SOC 1 vs. SOC 2 Audits for compliance. What is the difference ? A question that every mind has because compliance is in every other mind. And thus SOC 1 vs. SOC 2 audits needs to be understood.
In response to an increasing amount of service organizations outsourcing things such as data storage and applications to cloud services providers and other third parties, the American Institute of CPAs (AICPA) developed the Service Organization Controls (SOC) 1 and 2. SOC audits are independent reports designed to establish a framework for system-level controls protecting sensitive information and ensuring confidentiality. SOC 1 vs. SOC 2 audits, what’s the difference?
SOC 1 vs. SOC 2 Audits
SOC 1 reports are designed to meet the needs of service organizations and the CPAs they employ to audit their financial statements. These reports are intended to evaluate internal controls on the organization’s financial statements and fall under either Type 1 or Type 2. SOC 1 Type 1 audits review the organization’s internal control systems and determine if they are effective in achieving their goals on a set date. Type 2 audits are similar in that they incorporate the same information as Type 1 reports, only that it judges the internal controls’ effectiveness over a specified period of time.
In contrast, SOC 2 audits are designed to meet the needs of a wide range of users. These users require detailed information about a service organization’s controls in place to manage the security, availability, and integrity of the systems used to process data and maintain confidentiality. Audits completed to meet SOC 2 standards are often helpful in determining an organization’s oversight, vendor management, risk management processes, corporate governance, and regulatory oversight. Like SOC 1, SOC 2 audits can also fall under two types. Type 1 reports describe internal control measures, while Type 2 uses this information and includes the effectiveness of the control measures. Plus, control measures outlined in Type 2 reports are measured against the Trust Services Criteria to evaluate the controls in place.
Summary: SOC 1 vs. SOC 2 Audits:
While both SOC 1 and SOC 2 are similar in that they evaluate a service organization’s internal control measures, the reports are different in that SOC 1 is designed solely to audit financial statement controls. SOC 2 has a broader use to evaluate the complete cybersecurity controls of an organization. Since both audits are completed by an independent party, service organization customers and shareholders can feel confident that sensitive data is being properly protected.
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