7 Reasons to Get a SOC 2 Type 1 Report

Securing data is essential for satisfying your existing customers and getting new ones. People and organizations want to ensure that their sensitive information is protected against breaches. Providing them with proof that their data is secure is equally important, because many customers require such documentation as a condition of doing business with you.

Given their ability to provide that assurance to customers, IT assessments, audits, and reports can be beneficial as you grow your business, whether you’re launching new products or services or approaching prospective customers who request proof of security.

One of three types of Service Organization Control (SOC) reports created by the American Institute of Certified Public Accountants (AICPA), a SOC 2 report details the controls of the systems that your company uses to process data and describes the security and privacy of that data. SOC 2 Type 1 and SOC 2 Type 2 reports are issued depending on your organization’s specific requirements and objectives.

• Type 1: A report on the organization’s description of their system and the suitability of that design. It describes systems as of a specific point in time. Think of it as a snapshot.
• Type 2: A report on the organization’s description of their system, the suitability of that design, and the operating effectiveness of the controls. It covers systems over a period of time, usually six or 12 months. Think of a Type 2 report as a movie.

A SOC 2 Type 1 report can be particularly helpful in serving your customers and making your company more competitive because it can be produced quickly, affordably, and effectively. It keeps opportunity cost down, telling your customers that your company is compliant and their data is safe.

Here are seven reasons to get a SOC 2 Type 1 report:

1. Customer Demand

As cybercrime damages mount, companies want vendors that are at-risk for data breaches to prove that they are properly protected by completing a SOC 2 report. Because of this, a SOC 2 report is becoming a necessity for companies that handle customer data for others, like software-as-a-service, banking, or healthcare companies.

While you could forego a SOC 2 audit and turn down potential customers who want one, it would be more beneficial for your company to get an audit so that you could get more customers.

2. Speed

A SOC 2 Type 1 report can be produced quickly after a readiness assessment. Since customers will commonly accept a Type 1 report for your first report, you can use one to get an audit report in hand and start promoting that it is available. This allows you to announce that you have undergone the SOC 2 audit much sooner than if you waited for the Type 2 period to elapse.

3. Proof of Compliance

When you have a Type 1 report done, you can show customers and prospects that you have best practices for compliance in place. This can be helpful as you wait six to 12 months for a Type 2 report to be finished. Otherwise, you will have no proof of compliance in the interim.

4. Cost

An audit for a Type 1 report is less expensive because auditors only need data from one day to produce a snapshot of your compliance posture. You don’t need to involve as much of your team or provide as much documentation as you would with a Type 2 report.

5. Competitive Advantage

Bigger companies are particularly concerned about security, especially the Trust Services Criteria that the AICPA has established for evaluating and reporting on controls over information and systems. They will be more likely to partner with you if you can provide them with a SOC 2 report that was prepared by a reputable auditor; thus giving you a competitive advantage in the marketplace.

6. Peace of Mind

When you have IT systems that run your business, you need to be sure that you have procedures and controls in place to provide business continuity. A SOC 2 report is a detailed analysis of the operational or compliance controls at a service organization. It is officially known as a Report on Controls at a Service Organization Relevant to Security, Availability, Processing Integrity, Confidentiality, or Privacy.

7. Preparation for Type 2

Although the SOC 2 Type 1 report has key benefits, most of your clients will ultimately require you to undergo the Type 2 audit for the greater level of reliance that comes with it. This is the gold standard that customers prefer.

Start with a readiness assessment and follow it with a Type 1 report, remediating any gaps prior to its issuance. Then, finish with a Type 2 audit for an optimal security footing.

A SOC 2 Type 1 report is an efficient way to ensure that your data is secure and to communicate that value to your customers. Position your company to win more business from bigger clients by assuring organizations that your company is compliant and their data is safe.