What is a SOC 2 Audit?
A SOC 2 audit is an audit of a service organization’s non-financial reporting controls as they relate to the Trust Services Criteria – the security, availability, processing integrity, confidentiality, and privacy of a system. A SOC 2 audit report provides user entities with reasonable assurance and peace of mind that the non-financial reporting controls at a service organization are suitably designed, in place, and appropriately protecting sensitive client data. There are two types of SOC 2 audit reports: SOC 2 Type I and SOC 2 Type II.
SOC 2 Type I vs. SOC 2 Type II: What’s the Difference?
SOC 2 Type I and SOC 2 Type II both report on the non-financial reporting controls and processes at a service organization as they relate to the Trust Services Criteria. There are many other similarities between SOC 2 Type I and SOC 2 Type II reports, but there is one key difference.
What is a SOC 2 Type I Report?
A SOC 2 Type I report—also written SOC 2 Type 1—is an attestation of controls at a service organization at a specific point in time. SOC 2 Type I reports on the description of controls provided by the management of the service organization and attests that the controls are suitably designed and implemented.
What is a SOC 2 Type II Report?
A SOC 2 Type II report—also written SOC 2 Type 2—is an attestation of controls at a service organization over a minimum six-month period. SOC 2 Type II reports on the description of controls provided by the management of the service organization, attests that the controls are suitably designed and implemented, and attests to the operating effectiveness of the controls.
During a SOC 2 Type II audit, the auditor will carry out field work on a sample of days across the testing period to observe how controls are implemented and how effective they are.
As you can see, the key difference between SOC 2 Type I and SOC 2 Type II reports is that Type II reports are conducted over a significantly longer period. This allows Type II reports to attest to control effectiveness, something that is not possible with the shorter Type 1 report, which can only attest to the suitability of design and implementation.
Which SOC 2 Compliance Report Is Right for Your Business?
As a CPA firm, we advise clients who are engaging in a SOC 2 audit for the first time to begin with a Type I and move on to a Type II the following audit period. This gives service organizations a good starting point and more time to focus on the description of their system, allowing them to mature their environment over time.
Many organizations are required to undergo a third-party SOC 2 audit. If you have questions about which type of SOC report you need or want help demonstrating to your clients your commitment to security and compliance, contact us today.
More SOC 2 Resources
There are two types of SOC 2 audit reports: Type I and Type II. Often times, if you’re doing a SOC 2 audit report for the first time, you’ll start with a Type I. It’s an engagement where we, as an auditor, are reporting on management’s description of the controls that are placed into operation. We will also provide an opinion on the suitability of the design of those controls.
A Type II report for a SOC 2 audit includes the exact same sections as I just mentioned in the Type I, but there’s an additional section that talks about the operating effectiveness of those controls that you’ve put into place. What the auditor does in a Type II report is perform tests of operating effectiveness to validate that the controls are in place and operating effectively. It’s important to understand the distinction between the two types of reports because your clients may ask for a Type II and you need to be aware of what the difference is between the SOC 2 Type I vs. SOC 2 Type II. If you are just beginning the SOC 2 audit process, you may consider beginning with the Type I so that we can spend more time focused on your description of the system that you have in place at your service organization, and whether or not those controls are suitably designed before moving onto testing of operating effectiveness in the SOC 2 Type II audit report.