SOC 2 Type 1 vs. SOC 2 Type 2

In today’s security-conscious world, organizations seeking to prove their commitment to protecting customer data often pursue SOC 2 compliance. But within this framework, there are two well-trodden paths: SOC 2 Type 1 and SOC 2 Type 2. 

If you’re seeking clarity between these two tracks, you’ve come to the right place. This article explores the nuances of these two SOC 2 types, helping you determine which is best for your organization’s needs.

What is SOC 2 Compliance?

Before diving into SOC 2 Type 1 vs Type 2, let’s start with the basics. SOC 2 (Service Organization Control 2) is a widely recognized compliance standard for assessing the controls an organization uses to protect customer data. This standard is based on five trust service criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy.

SOC 2 is not a one-size-fits-all certification. Instead, organizations can choose between two types of audits—SOC 2 Type 1 and SOC 2 Type 2—based on their objectives.

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SOC 2 Type 1: A Snapshot of Compliance

A SOC 2 Type 1 report evaluates an organization’s systems and controls at a specific point in time. This audit demonstrates that your company has implemented the necessary processes to meet the trust service criteria.

Key Features of SOC 2 Type 1

• Focus: Assesses the design of controls at a single moment.
• Timeline: Typically faster to complete (6–12 weeks, on average).
• Purpose: Demonstrates that appropriate controls are in place.
• Audience: Ideal for startups and organizations new to compliance.

Example Use Case: A SaaS company securing its first enterprise customer who requires proof of security practices.

Advantages of SOC 2 Type 1

1. Speed: The process is shorter and less resource-intensive since it’s a point-in-time audit.
2. Foundation: Establishes a baseline for future audits, including SOC 2 Type 2.
3. Cost: Often less expensive than SOC 2 Type 2.

Limitations of SOC 2 Type 1

• It does not provide evidence that your controls operate effectively over time.
• Organizations requiring ongoing assurance (e.g., financial institutions) may not consider it sufficient.

SOC 2 Type 2: A Long-Term Perspective

Unlike Type 1, a SOC 2 Type 2 audit evaluates the effectiveness of controls over a defined period, typically 3 to 12 months. This demonstrates not only that controls are in place but that they are consistently functioning as intended.

Key Features of SOC 2 Type 2

• Focus: Assesses the operating effectiveness of controls over time.
• Timeline: Longer audit period (3–12 months) plus reporting time.
• Purpose: Demonstrates robust, sustained adherence to security practices.
• Audience: Businesses with established processes seeking to expand partnerships or retain major customers.

Example Use Case: A cloud provider aiming to assure enterprise clients of ongoing compliance.

Advantages of SOC 2 Type 2

1. Comprehensive Assurance: Validates both the design and consistent performance of controls.
2. Trust Builder: Provides more detailed evidence to stakeholders.
3. Competitive Edge: Often a requirement for high-value contracts.

Limitations of SOC 2 Type 2

• Time-Intensive: The extended audit period requires more preparation and resources.
• Cost: Generally more expensive than SOC 2 Type 1 due to its depth.

The Five Trust Services Criteria (TSC) in SOC 2

1. Security: Protection of information and systems against unauthorized access.
2. Availability: Accessibility of systems as agreed upon.
3. Processing Integrity: System processing is complete, valid, accurate, timely, and authorized to meet the entity’s objectives.
4. Confidentiality: Information designated as confidential is protected to meet the entity’s objectives.
5. Privacy: Personal information is collected, used, retained, disclosed, and disposed to meet the entity’s objectives.

In a SOC 2 Type 1 audit, these criteria are evaluated at a specific point in time to assess the design of controls.

In a SOC 2 Type 2 audit, the same criteria are assessed over a period (e.g., 3–12 months) to evaluate controls’ design and operating effectiveness.

This distinction applies uniformly across all five Trust Services Criteria.

Difference Between SOC 2 Type 1 and Type 2

Aspect	SOC 2 Type 1	SOC 2 Type 2
Assessment Period	A single point in time	Over a defined period (e.g., 3–12 months)
Focus	Design of controls	Design and operational effectiveness
Timeline to Completion	Shorter (6–12 weeks)	Longer (3–12 months + reporting time)
Cost	Lower	Higher
Use Case	Proving readiness or meeting initial customer demands	Providing detailed assurance for long-term partnerships

Choosing Between SOC 2 Type 1 and SOC 2 Type 2

The decision to pursue SOC 2 Type 1 or Type 2 depends on your organization’s needs, growth stage, and customer demands.

Opt for SOC 2 Type 1 If:

• You’re new to compliance and need a starting point.
• Your customers primarily require assurance that controls are in place.
• You’re working with a tight deadline and want a faster process.

Opt for SOC 2 Type 2 If:

• Your customers require evidence of ongoing compliance.
• You’re scaling up and need to meet enterprise-level security expectations.
• Your industry (e.g., healthcare or finance) mandates stringent data protection standards.

The SOC 2 Audit Process: What to Expect

SOC 2 Type 1 Audit

1. Readiness Assessment: Identify gaps in your existing processes.
2. Audit: Review the design of controls and issue a SOC 2 Type 1 report.

SOC 2 Type 2 Audit

1. Preparation: Conduct a readiness assessment to ensure controls are operational.
2. Observation Period: Monitor and document control performance over the defined period.
3. Audit: Review both the design and effectiveness of controls.

Cost Considerations

A SOC 2 Type 1 audit typically costs between $5,000 and $20,000, as it assesses your controls at a specific time. A SOC 2 Type 2 audit, which evaluates the effectiveness of your controls over a period (usually 3 to 12 months), can range from $7,000 to $150,000 or more, depending on the scope and duration.

While the initial audit costs for a Type 1 report are lower, both types require similar investments in implementation, as they assess the same controls and practices. It’s also important to consider long-term expenses. Starting with a Type 1 report might lead to additional costs if clients later request a Type 2 report. Therefore, if you anticipate needing a Type 2 report, it may be more cost-effective to proceed directly to that stage.

Competitive Industries: SOC 2 as a Differentiator

Data security is a prerequisite to business operations in industries like SaaS, fintech, and healthcare. However, achieving SOC 2 compliance can set you apart from competitors who have yet to meet these standards. Here’s how:

1. Increased Customer Confidence: A SOC 2 type 2 report acts as a third-party validation of your security posture.
2. Sales Enablement: Many enterprise customers require SOC 2 compliance before signing contracts, making it a powerful sales tool.
3. Stronger Brand Reputation: Being SOC 2 compliant signals to the market that your organization prioritizes customer trust.

Communicating SOC 2 Compliance: Amplifying Customer Perception

Achieving SOC 2 compliance is just the beginning. How you communicate this achievement can significantly impact customer trust. Consider these strategies:

• Website Badges: Displaying compliance badges prominently on your website reassures visitors of your commitment to security.
• Trust Centers: Create a dedicated trust center on your website where customers can access SOC 2 reports, security policies, and other compliance-related information. This transparency builds credibility and enhances customer confidence.
• Customer-Facing Reports: Share SOC 2 summaries with potential and existing clients to demonstrate transparency.
• Marketing Campaigns: Highlight your compliance achievements in press releases, blog posts, and social media updates.

Automation in SOC Compliance Audits: Efficiency at Scale

AI-powered compliance automation is transforming how organizations approach SOC 2 compliance by handling some of the most tedious tasks:

Automated Evidence Collection

Platforms like Centraleyes simplify one of the most resource-heavy aspects of SOC 2 preparation. Gathering evidence from integrated systems—such as user activity logs, access permissions, and security configurations— ensures that compliance documentation is always current and ready for audit.

Workflow Automation

AI-driven platforms guide organizations through the entire audit lifecycle. From mapping out necessary controls to monitoring their implementation, automation reduces human error, saves time, and ensures a consistent approach. The result is a smoother process that empowers teams to focus on strategic improvements rather than mundane tasks.

Cloud-Based Audit Solutions: Flexible and Scalable

The rise of cloud technology has introduced a new level of adaptability and convenience for SOC 2 compliance. Cloud-based tools are designed to meet the needs of modern organizations, no matter their size or structure.

• Scalability: Cloud platforms grow with your organization, whether you’re a startup or a global enterprise. They can handle increasingly complex compliance requirements without the need for significant infrastructure investments.
• Accessibility: Cloud-based dashboards and tools are accessible from anywhere, making remote collaboration seamless. This is especially beneficial for distributed teams or global operations.
• Integration: Modern compliance platforms integrate easily with other key systems, such as HR software, CRM tools, and cybersecurity platforms. This interconnected approach ensures a unified view of compliance, reducing silos and improving decision-making.

Centraleyes: Simplifying and Deepening SOC 2 Compliance with AI

While many tools focus on simplifying SOC 2 compliance, Centraleyes takes it a step further by using AI not just to streamline the process but to enhance the depth and quality of your security posture.

1. Beyond Automation: Centraleyes doesn’t just automate evidence collection—it provides actionable insights by analyzing the data in real-time. For example, rather than simply flagging missing evidence, Centraleyes identifies root causes, suggests fixes, and prioritizes actions based on risk levels.
2. Proactive Risk Management: Centraleyes uses AI to monitor controls continuously and identify emerging risks before they become issues. This proactive approach deepens your security posture, ensuring that compliance is not just a checkbox exercise but a driver of resilience.

The Centraleyes Difference

With AI and cloud-based technology at its core, Centraleyes empowers organizations to meet today’s compliance challenges while building a future-ready security framework.

In other words, it’s compliance made smarter, simpler, and more secure.

To learn more about Centraleyes SOC 2 solutions, schedule a demo.