Are the SOC 2 Type 1 and Type 2 data making you feel lost? It can be hard for many businesses to pick the best compliance check for their needs. Businesses can show that they are safe with customer info by using SOC 2 reports.
This post will talk about the main ways that Type 1 and Type 2 audits are different. Get ready to learn more about SOC 2 standards.
How to Follow SOC 2 Rules
Meeting the requirements of SOC 2 helps companies keep customer info safe and earn their trust. It makes rules for how information systems should be safe, available, processed correctly, kept private, and secure.
A Look at the SOC 2 Reports
Reports from SOC 2 look at a company’s computer tools and security measures. There are five main topics that these papers cover: security, access, computer accuracy, privacy, and secrecy.
They tell you a lot about how a company handles and guards private information.
There are two main types of SOC 2 reports: Type 1 and Type 2. Type 1 looks at how the tools were designed at a certain point in time. Type 2 goes even further; it checks how well these limits work throughout 6 to 12 months.
Both reports help customers believe you and show that you follow the rules in your business.
In the tech business, SOC 2 reports are the gold standard for making sure that data is safe.
Outlining the Five Criteria for Trust Services
SOC 2 compliance is based on the Trust Services Criteria. Security, Availability, Processing Integrity, Confidentiality, and Privacy are the five main areas. The required factor, security, is all about keeping things safe from people who aren’t supposed to be there.
Availability makes sure that systems work and can be used as planned. Processing Integrity makes sure that all of the processing in a system is full, true, correct, and done on time.
Information that is marked as private is kept safe by confidentiality. Privacy is about how personal information is collected, used, stored, and thrown away. These standards apply to different parts of the system, like the hardware, software, people, processes, and data.
Strong internal rules are needed for organizations to show that they are committed to these ideals. In today’s data-driven business world, this all-around method helps build trust with partners and clients.
Type 1 and Type 2 of SOC 2 side by side
The scope and length of SOC 2 Type 1 and Type 2 reports are different. Type 1 controls are checked just once, while Type 2 controls are checked over months.
Bringing out the main differences
Some things make SOC 2 Type 1 and Type 2 data different from each other. Because of these differences, they can’t be used in all work situations or for the same amount of time.
| Aspect | SOC 2 Type 1 | SOC 2 Type 2 |
| Time Frame | Point in time assessment | Extended period (3-12 months) |
| Focus | Control design | Operational effectiveness |
| Audit Frequency | One-time assessment | Annual or as required |
| Depth of Evaluation | Less comprehensive | More thorough |
| Cost | Generally lower | Typically higher |
| Preparation Time | Shorter | Longer |
Type 1 reports show how control systems were working at a certain point in time. They take less time and money to do. Type 2 reports give you a more in-depth look at how well control has been working over time. These tests take more time and money, but they give you more peace of mind. When businesses choose between the two types of reports, they need to think about these things.
Looking into the Audit Process
Each Type 1 and Type 2 report goes through a different SOC 2 audit method. Type 1 checks look at a certain point in time and take two to four weeks to finish. During this time, independent CPAs check how well the security rules were designed.
Type 2 exams, on the other hand, take place over a longer period (6 to 12 months). This longer time frame gives auditors a chance to check how well controls are working over time.
Trust, but check. – From Ronald Reagan
Because they look at things for a longer time, Type 2 exams are more thorough and strict. After gathering proof for 6 to 12 months, the audit itself takes 4 to 6 weeks. During this time, inspectors look over paperwork, talk to staff, and test controls to make sure they meet the Trust Services Criteria.
This more in-depth method gives a fuller picture of a company’s safety measures and risk management methods.
Looking at the Pros and Cons of Each Type
Companies can get different benefits from SOC 2 Type 1 and Type 2 reports. Type 1 is a quick and cheap way to make sure that compliance is met at a certain point in time. So it’s perfect for new businesses or ones that have never done a SOC 2 check before.
Type 2, on the other hand, gives a full review over a long period, usually six months to a year. This all-around method gives people who regularly deal with private data more confidence in a company’s security steps.
The wants of the company must be weighed against these benefits. Type 1 is a good place to start because it gives you proof of compliance right away. Type 2, on the other hand, builds trust with partners and clients through its thorough evaluation.
Type 2 approval can be a strong way for companies that deal with personal information or work in fields with a lot of rules to show that they care about data protection.
We will now talk about how to pick the best SOC 2 report for your business.
How to Choose the Right SOC 2 Report for Your Company
Getting the right SOC 2 report is important for the growth of your business. It depends on what your business needs, what your customers want, and how you want to grow.
Things to Think About When Picking a Report
It is very important for your company’s protection that you choose the right SOC 2 report. Choosing between Type 1 and Type 2 reports is based on several factors.
Strengths of the report: Type 2 reports give a fuller picture of your security measures over time, which makes them ideal for dealing with private data.
Type 2 checks need to be observed for at least three months, which shows that the company has better security measures and has been following trust service standards for a long time.
- Think about the cost. Type 1 audits are usually less expensive, which makes them a good place to start for new businesses on a tight budget.
- Needs of the client: Some partners or clients may ask for a Type 2 report, especially in fields that deal with health data or financial reports.
- Legal compliance: Type 2 records might be better at meeting certain legal standards, like HIPAA or PCI-DSS, based on your business.
Competitive edge: A Type 2 report can help you stand out in a crowded market by showing that you care about data security and risk assessment.
- Readiness within the organization: Before picking a Type 2 report, think about how ready your company is for a stricter audit process.
- Lack of time: Type 1 records can be made more quickly, which could be helpful if you need to show compliance quickly.
- Maturity of controls: If you just put in place your security controls, a Type 1 report might be better at first.
- Planning for the future: Starting with a Type 1 report can be the first step toward a Type 2 audit, which lets you get to SOC 2 compliance more slowly.
How to Make the Change from Type 1 to Type 2
Moving from SOC 2 Type 1 to Type 2 needs to be carefully planned and carried out. To make this change, follow these important steps:
- Define the scope of the audit. Make a list of all the systems, processes, and controls that will be part of the Type 2 audit. This step makes sure that regulatory efforts are focused.
- Do a gap analysis: compare the way things are done now to the standards of SOC 2 Type 2. Find the places that need to be fixed so that the longer audit time can be met.
- Do a preparation assessment: Check to see how ready your company is for the Type 2 audit. This helps find possible flaws and places to improve.
- Get help from outside sources: hire qualified inspectors who have done SOC 2 Type 2 reviews before. What they know helps you through the change process.
- Make the changes that need to be made: fill in the holes that were found in the previous steps. As needed, improve security, make internal rules stronger, and keep policies up to date.
- Write down processes: Keep careful records of all the important steps and limits. During the audit, this paperwork will be used as proof.
- Teach employees: Teach employees about new or changed procedures and how they can help keep compliance. This makes people more aware of security.
- Do internal audits: Test and analyze controls regularly to make sure they work as they should. This ongoing oversight helps keep people in line over time.
- Gather evidence: Create records that show the rules worked well during the audit time. This includes records, logs, and other useful information.
- Have an inspector look over your organization. Have outsider auditors look over your organization’s compliance over the given time frame. Quickly give the asked details to make the process go more smoothly.
Stress how important it is to keep up with compliance efforts.
SOC 2 compliance is a journey, not a goal that must be reached all at once. Your security methods stay strong and up to date with regular checks and changes. Which type of report you use relies on the wants and goals of your business.
The process can be made easier with automation tools, which saves time and money. Setting data protection as a top priority builds trust with clients and lets you enter new markets.