SOC Standard

SOC stands for System and Organization Controls. SOC standards are a set of reporting frameworks
developed by the American Institute of Certified Public Accountants (AICPA). These standards help organizations demonstrate that they have appropriate controls in place to protect data and ensure reliable operations.

SOC reports are especially important for service organizations that store, process, or manage data on behalf
of their customers. They provide assurance to customers, auditors, and business partners that proper controls
are designed and operating effectively.

What is SOC 1?

SOC 1 focuses on controls related to financial reporting.
It is designed for service organizations whose services impact their customers’ financial statements.

SOC 1 reports are commonly required when a company provides services that could affect accounting or financial
data, such as payroll processing, billing services, or financial transaction processing.

There are two types of SOC 1 reports:

• Type I: Evaluates the design of controls at a specific point in time.
• Type II: Evaluates both the design and operating effectiveness of controls over a period of time.

What is SOC 2?

SOC 2 focuses on how organizations manage and protect customer data.
It is based on the Trust Services Criteria (TSC).

SOC 2 is especially important for technology companies, SaaS providers, cloud service providers,
and any organization that stores or processes sensitive customer information.

SOC 2 evaluates controls based on the following Trust Services Criteria:

• Security: Protection against unauthorized access
• Availability: System availability as committed or agreed
• Processing Integrity: System processing is complete and accurate
• Confidentiality: Protection of confidential information
• Privacy: Proper handling of personal information

SOC 1 vs SOC 2

Aspect	SOC 1	SOC 2
Primary Focus	Financial reporting controls	Data security and privacy controls
Intended Audience	Auditors, finance teams, regulators	Customers, partners, and stakeholders
Applicable To	Organizations affecting customer financial statements	Organizations handling customer data
Key Criteria	Internal controls over financial reporting	Trust Services Criteria (Security, Availability, etc.)
Common Industries	Payroll, accounting, financial services	SaaS, cloud services, IT services
Report Types	Type I and Type II	Type I and Type II

Summary

SOC 1 is about financial accuracy, while SOC 2 is about data trust and security.
Understanding the difference helps organizations choose the right compliance report for their business needs.