Trust. It’s one of the vaguest, yet most underestimated aspects of doing business. Your sales team could do a spectacular job of showing a client that your service has astronomical potential to help their business, but that’s only one piece of the puzzle. Clients need to trust that you’ll deliver on your promises and that you won’t bring them any added risks. How do you go about building that trust?
One way to begin is with widely used and well-respected assessment reports like SOC reports. Before you go diving in and investing in every certification you can find, you’ll need to determine which ones are actually necessary and beneficial for your business.
Let’s take a closer look at SOC reports and, in particular, the difference between SOC 1 vs SOC 2 reports so you can be prepared if a client requests them.
The basics of SOC reports
What is SOC 1 and SOC 2 reporting, and what is its purpose? Attaining a SOC 2 report is all about documenting the steps you’re taking to make your operations and data secure so you don’t put your clients’ data at risk. SOC stands for Service Organization Controls, so these reports were designed for organizations that provide a service to document their security and, ultimately, trustworthiness to their clients.
SOC reports were developed by the American Institute of Certified Public Accountants (AICPA) as a way to help companies know that their data or financial reports will be well-protected by your organization. SOC 1 and SOC 2 reports are common requests from organizations in North America because these reports originated in the US.
Difference between SOC 1 and SOC 2
Among organizations that are preparing for their first SOC report, one of the first questions they ask is, “What’s the difference between a SOC 1 vs SOC 2 report?” In truth, there is also a SOC 3 report, though this report is less common and is written for more general audiences like stakeholders rather than clients or users, so we’ll keep our focus on SOC 1 and SOC 2
In a nutshell, the difference is that SOC 1 reports focus on financial operations while SOC 2 reports focus more on data security and compliance. A SOC 1 report will detail all the steps you’ve taken and the systems you have in place to ensure accurate financial reporting and financial operations. This is why these reports are common for organizations that offer a service that affects their clients’ financial operations.
SOC 2, on the other hand, deals more with data security. In fact, SOC 2 reports feature five categories called the Trust Service Principles: security, availability, integrity, availability, and privacy. Every SOC 2 report will evaluate your security, but your report only needs to cover the other four principles if and when they are relevant.
How to determine if you need a SOC 1 or SOC 2 report
The difference between a SOC 1 and SOC 2 report is rather simple, but the natural next question is, “How do I know which one I need?”
It comes down to the impact that your organization has on your clients or users. If you affect your clients’ financial operations in any way, they’re likely to expect a SOC 1 report. For example, if you track any of their financial data, process payments for them, or process their payroll, you’re likely to need a SOC 1 report.
On the other hand, if you work with any other type of sensitive information for your clients, they’re likely to require a SOC 2 report. This can be a common request for cloud service providers, cybersecurity providers, and more.
Ultimately, your client will also tell you exactly what they need from you. Still, based on the service you provide and the impact you have on your users, you can determine which type of SOC report applies to you and begin the process early so you can have your report ready to go.
How to get a SOC 1 or SOC 2 report
SOC 1 and SOC 2 reports can take weeks or months to complete, but you can simplify the process by starting off on the right foot. Begin by doing your own assessment of your system to see where you’re following best practices and where you fall short. This readiness assessment will make your finished audit smoother and faster. In fact, a compliance automation tool like Vanta can streamline the process even further by conducting your readiness assessment for you and giving you a clear list of the controls you may be missing.
When you are proud of the security and operations controls you have in place, the next step is to hire an external auditor. This auditor does an in-depth investigation of your system and your operations to prepare your SOC 1 or SOC 2 report.
If you want to fast-track your SOC 2 report, learn more about Vanta SOC 2 compliance automation and how it can guide you in getting your report and opening new doors for your business.