Overview

As regulatory standards around data security and compliance become stricter, SOC (System and Organization Controls) audits have emerged as an essential tool for service organizations seeking to build trust with clients and stakeholders. However, many businesses approach us at Auditvisor feeling uncertain about which SOC report aligns with their unique operations. Choosing the right SOC audit type is crucial—not just for meeting compliance requirements, but also for strengthening client relationships and supporting sustainable growth.

What many organizations overlook is that SOC audits are not determined solely by industry. Instead, the nature of the service provided and the type of data processed are the key determinants. A data center managing customer information has very different SOC needs than a payroll processor responsible for handling financial data, regardless of the industries they serve. Let’s delve into each SOC audit type and the scenarios that would benefit most from each, followed by an overview of the Type 1 and Type 2 reports that can be generated from each audit.

A Common Scenario: Finding the Right SOC Audit

Imagine a scenario where a SaaS provider approaches Auditvisor, uncertain about which audit would offer the most value. They handle not only sensitive user data but also manage uptime requirements for clients who rely on their platform’s availability. This client needs a SOC 2 audit to address information security, privacy, and availability controls. However, another SaaS provider that processes financial transactions for their clients may find a SOC 1 audit more relevant, particularly if financial data accuracy impacts client records.

At Auditvisor, we’ve developed a process to identify these critical factors—examining both the nature of the service provided and the type of data processed. Our approach allows us to recommend a tailored audit type, ensuring our clients pursue the right report that adds tangible value.

SOC Audit Types Explained

Each SOC audit type serves a distinct purpose, assessing specific controls based on service functions and data processed, rather than the industry of the organization:

• SOC 1: Designed for organizations that impact clients’ financial reporting, SOC 1 audits evaluate controls relevant to financial data accuracy. Companies such as payroll processors, loan service providers, or any organization directly influencing client financial data benefit from SOC 1, as it demonstrates robust internal controls over financial reporting.
• SOC 2: This audit addresses controls around information security, availability, processing integrity, confidentiality, and privacy. SOC 2 is invaluable for technology providers, SaaS companies, and cloud service providers managing sensitive customer information. It reassures clients that their data is well-protected and that service delivery standards are consistently met.
• SOC 3: SOC 3 is a public-facing summary of SOC 2, meant to showcase an organization’s commitment to security without disclosing detailed internal controls. This report type is ideal for companies wanting to present a high-level view of their security posture to current and potential customers.
• SOC for Supply Chain: With an increasing reliance on complex supply chains, this audit evaluates controls across a company’s entire supply chain. SOC for Supply Chain helps companies in sectors like manufacturing, logistics, or retail establish that they maintain security, availability, and processing integrity throughout their supplier networks.
• SOC for Cybersecurity: This report is tailored for organizations aiming to strengthen their cybersecurity posture, a concern that transcends industry lines. SOC for Cybersecurity audits evaluate a company’s ability to manage cyber risks, making it essential for any organization looking to mitigate the growing threat of cyber attacks.

Understanding Type 1 and Type 2 Reports

Each SOC audit type—whether SOC 1, SOC 2, or SOC for Cybersecurity—can be delivered as either a Type 1 or Type 2 report. These reports provide different levels of assurance based on the organization’s needs:

• Type 1 Report: Type 1 reports assess the design and implementation of controls at a specific point in time, offering a “snapshot” view. They verify that controls are properly designed to meet security or financial objectives but don’t evaluate whether those controls operate effectively over time. This makes Type 1 ideal for organizations new to SOC audits or those establishing initial compliance.
• Type 2 Report: Type 2 reports provide a more comprehensive review, assessing the operational effectiveness of controls over a period, typically six months to a year. They’re particularly valuable for companies wanting to demonstrate the reliability and consistent operation of controls. For organizations under regulatory scrutiny or dealing with large volumes of sensitive data, Type 2 is often considered the gold standard, showcasing a long-term commitment to security, privacy, and data integrity.

Selecting between Type 1 and Type 2 depends largely on the organization’s maturity and client expectations. For some clients, a Type 1 may be an adequate first step to establish control frameworks. But for many, a Type 2 report adds significant value, as it builds confidence by demonstrating consistent, reliable control practices over time.

The Bigger Picture: How SOC Audits Add Value

Ultimately, a SOC audit is more than a compliance checkbox. It’s an opportunity for organizations to validate their internal controls, identify areas of improvement, and instill greater trust in their client relationships. At Auditvisor, our role is to provide this added value by guiding organizations toward the SOC report that best aligns with their operations and data responsibilities. By understanding our clients’ unique needs and goals, we’re able to deliver a SOC audit that strengthens not only compliance but also client confidence and business resilience.