There are many SOCs in the sock drawer. Some are for everyday wear. Others are for bank meetings.
In total, the AICPA has defined three SOC (System and Organization Controls) categories for service organizations:
Choosing a SOC report type has much to do with where you want to go. Which industries do you target now and do you plan to target additional industries in the future? What tasks does your service organization execute for its customers?
SOC 3 is often left out of the discussion because it is a “nice-to-have,” while SOC 1 and 2 are now required by most enterprise and government body clientele. With SOC 3, you get an overview of your organization’s adherence to the five Trust Services Principles without your auditor’s assessments, opinions, or descriptions of how your controls were tested. It’s like SOC 2 Lite. An ankle sock, perhaps.
So let’s look at the great debate of SOC 1 vs. SOC 2. You can expedite the audit process for both reports with compliance automation software. By the end of this post, you should know which report or reports to target for your cybersecurity compliance needs.
What is SOC 1?
SOC 1 is a report that assesses the financial controls of an organization.
Think payroll processing and management, employee benefit providers, trust services, and registered investment advisors.
Enterprises that depend on third-party service organizations to manage or store financial information will often want to see SOC 1 attestation from those providers “for evidence of their operating effectiveness.”
Beyond client requirements, SOC 1 certification is also helpful to have for financial statement audits
Similar to SOC 2, there are two report types within SOC 1. Type 1 provides a snapshot of the system description and control design based on the control objectives.
Type 2 looks at the system description and control design based on a specified timeframe and includes an assessment of its operating effectiveness.
SOC 1 and SOC 2 reports are restricted, meaning only a defined set of individuals or departments can access them. However, SOC 1 reports have higher restrictions than SOC 2. Only your managers, the client requesting the information, and the auditors can view and use your SOC 1 reports.
With ControlMap, you can prepare for your SOC 1 audit while upholding confidentiality for your materials by managing permissions for those who can view and edit policy documents in your Compliance Portal.
What is SOC 2?
SOC 2 is a report that assesses non-financial controls based on Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.
Not all Trust Services are required as part of the audit process. Only ‘security’ is needed, and you can choose to be assessed on additional criteria during your scoping process.
The two Report Types for SOC 2 are similar to SOC 1:
Type I: Provides an assessment based on management’s description of the organization’s system and suitability of the design of the controls.
Type II: Provides the same assessment as Type 1, as well as an assessment of the system and design of the controls over a defined period (so, evaluating operating effectiveness).
Why is SOC 2 so popular?
Popular things appeal to a broad audience. SOC 2 does just that.
With SOC 2, the AICPA has developed a framework that “is intended to meet the needs of a broad range of users.” So if your organization sells something ‘as-a-service’ on the web, it’s likely to benefit from SOC 2 attestation.
Popular things are often known by their branded name, Like Kleenex or Chapstick. These have become shorthand for the product itself (tissue paper, lip balm).
SOC 2 is like that, too. The term SOC 2 has come to be interchangeable with, in a broad sense, cybersecurity compliance.
As Jim Goldman at Forbes notes:
“SOC 2 attestation and ISO 27001 certification are thresholds or costs of doing business that companies must accept if they are going to sell their services to enterprise-scale companies.
It’s the club everyone wants to get into. It’s Studio 54 in 1977. It’s SOC 2, baby!
Does SOC 2 include SOC 1?
The good news is:
The bad news:
SOC 2 does not include SOC 1 within its certification. SOC 1 is a separate report pursued through a different auditing process.
Since both reports are voluntary, you can obtain certification in both over time, based on priority for your organization.
Should I prioritize SOC 2 or SOC 1?
Cybersecurity compliance is an ongoing investment. Consider the following actions to help in your decision-making process and leverage the most from your security budget:
- Revisit the five and ten-year outlook for your organization. If you do not currently provide financial services and do not intend to in the future, you do not need to pursue SOC 1.
- Talk to your sales team to determine which framework or frameworks are frequently requested by prospective clients. There may be growing demand for one or the other.
- Consult with your Infosec leadership to gain more expertise on the cybersecurity posture for your organization.
- Book a demo with a compliance automation software provider to learn more about SOC 2 and SOC 1 automation.
Keen on both? You can pursue SOC 1 and SOC 2 simultaneously. With compliance automation software, the sprawl of your IT infrastructure comes together in one workflow, with the opportunity for cross-mapping data for more efficient audit preparation. Now that will knock your SOCs off!
Secure your SOC 2 or SOC 1 audit
Now that you know the difference between SOC 1 and SOC 2, it’s time to breeze through audit preparation. Email us to get started!