What's Inside

You’ve just received a request from a customer to provide a SOC 2 report. 

If you’ve never gone through the SOC 2 compliance journey before, your mind is likely swirling with questions—what exactly is a SOC 2 report? Are there different kinds of SOC 2 reports? Which is right for my company? 

There are two kinds of SOC 2 reports: Type 1 and Type 2. While there are similarities between the two reports, there are also distinct differences to note. 

Below, we break down SOC 2 Type 1 vs. Type 2 to answer your questions and help you pick the right report for your company.

Quick Refresher: What Is SOC 2? 

Created by the AICPA, SOC 2 provides criteria for handling customer data based on the five Trust Services Criteria (TSC): security, availability, processing integrity, confidentiality, and privacy. 

Service organizations determine which of the five TSC apply to their organization and then design and implement SOC 2 security controls to comply with the trust services criteria. Auditors will then provide a report that can be shared with customers attesting to the fact that you've met those criteria. 

What Is SOC 2 Type 1? 

SOC 2 Type 1 is a point-in-time report, and it only covers a specific day. This report answers the question: Are you secure today? 

In addition, it only covers the design of your controls. This means an auditor only needs to confirm that controls are suitably designed—not the operating effectiveness of those controls. So auditors are essentially validating that “if this control were working properly, it would fulfill its purpose.”

What Is SOC 2 Type 2? 

A SOC 2 Type 2 audit examines compliance over time—often covering a period of no more than a year. There’s no minimum or maximum SOC 2 Type 2 audit period that needs to be covered. Technically, you could choose to do a five-day audit period, but that wouldn’t provide much value to you or your customers. Each auditor will generally set their own minimum requirements for an observation period.

For a first-time SOC 2 Type 2 report, best practice is considered at least a six-month audit period. However, if you’re trying to win deals and bring in new customers quickly, you may want to get a Type 2 done faster and opt for an audit period between three and six months.  

A Type 2 report covers both the design of your controls and the operating effectiveness of the controls. Because of this, an auditor has much more work cut out for them in a Type 2 audit compared to just auditing the design of the controls required for a Type 1. 

SOC 2 Type 1 vs. Type 2: The Main Differences

When we think of requirements for a SOC 2 report, we think of the TSC. Whether you’re doing a SOC 2 Type 1 or SOC 2 Type 2, the TSC are the same. Both SOC 2 types will also require an independent auditor to dig into your controls and provide you with a report. 

But that’s where the similarities end. Below we cover the main differences you'll need to know.

Audit Scope

A SOC 2 Type 1 only needs to cover the design of your controls, whereas a SOC 2 Type 2 must cover the design and operating effectiveness of your controls. 

For a Type 1, the auditor only needs to look at the design. They might look at policies, interview you, or do walkthroughs. However, for a Type 2 audit they have to gather evidence to support the operating effectiveness of all controls for an audit period. 

Historically, they validate the operating effectiveness of your controls by performing random sampling. If your organization says they perform daily backups, the auditor may say: “Show me proof that a backup was performed on these five days.”

Audit Speed

A Type 1 can be done much faster than a Type 2. As soon as you have your controls implemented, you can have an auditor start a Type 1 audit. 

Because there needs to be an audit period for a Type 2, you can’t start the audit right away once your controls are implemented. You need to wait until the audit period has passed before you can start the audit. This means your customer or prospect won’t receive the report until the audit period is over. 

Audit Cost

Because a SOC 2 Type 1 report requires less effort and time than a Type 2, a Type 1 audit costs less. Midsize companies can expect to pay $7,500 to $15,000 for a Type 1 audit, whereas larger companies can expect to pay up to $60,000. 

The cost of a SOC 2 Type 2 audit increases significantly. Midsize companies can expect to pay $12,000 to $20,000 for a Type 2 audit. The total cost for large companies may reach up to $100,000. 

Reporting Cadence

If you opt to undergo a Type 1 report first, it’s important to note that customers will likely expect a Type 2 report six to 12 months after the Type 1 is completed. A Type 1 is a one-time report, whereas a SOC 2 Type 2 report is something you’ll renew on an annual basis. 

SOC 2 reports do not expire, however, the information may be less relevant over time. This is why an annual report is the industry standard. Because a SOC 2 Type 2 report from three years ago may no longer contain the most relevant information on your company, and specifically the security at your company.

Report Value 

The time and effort required to complete a SOC 2 Type 2 report makes it a more valuable report compared to a Type 1. A Type 2 report also provides more detail into the effectiveness of your security controls, helping to assure customers that proper safeguards are in place to protect their data.  

Which Report Type Is Right for Your Company?

For an organization undergoing SOC 2 compliance for the first time, the report type you need will depend on how quickly you need to have the report in your hands. 

If time is of the essence in proving SOC 2 compliance for customers or prospects, a Type 1 report can be an effective place to start. These reports take considerably less time compared to a Type 2 report. 

However, if time isn’t a factor, you can either start with a Type 1 audit and work toward Type 2 or go directly into the Type 2 compliance process. 

How Drata Can Help You Achieve and Maintain SOC 2 Compliance 

Whether you choose to start with a Type 1 report or go directly into a Type 2 report, the SOC compliance journey is paved with challenges and complexity. SOC 2 first-timers are often surprised by the amount of time and documentation that’s required. 

Drata can help you get up and running with your compliance efforts by automating evidence collection and providing you with auditor-approved security policies for you to make your own. You’ll also have access to Drata’s team of SOC 2 compliance experts ready to walk you through the framework’s often confusing processes.