SOC 1 vs SOC 2: What’s the Difference?
SOC 1 and SOC 2 sound like siblings, and they are -- but they answer different questions for different people. Picking the wrong one means paying for a report your customers’ auditors can’t use.
The one-sentence difference
SOC 1 reports on the controls at your organization that are relevant to your customers’ financial reporting -- internal control over financial reporting (ICFR) -- under AICPA SSAE 18. SOC 2 reports on controls relevant to security, availability, processing integrity, confidentiality, and privacy under the AICPA Trust Services Criteria. Same examination family, different subject matter.
Who each report is for
A SOC 1 report’s audience is your customers’ financial auditors: they rely on it when auditing their clients’ financial statements. A SOC 2 report’s audience is your customers’ security and procurement teams: they read it during vendor security reviews. If your service touches payroll, billing, claims, or transaction processing, your customers likely need SOC 1. If you’re a SaaS vendor handling customer data, they likely need SOC 2. Many service organizations need both.
Type 1 vs Type 2 in both
Both frameworks offer Type 1 (point-in-time design) and Type 2 (period-of-time operating effectiveness) reports. The distinction works the same way in each -- our Type 1 vs Type 2 guide covers it in detail.
Can you do both at once?
Yes -- and you usually should if you need both. Combined SOC 1 + SOC 2 examinations let one set of evidence feed two reports, which is materially cheaper than two separate engagements. Firms like Schellman, A-LIGN, 360 Advanced, BARR Advisory, and KirkpatrickPrice run combined programs routinely. Ask for combined pricing when you request quotes.
Which do your customers want?
Don’t guess: ask your largest customers what their auditors and security teams require, in writing. If the answer is ‘the auditors need it for our financial audit,’ that’s SOC 1. If it’s ‘procurement needs it for vendor review,’ that’s usually SOC 2. Take the path quiz once you know.
Questions
Can one examination cover both SOC 1 and SOC 2?
Yes. Many CPA firms perform combined SOC 1 + SOC 2 examinations where one evidence set feeds both reports, often at lower total cost than separate engagements.
Does SOC 2 replace SOC 1?
No. They answer different questions for different audiences. A SOC 2 report does not satisfy a customer auditor who needs ICFR assurance -- that’s what SOC 1 is for.
Related reading
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