What distinguishes SOC 1 from SOC 2?


If your business specializes in providing outsourced technology services, customers may request a due diligence package from you. This package will often contain a recently completed SOC 1 or SOC 2 report. It is intended to provide existing or future clients with an elevated degree of assurance regarding the integrity and confidentiality of your internal operations. Create a thorough investigation package that offers consumers the assurance they want by comprehending the function of SOC 1 and SOC 2 records and the distinctions between them. Know more about soc 1 vs soc 2


Service organizations must go through a Service Organization (SOC) audit to assess and document their clients’ internal controls over their financial statements. This audit is covered by the AICPA’s SSAE 18 AT-C Section 320. A service company must decide on important control goals for its services, including those related to business and IT operations. For instance, a completed SOC 1 report might be provided as evidence of effective internal controls verified by an independent CPA firm by an outsourced payroll provider. Customers, management, compliance authorities, and outside auditors all often utilize SOC 1 reports.


 E 18 Standard, commonly known as a Service Organization Security (SOC) 2 report, discusses a service organization’s controls that are pertinent to its operations and conformity with the AICPA’s Trust Services Criteria. Service businesses can assess their internal controls for reliability, security, processing accuracy, secrecy, and privacy of client data and report on them using a SOC 2 audit. Organizations providing services must decide whether the service criteria apply to their offerings and legal needs. For instance, a data center providing secure storage for vital infrastructure could require a SOC 2 report to verify the effectiveness of the measures. Customers, management, business associates, potential clients, compliance authorities, and external auditors all read SOC 2 reports.

SOC type 1 vs type 2

Depending on the preparedness of the service organization for the audit and the amount of time needed for the audit, type 1 and type 2 SOC audits are available. While type 2 audits give the chance to look at the controls’ operational performance over a six- to 12-month period, type 1 audits assess and report on the design of controls and procedures at a single date. To provide transparent, ongoing coverage and validation of internal controls, service firms should seek to cover 12 months and conduct the audit yearly to ensure the audit’s maximum value.

For service firms that have never undergone an audit or that have just undergone major enhancements to their internal controls, policies, and procedures, a type 1 SOC audit is an appropriate alternative. The business can assess and report on the design of its controls through the use of this audit, which assesses and documents the design of procedures and controls over a specified period. This strategy is especially helpful for service firms that have just undergone a large upgrade or have been requested to conduct a SOC audit by clients or potential clients.

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