Cracking the Code: Identifying the Type of SOC Audit You Need

There are different types of SOC Audits under the System and Organization Controls (SOC) framework developed by the American Institute of Certified Public Accountants (AICPA). While all types of audits assess controls within an organization, they differ in their focus and the type of report they generate.

Determining the type of SOC Audit you need depends on several factors, including the nature of your business, the services you provide, and the requirements of your clients or industry.

To determine the appropriate audit to consider, ask yourself the following key questions:

1. What kind of business & services do you provide?

Assess the nature of your business operations and consider the impact your services may have on your clients' financial reporting, data security, or other relevant factors. Regardless of the industry your Company may be in, an audit will help to ensure sensitive client information is being handled effectively. When it comes to protecting your customers’ data, a SOC 2 report can help you satisfy contractual requirements and reduce regulatory compliance efforts. It also can assist you in mitigating risk and increasing trust by improving your service organization’s internal control environment.

2. Are there specific client or regulatory requirements?

Some clients may request a SOC 1 or SOC 2 report as a condition for engaging business with you. Additionally, certain industries have specific compliance obligations, such as healthcare organizations requiring HIPAA compliance or financial institutions needing to comply with the Gramm-Leach-Bliley Act (GLBA). These requirements can help guide your choice of SOC audit type.

3. What are the Scope of Controls critical to your business?

If your primary concern is the effectiveness of controls related to financial reporting, a SOC 1 audit may be appropriate. However, if you want to demonstrate a broader range of controls encompassing security, availability, processing integrity, confidentiality, and privacy, a SOC 2 audit would be more suitable.

4. What is the purpose of the Audit & who is the audience? 

If you primarily need to provide assurance to your clients, regulators, and other stakeholders a SOC 2 report may be the right choice. On the other hand, if your clients' auditors require assurance over your financial controls, a SOC 1 report would be more relevant. If you seek a general-use report for public distribution to showcase your security and data protection practices, or marketing purposes, a SOC 3 report would be more suitable.

Download our free "SOC Audit Cliff Notes Guide" below to learn more
about SOC 1, SOC 2, and SOC 3 Reports.

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With damages from cyber crimes mounting, customers are requiring vendors to provide SOC reports to better protect against the type of data breaches that extract significant costs financially and reputationally. A SOC report could be especially beneficial to you if you operate security and compliance for a large retail, banking, healthcare, or software-as-a-service (SaaS) company that is responsible for its clients’ data. Passing a SOC audit will help your company continue to serve its customers.

What if I'm not sure how to answer these questions?

If you are unsure about the type of SOC Audit you need, it can be beneficial to consult with accounting professionals, auditors, or compliance experts. They can provide guidance based on your specific business requirements and industry norms.

CyberGuard Compliance has expertise in attestations and certifications and can assess your specific circumstances so you can make an informed decision. To schedule time with us, click here.