Which SOC 1 Report is Best for Your Business?
So, you have either been asked to get a SOC 1 Audit by a client, or your service organization could benefit from being certified. However, then the next question is, what report should you get? A SOC 1 Type 1 or Type 2 report can be used for a variety of industries. Knowing the differences between the two are vital.
SOC 1 audit reports are specifically intended to examine the effectiveness of the controls put in place by a service organization, relevant to their clients’ financial reporting and statements. The auditor (typically a CPA) will conduct tests and assess these controls to see if there are any potential gaps or threats. Once passed, the service organization becomes SOC certified.
A type I reports on the description of controls of the service organization and tests that they are suitably designed and implemented at a specific point in time.
A type II reports on the description of controls provided by management of the service organization, tests that the controls are suitably designed and implemented, and verifies the operating effectiveness of the controls over a minimum of a 6-month period.
The key difference in the reports is time. It’s important to know whether a client requires a specific type, or to understand which one will benefit your business in the future.
Increasing Demand for SOC 1 Type 1 or Type 2 Reports
While SOC audits have been around for many years, there is a large number of businesses that are unaware of their existence, and benefits. However, that is changing. Many businesses have seen themselves transition from wanting to get SOC certified, to being required to by customers and vendors. The certification provides a level of assurance and security that cannot be obtained any other way, thus, some will only conduct business with SOC certified companies. If your business has not been asked about it yet, you probably will be in the near future. As a specialized SOC Audit firm, we put service first with our rapid and affordable SOC process.
If you have any questions about which type of SOC audit is right for your business, please contact our office.