SOC 1, SOC 2, and SOC 3 reports are often mentioned in vendor risk assessments, security reviews, and enterprise procurement processes. But what exactly do they mean—and which one does your company actually need?
In this guide, we break down:
What each SOC report covers
How they differ in scope and audience
When to use SOC 1 vs SOC 2 vs SOC 3
How to use SOC 3 for public trust and marketing
📌 Quick summary:
SOC 1 focuses on financial reporting, SOC 2 on data security and system integrity, and SOC 3 is a public version of SOC 2 used for marketing.
What Are SOC Reports?
SOC stands for System and Organization Controls, a suite of audit reports developed by the American Institute of Certified Public Accountants (AICPA). These reports help service providers demonstrate trustworthiness across critical areas like data security, privacy, financial controls, and system availability.
Each SOC report serves a different purpose and audience, but they’re all based on independent audits conducted by certified public accountants.
🔗 Learn more: SOC for Service Organizations on AICPA-CIMA
SOC 1: Focused on Financial Reporting Controls
SOC 1 is designed for companies that impact their clients’ financial reporting, such as payroll processors, billing platforms, or accounting tools.
SOC 1 reports are based on the Statement on Standards for Attestation Engagements (SSAE) 18, and they evaluate the design and effectiveness of internal controls over financial reporting (ICFR).
Use Cases:
Payroll providers
Accounting platforms
ERP systems
Payment processors
Report Types:
Type I: Assesses control design at a point in time
Type II: Assesses both design and operational effectiveness over time (typically 6–12 months)
🔗 What is SSAE 18? – AICPA Resource
SOC 2: Trust Criteria for Security and Beyond
SOC 2 is the most common compliance request for cloud-based service providers. It focuses on how well your company protects data, ensures availability, and maintains integrity in operations.
SOC 2 reports are based on the AICPA Trust Services Criteria (TSC), covering five areas:
Security (required)
Availability
Processing Integrity
Confidentiality
Privacy
Who Needs It:
SaaS platforms
IT infrastructure providers
Data analytics tools
HR or CRM software handling sensitive information
Key Features:
Type I vs Type II (just like SOC 1)
More technical and operations-focused
Often a must-have for B2B SaaS vendors in procurement pipelines
🔗 Trust Services Criteria Explained
SOC 3: A Public-Facing Summary of SOC 2
SOC 3 is essentially a marketing-friendly version of SOC 2.
It covers the same five Trust Service Criteria, but doesn’t include detailed descriptions of your systems, controls, or test results. That makes it safe to publish on your website or share publicly.
Why Use SOC 3:
Demonstrate commitment to security without disclosing sensitive audit details
Build trust with prospects, investors, and the public
Use as part of brand positioning and customer-facing materials
🔗 SOC 3 Reports Overview – AICPA
Key Differences at a Glance
| Feature | SOC 1 | SOC 2 | SOC 3 |
|---|---|---|---|
| Focus | Financial controls | Security & operations | Public summary of SOC 2 |
| Audience | CFOs, auditors | Technical teams, customers | General public |
| Framework | SSAE 18 | Trust Services Criteria | Trust Services Criteria |
| Distribution | Restricted | Restricted | Public |
| Use Case | Financial reporting impact | Data security, cloud services | Marketing, brand trust |
Which SOC Report Do You Need?
It depends on what kind of services you offer and what your clients care about:
| Your Business | Recommended Report |
|---|---|
| Payroll, accounting, or billing system | SOC 1 |
| SaaS platform storing user data | SOC 2 |
| You want a trust badge for your site | SOC 3 (in addition to SOC 2) |
| Audited by public clients or under SOX | SOC 1 Type II |
| Selling to enterprises or regulated sectors | SOC 2 Type II (sometimes both) |
Many companies eventually pursue both SOC 1 and SOC 2, especially if they serve finance and tech clients simultaneously.
Preparing for a SOC Audit
Whether it’s SOC 1, SOC 2, or SOC 3, the preparation process involves:
Mapping controls to criteria (financial or trust-based)
Documenting your systems and processes
Running a readiness assessment
Maintaining logs, evidence, and policies
Using tools to track assets, access, risks, and incidents
🧩 Related reading:
Compliance Is a Trust Signal
SOC reports are about proving your organization can be trusted. Customers, investors, and partners increasingly use SOC compliance as a filter for doing business.
And in a competitive market, that trust might just be your biggest differentiator.
FAQ
SOC 1 focuses on financial reporting controls, while SOC 2 focuses on data security and system integrity.
SOC 3 is a publicly shareable version of SOC 2, often used in marketing and on websites.
It depends on your clients. Financial impact = SOC 1. Tech/data handling = SOC 2.
Not by law, but many enterprise customers require it during procurement.
