SOC 1 and SOC 2: What Are The Differences?

Customers ask for “SOC” reports all the time, but the labels can get confusing fast. This article clarifies SOC 1 vs SOC 2, SOC 3, and Type 1 vs Type 2, then covers how to choose the right report, when you need both, prep steps, timelines, costs, and ISO 27001 and ISAE 3402 comparisons. 

SOC 1 and SOC 2: What Are The Differences? 

SOC Type 1 and Type 2 reports: What Is The Difference? 

How do you decide between SOC 2 Type 1 and SOC 2 Type 2? 

Decide between SOC 2 Type 1 and SOC 2 Type 2 based on what assurance your customers need from your system and organization controls, and whether a managed soc service provider can help you operationalize evidence collection and control monitoring so you can prove those controls ran consistently across the full audit period. 

Choose SOC 2 Type 1 when your goal is to prove control design quickly. A Type 1 report focuses on whether your organization controls are suitably designed as of a specific date. It fits when you have recently implemented controls, or when a buyer accepts a point-in-time view of your cybersecurity control design as an interim step toward fuller assurance. 

Choose SOC 2 Type 2 when your goal is to prove controls work consistently. A Type 2 report focuses on both design and operating effectiveness over a defined period, so it provides stronger assurance for SOC 2 compliance because it tests whether controls actually operated as described, not only whether they were designed. 

In short, pick Type 1 when you need a fast, point-in-time design opinion; pick Type 2 when customers want evidence that your controls operated effectively over time. 

How do you choose between SOC 1, SOC 2, and SOC 3? 

Choose between these report types based on what assurance your customers need and what risk your service affects. 

Choose a SOC 1 report when your service can affect a customer’s internal control over financial reporting. This is the right path when customers need assurance that your controls support accurate financial statement reporting, and when the best soc as a service provider can help you run and evidence those financial-reporting-relevant controls consistently across the audit period. 

Choose a SOC 2 report when customers need assurance about your controls related to security and trust, rather than financial reporting. In practice, “soc 1 vs soc 2” is decided by whether the customer’s primary concern is financial reporting assurance (SOC 1) or security and operational trust assurance (SOC 2). 

Choose a SOC 3 report when customers want a high-level, general-use report that can be shared broadly and they do not require the detailed control descriptions and testing results found in a SOC 2 report. 

Do you need both SOC 1 and SOC 2? 

You may need both SOC 1 and SOC 2 reports when your services create two distinct assurance needs for customers: one tied to financial reporting and one tied to security and operational trust. 

You likely need both a SOC 1 and a SOC 2 when: 

• Your service affects customer financial reporting, so customers need a SOC 1 report (the soc 1 report focuses on controls relevant to financial reporting), and

• You also store, process, or transmit customer data in a way that customers expect security assurance, so they need a SOC 2 report (the SOC 2 report focuses on SOC 2 controls aligned to SOC 2 criteria), and a managed security service provider can help implement, monitor, and evidence those controls so audit testing can confirm they operated as designed.

If customers only need one assurance outcome, you typically choose soc 1 or soc 2 based on which risk is dominant: financial reporting (SOC 1) versus security and operational trust (SOC 2). 

If you do pursue both, the “type” still matters: a type i report is point-in-time, while a Type II report tests operating effectiveness over a period (often referenced as type 1 vs type 2, including soc 2 type ii and SOC 1 Type II). 

When do organizations need both SOC 1 and SOC 2? 

Organizations need both SOC 1 and 2 reports when customers require two different assurance outcomes from the same vendor relationship. 

You need both when all of the following are true: 

• The service affects customer financial statement processes, so a SOC 1 report is necessary because SOC 1 focuses on controls relevant to financial reporting and the auditor tests controls that can impact that reporting.

• The service also involves protecting customer data or systems, so a SOC 2 attestation report is necessary because SOC 2 identifies and tests controls mapped to SOC 2 criteria for security and related trust outcomes.

• The customer base includes stakeholders who review different assurance artifacts, so the same service organization must satisfy both finance assurance and security assurance expectations through different types of SOC reports, and ai driven soc as a service can support this by continuously monitoring controls and generating audit-ready evidence that aligns to each report’s scope.

In short, organizations need both when a single service creates both financial reporting exposure (SOC 1) and security or trust exposure (SOC 2), and customers expect both assurances as part of soc compliance. 

How do you get a SOC 1 or SOC 2 report? 

To get soc 1 or SOC 2, an organization completes a defined soc examination performed by an independent auditor (CPA firm). The process is similar across soc report types, but the scope differs because SOC 1 and SOC 2 serve different assurance purposes. 

• Confirm which report you need
  Determine whether you need soc 1 or 2 based on what the service affects. SOC 1 is for organizations whose service can impact customer financial reporting, while SOC 2 is used when customers need security and trust assurance (often described as soc for cybersecurity).

• Define the system boundary and control scope
  Document the services, systems, locations, vendors, and processes that will be in scope. For SOC 2, map controls to the selected SOC 2 criteria (the criteria as soc 2).

• Implement and document controls, then run them
  Put controls in place and operate them in the normal course of business. This matters because the auditor tests controls using evidence. If you pursue Type II, controls must operate over the defined period.

• Engage an auditor and complete the SOC audit. The auditor plans and performs the SOC audit, collects evidence, and tests controls; for SOC 2, this is the SOC 2 audit and report workflow, and soc services can help you organize evidence and maintain control operation so testing stays consistent..

• Receive the SOC report
  After testing and management responses (if applicable), the auditor issues the final SOC 1 or SOC 2 report for distribution to intended users.

How much does SOC 1 vs SOC 2 cost? 

SOC 1 vs SOC 2 costs vary mainly by scope, complexity, and whether you pursue Type I or Type II, so the most accurate way to compare is to separate audit fees from total program cost. 

How do you prepare for a SOC 1 or SOC 2 audit? 

Prepare for a SOC 1 or SOC 2 audit by defining the correct scope, aligning controls to the correct objective, and producing evidence that an auditor can test, where 24/7 managed soc services can continuously monitor controls and preserve time-stamped evidence so audit sampling reflects real, ongoing operation. 

• Confirm which report you need and why:
  Use the key differences between SOC 1 and SOC 2 to set scope correctly: SOC 1 tests controls that can impact customer financial reporting, whereas SOC 2 is commonly requested as a security and trust assurance report (often treated as a soc for cybersecurity report).

• Define the in-scope system and boundaries
   List in-scope services, applications, infrastructure, locations, and third parties.
   Document data flows and where customer data or financial reporting-relevant outputs are created, processed, stored, or transmitted.

• Map controls to audit objectives
  For SOC 1, map controls to the financial reporting-related risks your service creates.
  For SOC 2, map controls to the SOC 2 criteria in scope (what is required for a SOC 2 depends on which criteria you include).

• Document policies, procedures, and control ownership
  Assign each control an owner, frequency, evidence type, and escalation path.
  Ensure procedures match what teams actually do, because auditors test what operates in practice.

• Run controls and collect evidence in a repeatable way
  Centralize evidence (tickets, logs, approvals, configurations, access reviews, change records).
   If you are pursuing Type II, maintain evidence over the full operating period; Type I requires point-in-time evidence.

• Perform a readiness check before the audit starts
  Validate that each key control has complete evidence, correct timestamps, and clear linkage to the system in scope.
   Fix gaps before fieldwork so audit testing does not fail due to missing or inconsistent evidence.

How does SOC 1 or SOC 2 compare to ISO 27001 and ISAE 3402? 

SOC 1 and SOC 2 are attestation reports issued by an independent auditor, while ISO 27001 is a certification standard for an information security management system. ISAE 3402 is an international assurance standard for service-organization controls that aligns closely with SOC 1’s purpose. 

FAQs 

1. What is the difference between SOC 1 and SOC 2?
   SOC 1 focuses on controls affecting financial reporting, while SOC 2 addresses security and privacy controls for data protection. 
2. When do I need a SOC 3 report?
   SOC 3 is typically used for public-facing summaries when you want to share high-level audit results without disclosing detailed control testing. 
3. How long does a SOC 2 audit take?
   The timeline for a SOC 2 audit can vary but typically takes 2–6 months depending on the scope and complexity. 
4. How much does a SOC 2 report cost?
   SOC 2 report costs range widely, typically between $7,000–$50,000, depending on the service provider’s complexity and audit type. 
5. Can a Managed Security Service Provider help with SOC 2 preparation?
   Yes, a Managed Security Service Provider can assist by ensuring continuous control monitoring and providing documentation necessary for the audit.