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SOC 1 vs SOC 2: What Are the Differences?

What does SOC 1 stand for? What are the key differences between SOC 1 and SOC 2? Find out the use cases and differences between SOC 1 and 2 in this article.

Cybersecurity compliance is not just a box to check; it's a vital aspect of maintaining trust and safeguarding your digital assets. This is because non-compliance can result in attacks and severe penalties, which could jeopardize your business reputation. For firms that deal with sensitive information, the stakes are even higher. That is why it's crucial to understand the different types of compliance frameworks to ensure you're adhering to the right standards. 

One common point of confusion is SOC (System and Organization Controls) 1 and 2. Both serve distinct purposes and are applicable in different scenarios. This blog post examines both and provides you with the insights needed to make informed decisions about which framework aligns with your operational requirements.

SOC 1 vs 2: A Quick Overview 

This table should give you a quick overview of how both frameworks vary in terms of focus, scope, audience, and auditing standards.




Focus Area

Controls over financial statements

Related to security, availability, processing integrity, confidentiality, and privacy of customer data

User Needs

Entities concerned with the impact of controls on their financial statements

Users needing detailed information about measures relevant to data security

Auditor’s Opinion

Evaluate whether financial controls are designed and work properly

Assess if Trust Services Criteria (TSC) are developed and function correctly

Type of Organizations

Payroll processing, billing management, financial reporting software

Cloud service providers, SaaS providers, HR management services, data centers

Auditing Standards

Based on Statement on Standards for Attestation Engagements (SSAE) No. 18

Based on the TSC designed by the American Institute of Certified Public Accountants (AICPA)

While both reports are essential for assessing the controls in service organizations, they cater to different needs and audiences. As can be seen in the table above, SOC 1 is more finance-centric, making it crucial for organizations that handle tasks directly affecting their clients' financial statements. On the other hand, SOC 2 is broader in scope, focusing on a range of controls that are vital for information security. 

What Is SOC?

SOC is a framework for reporting on the controls and processes within a service organization. Designed by the American Institute of Certified Public Accountants (AICPA), it helps assure clients that their information is managed securely. There are two kinds of SOC reports that are suitable for different circumstances. 

Let’s examine them in detail. 

What Is SOC 1?

SOC 1 is an audit framework for evaluating the internal controls that a service organization has in place for producing assessments of its financial activities. The evaluation provides a report that is useful for clients and their auditors to assess financial risk. 

Types of SOC 1

This table provides a clear distinction between the two kinds of SOC 1 and highlights their focus, the role of the auditor, the duration for which they are effective, and the level of assurance they offer.


Type I

Type II


A snapshot capturing the state of a service organization's control environment at a specific moment. Focuses on the design and implementation of controls.

Evaluates the operational effectiveness of controls over a specified period. Goes beyond design to test operational effectiveness.

Auditor's Role

Assesses whether the security is suitably created to achieve its intended objectives. No testing of the controls' effectiveness is performed.

Examines the design and implementation of controls and performs detailed testing to verify controls are operating effectively. Involves scrutinizing historical data and interviewing staff.


Specific moment in time.

Usually at least six months.

Assurance Level

Limited assurance as it is a preliminary step.

Higher level of assurance as it is comprehensive.

Who Needs a SOC 1 Report?

Companies that handle data affecting the financial statements of user entities should consider obtaining a SOC 1 report. This includes payroll processors, loan servicers, and data centers that provide financial application hosting. Clients often demand the statement from their service providers as part of their own audit and compliance requirements.

Advantages of SOC 1 

Here are some key advantages of being SOC 1 compliant:

  • Enhanced Credibility and Trust: The statement serves as an independent validation of a company's internal controls, enhancing its credibility and instilling greater confidence among user entities. This can be a significant differentiator in competitive markets.
  • Risk Mitigation: By undergoing the audit, organizations can identify weaknesses or gaps in their control environment. This proactive approach allows for timely remediation, thereby reducing operational and compliance risks.
  • Streamlined Vendor Management: Having a SOC 1 report from a service provider simplifies the vendor management process. It provides a standardized benchmark for evaluating the adequacy and effectiveness of safety measures, making it easier to assess and compare different service providers.

What Is SOC 2? 

This is an auditing procedure that ensures businesses securely handle data to protect the interests and privacy of their clients. Developed by the AICPA, it defines criteria for handling clients' information based on whether it is secure, available, processed correctly, confidential, and kept private. 

The five criteria include:

  1. Security: This is the foundational criterion and focuses on protecting system resources against unauthorized access. Measures include firewalls, access controls, and encryption.
  1. Availability: This standard ensures that the system is operational and accessible for use as agreed upon. It involves monitoring network performance, disaster recovery, and incident handling.
  1. Processing Integrity: Ensures that a system performs its intended function in a complete, accurate, and authorized manner and involves data quality checks, process monitoring, and error detection.
  1. Confidentiality: Focuses on limiting data access and exposure to authorized users only. It involves encryption, access controls, and firewalls to protect sensitive information.
  1. Privacy: Relates to the gathering, usage, retention, disclosure, and disposal of personal information in accordance with an organization’s privacy notice and principles.

Read more about the SOC 2 compliance checklist here.

Types of SOC 2 

The table below provides more information on the two kinds of SOC 2 statements.


Type I

Type II


A snapshot of the control environment at a specific point in time. Evaluates if controls are suitably designed based on trust service principles.

Provides a historical view of the control environment. Includes detailed testing to validate the effectiveness of controls.


Design of controls.

Design and effectiveness of controls.


A single point in time.

6 months to a year.

Use Case

Often, the first step and provides quick validation for businesses' contractual requirements.

Ongoing vendor relationships, more robust evidence of effective management.

While Type I serves as an initial assessment and is often time-sensitive, Type II offers a more comprehensive and historical perspective, making it suitable for ongoing relationships. Understanding these distinctions can help organizations choose the appropriate report type for their specific needs, whether it's quick validation or a more in-depth evaluation of control effectiveness.

Who Needs a SOC 2 Report?

Any business that stores, processes, or transmits information should consider being SOC 2 compliant, especially if they use cloud services to manage this data. This includes SaaS companies, healthcare providers, financial institutions, and any business that partners with these types of organizations. 

Aside from that, it is often a requirement in B2B contracts to ensure that both parties maintain adequate controls for information security. It's also becoming increasingly important for compliance with various regulatory frameworks like GDPR and HIPAA.

Benefits of SOC 2 

Acquiring SOC 2 offers several advantages, including the following: 

  • Trust: One of the most immediate benefits of acquiring the report is the increased level of confidence it fosters among clients and stakeholders.
  • Competitive Advantage: In markets saturated with similar services, SOC 2 can set your organization apart. It provides tangible proof of your security measures, giving you an edge over businesses that lack such credentials.
  • Regulatory Compliance: It also serves as a cornerstone in meeting regulatory requirements. Whether it's GDPR in Europe, HIPAA in healthcare, or other industry-specific regulations, having SOC 2 can simplify the process and reduce the risk of legal repercussions.
  • Threat Management: The audit process involves a rigorous review of your control environment. This can uncover susceptibilities you may not have been aware of, providing an opportunity to strengthen your safety measures.
  • Investor and Customer Appeal: Being compliant can also make your firm more attractive to investors and customers. It signals a mature approach to data security and governance, which can be a compelling factor in investment decisions and customer loyalty.

Deciding Between SOC 1 and 2 

Choosing between both frameworks depends on your objectives and the requirements of your stakeholders. To decide, consider these factors:

Stakeholder Requirements

Your partners may have specific compliance requirements that dictate which framework you need. For example, if you're a service provider to a publicly traded firm, they may demand you to have a SOC 1 report to satisfy their regulatory obligations. On the other hand, if you're storing sensitive customer data, your clients may insist on a SOC 2 report to ensure you're following best practices for information security.

Type of Data Handled

The kind of data you manage plays a significant role in your choice. If you're handling transactions, billing, or any other financial operations for your customers, SOC 1 is more suitable. SOC 2 is designed for enterprises that store sensitive personal information, health records, or confidential business data. 

Compliance Needs

Certain industries have specific regulatory requirements that might make one type more applicable than the other. For instance, healthcare companies in the U.S. often need to comply with HIPAA, which has stringent data protection requirements that align more closely with SOC 2. Financial service providers, on the other hand, may find SOC 1 more aligned with industry regulations like Sarbanes-Oxley.

Future Goals

Your long-term business objectives can also influence your decision. If you plan to diversify your services to include data storage, cloud services, or any other services that require stringent data controls, SOC 2 provides a more comprehensive framework that can adapt to these changes.

Need more information about different compliance frameworks? Read more about SOC 2 vs ISO 27001 here.  

Can I Choose Both SOC 1 and 2? 

Some service organizations do need both audits to meet varied compliance requirements across industries. This allows them to cater to clients who require assurance on financial statement controls as well as those concerned with information security and privacy. 

Moreover, conducting these examinations simultaneously can create efficiencies due to overlapping testing areas, saving both time and resources for the organization. For example, a financial technology company that not only processes transactions but also stores personal information might need SOC 1 to ensure its financial controls are robust and SOC 2 to ensure its data handling meets security standards.

Streamline Your Compliance Process With Eden Data 

Cybersecurity audits are not what most businesses will classify as fun. The words most commonly associated with them would be "complex," "challenging," and "frustrating." No worries, it doesn't have to be like that for you with Eden Data as your partner.

Our cybersecurity specialists will conduct a gap analysis of your system to identify areas that need improvement and tailor a roadmap for compliance. With expertise in trust service principles, we can help design and implement controls that meet the SOC requirements you need. 

We will also prepare you for audits by offering mock assessments and remediation strategies. But that is not all. We will provide ongoing support to ensure that controls remain effective and up-to-date, thereby easing the path to not just initial compliance but also successful re-certification.

Why Opt for Eden Data?

Selecting Eden Data is a forward-thinking, excellence-driven decision. Here are some more convincing reasons:

  • Best of Class Team: Access a squad of cybersecurity whizzes, including former Big 4 professionals and military veterans, armed with vast experience in safeguarding a wide range of businesses.
  • Transparent Costs: No hidden fees and unexpected expenses with Eden Data's transparent pricing model. Our commitment is to provide clarity, making budgeting a breeze.
  • No Onboarding Charges: We value your business, and our appreciation is reflected in our elimination of onboarding costs. Embark on your cybersecurity journey without the initial financial burden.
  • 100% Satisfaction Guarantee: Our unwavering confidence in delivering exceptional service is underscored by our satisfaction guarantee. We pledge to exceed your expectations in every facet of our engagement.

So, are you ready to level up your security game? Contact our team today. 


Choosing between SOC 1 and SOC 2 compliance hinges on your business's specific data handling needs, with each offering distinct benefits in building trust and mitigating risk. Plus, Eden Data's expert guidance simplifies this complex process, ensuring streamlined and sustained compliance for your organization.

Our team is ready to answer any and all questions you may have.