Which SOC Report Do I Need? SOC 1 vs SOC 2

Explore SOC report nuances and get help from AAFCPAs to choose, prepare, and get compliant.

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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. Learn more about our SOC Report Services >

SOC 1 Reports SOC 2 Reports

UNDERSTANDING YOUR OPTIONS

SOC 1 vs. SOC 2: Which report does your organization need?

SOC 1

For organizations that handle outsourced financial processes on behalf of their clients.

Purpose
Evaluates controls relevant to a client’s internal control over financial reporting (ICFR).

Audience
External auditors, financial reporting teams, and management of user entities.

Standard
AICPA SSAE 18

Report Types
Type 1 (point in time) and Type 2 (operating effectiveness over a period).

Best For
Demonstrating strong internal controls for outsourced financial processes.

SOC 2

For organizations that store, process, or transmit sensitive customer data.

Purpose
Evaluates controls across Security, Availability, Processing Integrity, Confidentiality, and Privacy (Trust Services Criteria).

Audience
Customers, regulators, governance bodies, and business partners.

Standard
AICPA Trust Services Criteria

Report Types
Type 1 (point in time) and Type 2 (operating effectiveness over a period).

Best For
Demonstrating operational resilience and data safeguards to customers and partners.

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.
Learn more about SOC 1 Reports

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.
Learn more about SOC 2 Reports

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.

Frequently Asked Questions : SOC 1 vs SOC 2

SOC 1 vs SOC 2
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