Contents
📚 What Are SOC Reports?
SOC stands for System and Organisation Controls. These are independent audit reports issued by certified public accountants (CPAs), designed to evaluate and validate how organisations manage data, risks, and internal controls.
They’re governed by the AICPA (American Institute of Certified Public Accountants) and commonly used in cloud and SaaS environments to provide assurance to clients and regulators.
🔍 SOC 1 – Financial Reporting Focus
SOC 1 audits are focused on internal controls over financial reporting (ICFR). These are critical if your services impact your clients’ financial statements.
- Audience: Financial auditors, regulators, and enterprise clients.
- Use Case: Payroll processors, billing platforms, and fintech services.
- Framework: Based on SSAE 18 standards.
Types:
- SOC 1 Type I: Snapshot of control design at a single point in time.
- SOC 1 Type II: Review of control effectiveness over a period (usually 6–12 months).
🛡️ SOC 2 – Security, Availability, Confidentiality & More
SOC 2 focuses on operational controls related to data security and privacy. It evaluates how a service provider protects client data and ensures uptime, confidentiality, and integrity.
- Audience: InfoSec teams, risk officers, procurement.
- Use Case: SaaS, cloud hosting, managed services.
- Framework: Trust Services Criteria (TSC)
| Trust Principles | Description |
|---|---|
| Security | Protection against unauthorised access (required). |
| Availability | Service uptime and disaster recovery. |
| Confidentiality | Protection of sensitive info. |
| Processing Integrity | Accurate, timely system processing. |
| Privacy | Proper handling of personal data (e.g. GDPR relevance). |
Types:
- SOC 2 Type I: Are controls properly designed?
- SOC 2 Type II: Are controls operating effectively over time?
📈 Key Differences Between SOC 1 & SOC 2
| Feature | SOC 1 | SOC 2 |
|---|---|---|
| Purpose | Financial reporting controls | Data security & operational controls |
| Audience | Financial auditors | IT security, clients, partners |
| Framework | SSAE 18 | Trust Services Criteria |
| Industries | Payroll, finance, accounting | SaaS, cloud, tech, B2B platforms |
✅ Why SOC Reports Matter
- Trust: Reassures customers and partners of your controls.
- Risk Reduction: Identifies gaps before regulators or clients do.
- Sales Enablement: Many enterprise clients require SOC reports as part of vendor onboarding.
- Compliance Readiness: Supports broader frameworks like ISO 27001, HIPAA, or GDPR.