A business can say it takes security seriously and protects sensitive data around the clock, but customers want proof. If your company stores, processes, or transmits sensitive customer data, clients and partners may want to know how access is controlled, how incidents are detected, and how consistently your team follows its own policies.
System and Organization Controls 2 (SOC 2) gives businesses a structured way to demonstrate that their security controls support the protection of customer data. There are two distinct forms of SOC 2 reporting: SOC 2 Type I and SOC 2 Type II. Each type has its own purpose and requirements, so it’s important for businesses to understand the differences in order to determine which one is necessary for their specific needs.
| Key takeaways – SOC 2 helps businesses demonstrate that their security controls protect customer data and support recognized trust criteria. – SOC 2 Type I evaluates whether security controls are properly designed and in place at a specific point in time. – SOC 2 Type II goes further by testing how consistently those controls operate over a defined audit period. – Type I is generally faster and less expensive, while Type II provides stronger evidence for enterprise customers and security-conscious clients. – Growing businesses can start with Type I to meet immediate needs, then progress to Type II as their security and compliance practices mature. |
What Is SOC 2?
SOC 2 is an assurance framework developed by the American Institute of Certified Public Accountants (AICPA) that evaluates how a service organization manages security, availability, processing integrity, confidentiality, and privacy. It helps organizations demonstrate that the security controls protecting their systems and customer data are appropriately structured and aligned with recognized industry standards.
The Five Trust Services Criteria
SOC 2 examinations are based on the AICPA’s Trust Services Criteria, which cover:
- Security: Protects systems and information against unauthorized access, misuse, or damage. Common security controls include identity and access management, physical access controls, multifactor authentication, firewall management, intrusion detection, vulnerability management, employee security training, and regular risk assessment.
- Availability: Keeps systems accessible and usable according to the company’s service level agreements. To ensure availability, companies may implement system monitoring, backups, disaster recovery procedures, capacity planning, incident response, and business continuity testing.
- Processing Integrity: Addresses whether data processing is complete, accurate, authorized, and performed as intended. Businesses typically use input validation, automated checks, approval workflows, and standard error-handling procedures.
- Confidentiality: Governs the protection of information classified as confidential. End-to-end encryption, data classification, restricted permissions, data loss prevention, and secure disposal procedures limit who can access sensitive information and reduce the risk of unauthorized disclosure.
- Privacy: Covers how personal information is collected, used, stored, shared, retained, and disposed of. Privacy notices, consent procedures, access restrictions, retention schedules, data-subject request processes, and safeguards for sensitive customer data help organizations manage personal information throughout its life cycle.
What is SOC 2 Type I?
A SOC 2 Type I report evaluates whether an organization’s security controls are properly designed and in place at a specific moment in time. Put simply, it asks: Do the appropriate controls exist, and can they reasonably address the risks and control objectives within scope?
During the audit process, evidence supporting the organization’s internal controls, such as policies, current system settings, access configurations, procedures, and other documentation, is reviewed.
What is SOC 2 Type II?
SOC 2 Type II takes the examination further by assessing both the design and operating effectiveness of a company’s controls over an extended observation period. Instead of asking only whether a process exists, the report assesses whether the process was adopted seamlessly and consistently throughout the audit window.
Auditors collect evidence covering activities performed during that period, which include access-review records, support tickets, security logs, change approvals, incident records, vendor reviews, and recurring monitoring.
SOC 2 Type I vs. SOC 2 Type II: Which is right for you?
The key differences between SOC 2 Type I and Type II come down to the following factors:
Audit process and scope
Type I evaluates control design and implementation at a specified date but does not test its ongoing functionality. It provides a snapshot of your security posture and shows whether controls are in place at that moment.
Type II examines control design plus security control’s operational effectiveness across an audit period. Historical testing can uncover missed reviews, incomplete approvals, inconsistent documentation, or other weaknesses that might not appear during a point-in-time examination.
Reporting effectiveness
A Type I examination often relies heavily on point-in-time evidence such as current policy documents, configurations, screenshots, and other records demonstrating that adequate data protection measures exist.
Type II requires a deeper evidence trail. Auditors may sample recurring access reviews, tickets, logs, approvals, monitoring records, and other documentation generated throughout the period. Having more historical data helps enterprise customers see how well something is actually working over time, rather than just looking at a single moment in time.
For organizations going through vendor assessments, having a strong security track record can make the process much smoother. It means many common security questions can be answered upfront, reducing the back-and-forth with procurement teams when additional documentation is needed.
Speed and timeline
SOC 2 Type I is typically faster and less expensive than Type II due to less testing required. The initial audit preparation can typically typically take three to six months to complete. The readiness assessment or gap analysis may uncover missing policies, inconsistent access controls, weak vendor management, or other issues that need correction before examination begins. The end-to-end process can therefore stretch into months for an organization starting without established controls.
Type II requires an observation period, commonly several months and often within a 3- to 12-month range depending on the engagement. Organizations must implement controls before that period starts and maintain them throughout, so preparation, remediation, testing, and production of the final report make Type II a longer undertaking.
Cost
Type I usually costs less because auditors evaluate a narrower timeframe and perform less historical sampling.
Type II requires more extensive testing. Auditors review records from across the period, select samples, investigate exceptions, and gather sufficient evidence to determine whether controls remained effective.
Keep in mind that the final price of the audit can vary depending on the business. More systems, locations, third-party vendors, complex data processing, or additional required Trust Services Criteria can increase the work involved.
Stage of business development
Type I often fits organizations building their first formal security and compliance program. It can help satisfy immediate client demands, demonstrate progress toward SOC 2 compliance, and establish a foundation for more mature practices.
Type II generally becomes more valuable as customer expectations increase. Larger financial institutions, cloud providers, and other security-conscious buyers may prefer historical proof that controls work consistently. For a growing service provider, that stronger assurance can also become a competitive advantage during sales and vendor reviews.
Consider a hybrid approach as your business grows
Choosing Type I first does not mean staying there. Early stage companies can use it as a practical first milestone: conduct a readiness assessment and implement the appropriate security measures. At the same time, they can begin building the documentation and monitoring practices required for Type II.
A compliance automation platform can support that transition by tracking recurring tasks and helping streamline evidence collection. Technology alone, however, cannot maintain control effectiveness. Your team still needs to perform reviews, manage exceptions, evaluate third-party vendors, and maintain clear ownership of ongoing security responsibilities.
Establish an SOC 2-compliant security posture
Choosing the right SOC 2 type comes down to your security maturity, customer expectations, sales priorities, and future plans. Type I can establish that your controls are properly structured at a specific date, while Type II provides stronger historical evidence that those controls continue working over time.
Refresh Technologies can help you evaluate your security posture, identify gaps, strengthen audit readiness, and implement controls that support the appropriate SOC 2 examination. Build a stronger foundation for regulatory compliance, customer confidence, and future growth by preparing for the right SOC 2 audit today. Contact us to get started.