Key Takeaways
Type 1 is a Snapshot, Type 2 is a Duration: The main difference lies in the time period covered. A Type 1 report analyzes the design of controls at a single, specified point in time, while a Type 2 report validates the design and operating effectiveness of those controls over a specified period (typically 6-12 months).
Type 2 Offers Greater Client Assurance: Since a Type 2 report provides evidence that controls were consistently operational over a period, it offers a substantially higher level of assurance to clients regarding the system’s day-to-day security and compliance.
Applies to Both SOC 1® and SOC 2®: The distinction between Type 1 and Type 2 reporting applies to both SOC 1® reports (focused on financial reporting impacts) and SOC 2® reports (focused on security, availability, confidentiality, processing integrity, and privacy).
Understanding SOC* Type 1 vs SOC* Type 2
If you are new to SOC* reporting, you might be wondering about the different kinds of SOC* reports available. No matter if you are looking to receive a SOC* type 1 or SOC* type 2, there are two different versions of each report to consider.
Do I need a SOC 1®* or SOC 2®* report?
There are two different kinds of SOC* reports, but that is separate from the types of reports available. Both SOC 1®* and SOC 2®* reports can be completed as either a Type 1 or Type 2 report.
- A SOC 1®* report is necessary for service organizations that may impact the financial reporting of their clients (for instance, income reporting or a balance sheet).
- A SOC 2®* report is for service organizations that hold, store, or process their client’s sensitive information, but do not impact the finances of their clients.
Speak to a Compliance Specialist.
SOC* Type 1 Report
A “Type 1” report analyzes management’s description of a service organization’s system and the suitability of the design of controls related to the applicable trust services criteria description as of a specified date.
A Type 1 report analyzes your systems at a specific point in time. Think of it like a snapshot of your systems, offering an overview on the procedures or controls your organization utilizes at a specific point in time.f
Describes Your System As a Whole
Assesses Your Organization's Internal Controls
Testing Occurs at a Specific Point in Time
SOC* Type 2 Report
A “Type 2” report analyzes management’s description of a service organization’s system and the suitability of the design and operating effectiveness of the controls related to the applicable trust services criteria throughout a specified period. This type of report offers assurance to your clients on how your systems are used day-to-day.
A Type 2 report usually offers a greater level of trust to your clients because they have more visibility into the way your systems are set up. When clients ask about the status of your SOC 2 compliance, they are usually looking for a SOC 2®* Type 2 report, as it provides evidence of the way your systems are being used over time.
Describes Your System As a Whole
Assesses Your Organization's Internal Controls
Testing Occurs Over a Period of Time During Which Your Controls Are Operational
Includes Detailed Descriptions of Your Assessor's Testing and the Results of Your Controls
Your SOC* Type 1 and Type 2 Compliance Partner
Auditwerx has been trusted by companies big and small with their SOC* readiness and assessment needs. We are ready to be your true partner for compliance and help you set your business on the path to success. If you are ready to get started on your SOC* compliance journey, contact us today.
FAQs
What information does a SOC Type 1 report validate?
A SOC Type 1 report serves as a “snapshot,” validating two key elements: management’s description of the service organization’s system and the suitability of the design of controls. This validation is done as of a specific date and does not cover the historical operation of those controls.
How does a SOC Type 2 report provide assurance on system effectiveness?
A SOC Type 2 report is more comprehensive, analyzing not only the design of controls but also their operating effectiveness throughout a specified period of time. It includes detailed descriptions of the assessor’s testing procedures and the results to show how the system was used day-to-day.
Which type of SOC report do most clients prefer or request?
Clients typically look for a SOC Type 2 report, especially for their ongoing vendor risk management needs. Because it provides assurance that the controls were operational over time (e.g., six months), it offers a greater level of trust and visibility into the security processes than a Type 1 snapshot.
What is the fundamental difference between a SOC 1 and a SOC 2 report?
A SOC 1® report is necessary for service organizations whose systems could potentially impact their client’s financial reporting (e.g., balance sheets). A SOC 2® report is for organizations that handle, store, or process client’s sensitive information but whose operations do not directly impact their client’s financial statements.
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