 1 audit reports can usually be completed in a matter of months, whereas SOC 2 Type 2 can take anywhere from 3-12 months to complete.

Cost

SOC 2 Type 1 audit reports are much cheaper than their SOC 2 Type 2 counterparts because they require less effort, time, and resources to complete.

Value

A SOC 2 Type 2 report is the more valuable option, as it provides greater detail into an organization’s security controls (how they’re designed, how effective they are) and demonstrates that your security processes and procedures were in place and effective for months. Type 2 reports give customers more information and a higher degree of confidence that their data is in safe hands.

Cadence

SOC 2 Type 1 is a one-time report. A SOC 2 Type 2 report needs to be assessed on an annual basis to ensure an organization is maintaining compliance.

SOC 2 Type 1 vs Type 2 Report: Which Type is Best for Your Company?

The right SOC 2 report type for your company largely depends on how quickly you need the report, the nature of your company, and the level of compliance you must demonstrate to potential partners.

Ask yourself the following questions to determine which SOC 2 report type is best for your company:

How quickly do you need to obtain your SOC 2 Report?

If you need to demonstrate SOC 2 compliance to win new business ASAP, a Type 1 report is likely your best solution as it’s quicker and simpler to achieve. Some organizations may require you to provide a SOC 2 Type 2 report. If that’s the case and you’re on a quick timeline, looking to external resources like a vCISO service may be a great option to help you fast-forward your compliance efforts.

What level of detail do you need in your SOC 2 report?

Enterprises typically require service organizations to demonstrate Type 2 compliance. If the level of detail in a Type 1 report does not meet external security requirements, you’ll need a Type 2 report that shows that your security processes and procedures were in place and operating effectively over the course of several months.

Will you eventually need a SOC 2 Type 2 report?

Companies that start with a Type 1 report usually do so with the understanding that they will also require a Type 2 report in the future. If you already know that you’ll need a Type 2 report down the line, the SOC 2 Type 1 vs Type 2 calculation is simple: If you have the time, budget, and resources to go through a Type 2 audit right now, aiming for a Type 2 report may save you time and hassle in the long run.

Budget & SOC 2 Type 1 vs Type 2: Do you have the time, budget, and resources required for SOC 2 Type 2?

A common question is, “How long does a SOC 2 audit take?” The short answer is it depends on the type of report you opt for. Type 2 audits are resource-heavy, time-consuming, and more costly than their Type 1 counterparts. Your organization’s budget and available resources may dictate which SOC 2 report type you can secure right now.

Fast Forward Your SOC 2 Type 1 or Type 2 Journey

SOC 2 compliance requirements are complex. But the process can be simplified. Our vCISOs have helped hundreds of service organizations navigate SOC 2 compliance in record time.

Whether you are considering a SOC 2 Type 1 vs Type 2 audit, our cybersecurity experts can give your team the hands-on support it needs to automate evidence collection, draft auditor-approved security policies, and navigate SOC 2’s confusing processes.