What Are SOC 2 Type 1 and Type 2 Reports?

soc 2 types 1 and 2 featured

SOC 2 is one of the most well-known and well-respected compliance frameworks for businesses wanting to show partners and clients that they take security seriously. With the help of expert auditors and supportive security professionals, SOC 2 can quickly become a standard part of doing business in nearly any industry. 

Organizations attempting to meet SOC 2 requirements will find that they will always seek one of two types of SOC 2 reports, Types 1 and 2. Learn more about these reports here. 

 

What’s a SOC 2 Report?

Generally speaking, a SOC 2 report is an attestation by a company that they have met or exceeded requirements for specific compliance standards set by the American Institute of Certified Public Accountants (AICPA). These requirements include the following categories, known as the “Trust Services Criteria:”

  1. Security: The overall cybersecurity of the system, particularly its ability to resist and mitigate attacks and breaches. It can include technologies like firewalls, anti-malware and hardening techniques. 
  2. Availability: Internal and authorized users can access limited sets of relevant information related to user accounts or job status, and nothing more. 
  3. Processing Integrity: The ability of a system to protect data from corruption or manipulation and prevent unauthorized manipulation of data through records like audit logs. 
  4. Confidentiality: Protecting unauthorized viewing of private data through mechanisms like IAM and MFA. 
  5. Privacy: Like confidentiality, but applies to broader categories like Personal Identifiable Information (PII) or other protected data. These criteria includes the implementation of encryption and cryptography. 

Not all of these criteria are part of an audit–instead, an organization will undergo assessment based on whichever criteria they see as necessary for their organization. The exception is the Security criteria because every SOC 2 report will include a security assessment. 

In any case, an organization undergoing SOC 2 assessment will end up with an attestation report speaking to their success or failure at the end of the process. However, unlike some other compliance audits, SOC 2 will come in one of two forms.

 

What Are the Differences Between SOC 1 Type 1 and Type 2 Reports?

soc 2 types 1 and 2

SOC 2 reports are further broken down into types 1 and 2, each with different information and applications based on the organization’s needs. 

The two types of SOC 2 reports are:

 

Type 1

Type 1 reports are more specifically known as “Report on Management’s Description of a Service Organization’s System and the Suitability of the Design Controls.” This massive title simply means that the Type 1 report describes the “suitability” of a system for SOC 2 assessment. 

More precisely, the Type 1 report will use a description and documentation of the controls. The auditor will look at the provided description of a system at a particular date. These reports come from the management of the company, and the auditor determines the fairness of that description. 

Type 1 reports, while not as robust as Type 2, will give organizations a quicker way to line up SOC 2 attestation if they are pressed for time. These reports provide the following advantages:

  • Proof of Compliance: Type 1 reports are still SOC 2 compliance, and organizations that require rapid proof of compliance will find it here. 
  • Cost Reductions: The lack of in-depth assessments means that auditors will work less, thus costing less. 
  • Preparation: An organization undergoing Type 1 assessment is well-positioned for a Type 2 assessment in the future and often turns to Type 1 audits as their first SOC 2 attestation. 

 

Type 2

Type 2 reports are called the “Report on Management’s Description of a Service Organization’s System and the Suitability of the Design and Operating Effectiveness of Controls.” Content-wise, these reports contain all the information included in a Type 1 report. However, these reports are also based on a period of time. That is, while a Type 1 report may cover fitness at the time of the audit, the Type 2 will cover continued compliance over an assessed time, typically six months. Type 2 audits, therefore, require regular re-assessments to maintain compliance. 

Furthermore, a Type 2 report will discuss the testing conducted to assess the system through a much more rigorous process than the Type 1 report. 

Some advantages of a Type 2 report include the following:

  • Thoroughness: SOC 2 Type 2 reports are the pinnacle of SOC audits, with rigorous standards and complete assessments. 
  • Reputation: A Type 2 report signals to clients and customers that security is incredibly important to your organization and serves as a trust-building measure that is invaluable in certain industries. 

 

What Are the Challenges of SOC 2 Attestation?

Regardless of whichever type of test you choose, SOC 2 reports aren’t a checklist or centralized document, but rather a set of general criteria that organizations align with as part of a demonstration of compliance. 

For businesses that are used to more prescriptive compliance audits, SOC 2 can throw a wrench in otherwise clockwork audits. New relationships with auditors and regular compliance policies and processes can provide new challenges and costs to any enterprise. 

Working with a solid SOC auditor can help organizations better understand compliance from risk management and security gaps. An organization that can document their IT and data handling practices can trust a knowledgeable auditor to help them align their systems as they are implemented with the demands of SOC 2.

Achieve SOC 2 Attestation Success With Lazarus Alliance

SOC 2 reporting is a regular occurrence, which means that prep and maintenance are full-time jobs. Organizations that attempt to meet their SOC 2 requirements with stone-age tools like spreadsheets and email without any support often find that these audits take two or three times longer than they need to. 

Trust the experts at Lazarus Alliance to help you automate SOC 2 Type 1 or Type 2 reports and continuing assessments. More importantly, we take this complex and costly process and reduce it to a manageable and straightforward part of doing business. We’re one of the SOC 2-authorized CPA firms that are, first and foremost, cybersecurity consultants. 

 

Are You Preparing For a SOC 2 Audit? 

Call Lazarus Alliance at 1-888-896-7580 or fill in this form. 

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