SOC 2 Type I vs Type II: What's the Difference? (2026 Guide)
TL;DR
SOC 2 Type I evaluates whether your security controls are properly designed at a single point in time — think of it as a photograph of your security posture. Type II proves those controls actually work effectively over a 3–12 month observation period, with auditors sampling real operational evidence like access logs, change records, and incident responses. Type I typically costs $15,000–$60,000 and takes 1–5 months through traditional approaches, while Type II runs $30,000–$150,000+ and takes 6–15 months. Most companies start with Type I for quick credibility, then progress to Type II — though enterprise buyers in regulated industries increasingly require Type II from the start.
If you're preparing for SOC 2® compliance, you'll hit this question early: should you pursue a Type I or Type II report? The terms sound nearly identical, but they represent fundamentally different assessments — with different timelines, evidence requirements, costs, and implications for how customers perceive your security posture.
This guide breaks down exactly how each report type works, what auditors actually examine, and how to determine which path fits your situation. No consulting jargon. Just clarity.
Quick Refresher: What Is SOC 2?
SOC 2 (System and Organization Controls 2) is a compliance framework developed by the AICPA that evaluates how service organizations protect customer data. It's built around five Trust Services Criteria:
- Security (required for every SOC 2 audit)
- Availability
- Processing Integrity
- Confidentiality
- Privacy
SOC 2 isn't legally mandated, but it has become a market expectation — especially for SaaS companies, cloud providers, and any business handling sensitive customer data. In 2025, SOC 2 remains the most common audit framework, pursued by 76% of organizations according to A-LIGN's Compliance Benchmark. SOC 2 adoptions rose 40% in 2024 alone, and 60% of companies say they're more likely to work with a startup that has achieved SOC 2 certification.
Both Type I and Type II reports evaluate the same Trust Services Criteria. The difference lies in what the auditor tests and how long that testing window covers. For a complete beginner walkthrough, see our SOC 2 guide for founders.
SOC 2 Type I: A Snapshot of Control Design
Think of Type I as a photograph. It captures your security posture at a single, specific point in time.
A Type I auditor examines whether your controls are properly designed and implemented as of a particular date. They review your policies, procedures, system configurations, and organizational structure. They verify that the building blocks of compliance exist. But they don't test whether those controls actually function consistently day-to-day — only that they're in place when the auditor looks.
What the auditor examines in a Type I
The assessment is focused on control design. Auditors will review your written policies and procedures, examine system architecture documentation, verify that access controls are configured correctly, check that monitoring tools are deployed, and confirm that your team can describe how each control operates. They may walk through a single recent example — one change management ticket, one access review — to validate the design. But they're not sampling across months of activity.
The evidence burden is primarily documentation-based: your Information Security Policy, access control configurations, network diagrams, org charts showing security responsibilities, and similar artifacts. For a detailed breakdown, see our guide on evidence requirements for Type I vs Type II.
Type I timelines
Type I audits are relatively fast. The audit itself typically takes 4 to 8 weeks once you're prepared, though preparation time varies widely based on your starting point. Organizations with existing security policies and documentation can be audit-ready in as little as a few weeks. Those building from scratch might need 2-3 months of preparation before the audit even begins.
The total timeline from "we've decided to pursue SOC 2" to "report in hand" typically ranges from 1 to 5 months depending on readiness. With AI-powered compliance platforms, that preparation phase can compress dramatically — Humadroid users have reached audit readiness in as little as one week by automating policy generation, control documentation, and gap analysis.
When Type I makes sense
Type I is often the right starting point when you're new to SOC 2 and need to demonstrate security maturity quickly, when a live sales deal or funding round requires "any SOC 2 report" on a tight deadline, when you've recently overhauled your security infrastructure and want to validate the new design before accumulating operational history, or when budget constraints make a single lower-cost assessment more practical as a first step.
A real-world example: a 30-person SaaS startup building developer tools for fintech companies implements access controls, formalizes onboarding processes, and publishes a comprehensive security policy. With an enterprise deal requiring compliance verification in 6 weeks, they pursue Type I. A month later, report in hand, they close the deal — and immediately begin building the operational track record needed for Type II.
SOC 2 Type II: Proof of Sustained Effectiveness
If Type I is a photograph, Type II is a documentary. It doesn't just show that your controls exist — it proves they work, consistently, over an extended period.
A Type II audit evaluates both the design and operational effectiveness of your controls across a defined observation period, typically 3 to 12 months. The auditor isn't just checking that you have an access review policy. They're sampling actual access reviews conducted over that entire period to verify the policy was followed every time.
What the auditor examines in a Type II
Everything from a Type I assessment, plus continuous operational evidence. Auditors will sample from the full observation period: access logs showing who accessed what and when, change management records for every significant system modification, incident response documentation for any security events, training completion records across the observation window, backup verification logs, vulnerability scan results conducted at regular intervals.
The key word is sampling. If you made 200 code deployments during a 6-month observation period, the auditor might test 25-40 of them to verify each one followed your change management procedures. Find a pattern of non-compliance in those samples, and you have exceptions in your report. Enough exceptions, and the entire audit opinion is affected.
This is why Type II carries significantly more weight. It's not enough to have good intentions on paper — you need the receipts.
The observation period explained
The observation period is the window during which your controls must be operating effectively. While the AICPA doesn't specify an official minimum, the shortest period typically seen in practice is 3 months, with 6 months being more common for first-time audits and 12 months as the standard for renewals.
This period cannot be accelerated or compressed. If you choose a 6-month observation window starting January 1, the auditor evaluates controls operating from January through June. You can't retroactively claim months you weren't tracking, and you can't skip ahead. The clock runs whether you're ready or not — which means starting strong matters enormously.
One critical mistake companies make: designating an observation start date before all controls are fully operational. If your observation period begins January 1 but you don't finish implementing your monitoring tools until February, auditors will find gaps in January's evidence. That can force you to restart the entire process. Always ensure every control is live and generating evidence before the clock starts.
Type II timelines
Total timelines for Type II run longer than Type I due to the mandatory observation period. The preparation phase — implementing controls, writing policies, setting up evidence collection — takes 1 to 6 months depending on your maturity. Then the observation period adds another 3 to 12 months. Finally, the actual audit takes 4 to 8 weeks after the observation period closes.
From a standing start, you're typically looking at 6 to 15 months for a complete Type II process. The biggest variable is how quickly you can get controls implemented and operational — this is where automation creates a real advantage. If you can compress the preparation phase from months to weeks, your observation period begins sooner, and you get your report sooner.
When Type II makes sense
Type II is the right choice when your target customers explicitly require Type II reports (increasingly common for enterprise and regulated industries), when you've been operating security controls for 3+ months already and just need to formalize them, when you want to avoid the double cost of Type I now followed by Type II later, or when you're positioning for long-term enterprise sales where Type I wouldn't be accepted anyway.
Type I vs Type II: Side-by-Side Comparison
| SOC 2 Type I | SOC 2 Type II | |
|---|---|---|
| What it assesses | Design of controls at a point in time | Design + operational effectiveness over a period |
| Timeframe covered | Single specific date | 3–12 month observation period |
| Audit duration | 4–8 weeks | 4–8 weeks (after observation period) |
| Total timeline | 1–5 months start to report | 6–15 months start to report |
| Evidence required | Policies, documentation, configurations | Logs, tickets, records across entire period |
| Auditor testing approach | Inspect design, walk through 1–2 examples | Sample 25–40+ items across full observation window |
| Audit fees (2025–2026) | $5,000–$25,000 | $7,000–$50,000+ |
| Total cost with preparation | $15,000–$60,000 (traditional) | $30,000–$150,000+ (traditional) |
| Client perception | Good starting point, shows intent | Gold standard, proves operational maturity |
| Report validity | Point-in-time (no expiration, but ages quickly) | 12 months (annual renewal expected) |
| Best for | First-time compliance, urgent timelines | Enterprise sales, regulated industries |
What Auditors Actually Test: A Practical Example
To make this concrete, let's walk through how a single control — user access management — gets evaluated differently under each report type.
Type I audit of access management
The auditor reviews your Access Control Policy. They verify that your identity provider is configured with role-based access. They check that multi-factor authentication is enabled. They might walk through one recent employee onboarding to confirm the documented process was followed. Result: they confirm the control is properly designed and implemented as of the audit date.
Type II audit of access management
Same starting point, but now the auditor pulls a list of every employee who joined or left during the 6-month observation period — say 15 joiners and 8 departures. They select a sample (perhaps 8 joiners and all 8 departures) and verify: was each account provisioned through the proper approval workflow? Were access rights appropriate for the role? For departures, were accounts deactivated within the timeframe specified in your policy? They also sample quarterly access reviews to confirm they happened on schedule and resulted in appropriate adjustments.
If 7 out of 8 departures had accounts deactivated within 24 hours but one took 5 days, that's an exception in the report. The auditor notes it, management responds with an explanation, and users of the report decide whether it's material to their risk assessment.
This level of scrutiny is exactly why Type II carries more weight — and why maintaining continuous monitoring of controls throughout the observation period is non-negotiable.
How Enterprise Buyers View Each Report
Understanding how your prospective customers perceive these reports is just as important as understanding the technical differences.
Type I perception has shifted significantly. While it once served as adequate proof of security maturity, enterprise procurement teams increasingly view Type I as a temporary measure, not a destination. It signals that you've taken security seriously enough to invest in an audit, but it doesn't answer the question buyers really care about: "Do you actually follow through, consistently, when nobody's watching?"
Type II is rapidly becoming the enterprise baseline. In regulated industries like financial services and healthcare, procurement teams often auto-reject vendors who can only present Type I reports. The reasoning is straightforward — with 83% of organizations having experienced a third-party security incident in the last three years, buyers need evidence of sustained operational discipline, not just well-designed policies.
That said, Type I still has real commercial value for early-stage companies. A Type I report in hand beats no report at all, and many mid-market buyers will accept it as a stepping stone with a clear Type II timeline communicated upfront. For a deeper analysis of buyer psychology, see our article on how clients view Type I vs Type II reports.
The Type I → Type II Transition Path
Most companies follow a two-phase approach: Type I first to establish a baseline and close near-term deals, then Type II within 6-12 months to build deeper enterprise credibility. Here's how that transition typically works.
Phase 1: Type I (months 1-3). Implement controls, document policies, get everything designed and in place. Complete the Type I audit. Use the report to unblock deals and demonstrate commitment to security.
Phase 2: Transition (months 3-4). Immediately after Type I, designate your Type II observation start date. Ensure all controls are not just designed but actively operating and generating evidence. Set up automated evidence collection — access logs, change records, incident documentation — so nothing falls through the cracks during the observation window.
Phase 3: Type II (months 4-12+). Operate controls consistently throughout the observation period. Conduct the Type II audit once the window closes. From this point forward, annual Type II renewals become your standard.
The critical success factor in this transition is not treating Type I as a finish line. Companies that celebrate their Type I report and relax often scramble when it's time to demonstrate 6 months of operational evidence. The smartest teams start operating as if they're in a Type II observation period from day one.
Common Mistakes That Derail SOC 2 Audits
Treating SOC 2 as purely a technical project. Roughly 50% of SOC 2 requirements are non-technical — HR processes like background checks and security training, vendor management procedures, incident response plans, and policy governance. Companies that assign SOC 2 exclusively to the engineering team inevitably have gaps in these operational areas.
Choosing the cheapest auditor. SOC 2 audit fees range from $5,000 to $50,000+, and the lowest bid isn't always the best value. Inexperienced auditors can cause delays through poor communication, excessive exception findings over minor issues, and audit reports that sophisticated buyers find lacking in rigor. Always reference-check auditors with companies similar to yours in size and industry.
Inconsistent documentation during the observation period. "If it's not documented, it didn't happen" is the foundational principle of SOC 2 auditing. Every access grant needs a ticket. Every incident needs a documented response. Every training session needs completion records. This is where automated evidence collection transforms the process — connecting directly to your infrastructure eliminates the risk of human forgetfulness creating audit gaps.
Waiting too long to start. With 56% of organizations spending 3-6 months preparing for audits, the timeline from "we should do SOC 2" to "report in hand" is longer than most founders expect. If you know enterprise customers will require compliance, starting early while the stakes are lower is always easier than scrambling under deal pressure.
Cost Overview: What to Budget in 2026
SOC 2 costs vary enormously based on company size, scope, auditor selection, and approach. Here's a realistic overview based on current industry data.
SOC 2 Type I total costs typically range from $15,000 to $60,000 through traditional consulting and audit approaches. This includes readiness assessment ($10,000-$25,000 if outsourced), audit fees ($5,000-$25,000), security tooling, and internal staff time. For small organizations with narrow scope — Security criterion only, simple infrastructure — costs can fall toward the lower end. Mid-sized companies with multiple Trust Services Criteria and complex environments trend higher.
SOC 2 Type II total costs range from $30,000 to $150,000+ through traditional paths, driven by the longer engagement timeline, more intensive audit procedures, and ongoing monitoring requirements during the observation period.
The AI-powered alternative. Modern compliance automation platforms have compressed these costs dramatically. Humadroid users typically invest under $5,000 total for Type I (platform subscription + audit fees through our vetted assessor network starting at $2,000) and under $10,000 for Type II. That's a 90%+ reduction from traditional consulting approaches. The AI handles policy generation, gap analysis, control documentation, and evidence collection — the work that previously consumed hundreds of consultant hours. For a detailed cost comparison with decision framework, see our SMB decision framework for Type I vs Type II.
Industry-Specific Considerations
SaaS companies represent the largest segment of SOC 2 certifications — 45% of all SOC 2 reports come from IT and SaaS sectors. For B2B SaaS, SOC 2 is table stakes. Early-stage companies can often start with Type I, but should plan for Type II by Series A or when pursuing deals above $50k ACV. The typical enterprise procurement process will eventually demand it.
FinTech companies should generally skip Type I entirely. Banks, payment processors, and financial institutions require operational proof of security controls, not just design validation. A Type I report often carries little weight in financial services procurement, where "regulator-induced anxiety" means buyers demand evidence of sustained, tested security practices.
HealthTech companies face a dual requirement. HIPAA compliance overlaps with but doesn't replace SOC 2, and healthcare systems expect Type II as standard given the sensitivity of patient data. If you're serving healthcare customers, plan for Type II with Security, Confidentiality, Privacy, and often Availability criteria in scope.
General B2B services have more flexibility. Your decision depends largely on your customer base. If you're selling to enterprises and regulated industries, prioritize Type II. If your customers are primarily SMBs and mid-market companies, Type I may be sufficient for now — but the market trend is clearly moving toward Type II expectations across all segments.
How Humadroid Accelerates Both Paths
We built Humadroid because the traditional approach to SOC 2 — $200,000+ in consulting fees, months of preparation, endless spreadsheets — puts enterprise-grade compliance out of reach for most growing companies. Here's how our AI-powered platform changes the equation for both Type I and Type II.
For Type I preparation, Humadroid's AI generates company-specific policies and control documentation in minutes rather than weeks. It creates your SOC 2 System Description automatically based on your actual business profile. It identifies gaps and provides remediation guidance 24/7 — no waiting for consultant availability. Companies have reached audit readiness in as little as one week.
For Type II observation periods, the platform's automated evidence collection connects directly to AWS, GCP, GitHub, and Cloudflare to continuously capture the operational evidence auditors need. Over 50 evidence sources across four platforms, running in the background while your team focuses on building product. When the observation period ends, your evidence is already organized and audit-ready.
For ongoing compliance, the Compliance Daily dashboard tells you exactly what to work on each day, with themed focus areas and urgency-based prioritization. No more guessing whether you're on track for your next audit cycle.
And we practice what we preach — Humadroid achieved SOC 2 compliance using our own platform, without any external consultants.
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Next Steps: Your Path Forward
Understanding the difference between Type I and Type II is the first step. The second is choosing the right path for your specific situation. If you're looking for a detailed decision framework with cost calculations and timeline planning, our companion guide on choosing between Type I and Type II for SMBs walks through the decision step by step.
Ready to start? Here are practical next steps based on where you are:
If you're exploring SOC 2 for the first time, read our steps to achieve SOC 2 compliance for a complete implementation roadmap, then consider a readiness assessment to identify your gaps.
If you're preparing for a Type I audit, focus on policy documentation, control implementation, and evidence organization. Humadroid's AI can generate your complete policy library and system description in hours, getting you audit-ready faster than any manual approach.
If you're transitioning from Type I to Type II, prioritize setting up automated evidence collection before your observation period begins. Every day without automated capture is a day of evidence you might need to reconstruct manually later.
If you're going straight to Type II, start implementing controls immediately so your observation period begins as early as possible. The sooner controls are live and generating evidence, the sooner you'll have your report.
Whichever path you choose, the fundamentals remain the same: start with intent, build with consistency, and automate everything you can. SOC 2 compliance isn't a checkbox — it's an ongoing commitment to protecting your customers' data. Type I gets you started. Type II proves you mean it.
Also evaluating frameworks beyond SOC 2? See our comparison of SOC 2 vs ISO 27001 to determine which fits your compliance roadmap — or whether you need both.
February 2026 update: This guide has been substantially expanded with 2025–2026 audit cost data, detailed auditor testing examples for both report types, the Type I → Type II transition path, industry-specific guidance for SaaS, FinTech, and HealthTech, a comprehensive comparison table, and common audit pitfalls to avoid.
Frequently Asked Questions
SOC 2 Type I total costs typically range from $15,000 to $60,000 through traditional consulting, including readiness assessment, audit fees ($5,000–$25,000), and internal labor. Type II runs $30,000 to $150,000+ due to the longer observation period, more intensive audit procedures, and ongoing monitoring requirements. AI-powered compliance platforms like Humadroid can compress total Type I costs to under $5,000 and Type II to under $10,000 by automating policy generation, gap analysis, and evidence collection.
Yes — and for Type II audits, automated evidence collection is practically essential. Auditors sample 25–40+ items across the full observation period, covering access logs, change management records, incident responses, training completions, and vulnerability scans. Manually tracking all of this over 3–12 months creates significant risk of gaps. Platforms like Humadroid connect directly to AWS, GCP, GitHub, and Cloudflare to capture over 50 evidence types continuously, so when the observation period ends, your evidence is already organized and audit-ready.
Most startups begin with Type I to demonstrate security maturity quickly — it can be completed in 1–5 months and proves controls are properly designed. This is especially valuable when a sales deal or funding round requires compliance verification on a tight deadline. However, enterprise buyers in regulated industries like financial services and healthcare increasingly require Type II from the start. The best approach is often Type I first to unblock near-term deals, then immediately begin your Type II observation period so you have a Type II report within 6–12 months.
The observation period typically ranges from 3 to 12 months. While the AICPA doesn't mandate a specific minimum, 3 months is the shortest window commonly accepted in practice, with 6 months being standard for first-time audits and 12 months for annual renewals. This period cannot be compressed or accelerated — your controls must be fully operational and generating evidence from day one. Starting the observation period before all controls are implemented is a common mistake that forces companies to restart the process.
In a Type I audit, auditors review your policies, configurations, and documentation, and may walk through one or two recent examples to confirm control design. In a Type II audit, auditors sample extensively across the full observation period — for example, testing 25–40 code deployments out of 200 to verify change management compliance, or reviewing every employee departure to confirm timely account deactivation. Any inconsistencies become documented exceptions in the report, which is why Type II demands sustained operational discipline, not just well-designed procedures.
Yes, you can go directly to Type II if your security controls are already operational. This is often the smarter path if you've been running controls for 3+ months, your target customers explicitly require Type II (common in financial services and healthcare), or you want to avoid the double cost of doing Type I first and Type II later. The trade-off is a longer timeline before you have any report to share — 6 to 15 months from a standing start versus 1–5 months for Type I.
Enterprise procurement teams increasingly view Type I as a temporary measure rather than a destination. In regulated industries like financial services and healthcare, many buyers auto-reject vendors with only Type I reports. Type II has become the baseline expectation because it proves controls work consistently over time — not just that they exist on paper. That said, Type I still holds commercial value for early-stage companies, and many mid-market buyers will accept it as a stepping stone if you communicate a clear Type II timeline.
SOC 2 reports don't technically expire, but they lose practical relevance over time. Type I reports capture a single point in time and age quickly — customers typically expect to see a Type II report within 6–12 months after a Type I. Type II reports are generally considered valid for 12 months after the observation period ends, and most organizations renew annually to maintain current reports. If there's a gap between reports, companies can issue a bridge letter confirming no material changes, which is usually accepted for up to 3–6 months.
Financial services and healthcare are the most common industries where Type II is effectively mandatory — banks, payment processors, and hospital systems routinely reject vendors with only Type I reports because they need proof of sustained operational security, not just control design. SaaS companies selling to enterprises should plan for Type II by Series A or when pursuing deals above $50k ACV. FinTech companies are generally advised to skip Type I entirely and go straight to Type II. HealthTech companies typically need Type II with Security, Confidentiality, Privacy, and Availability criteria in scope, alongside separate HIPAA compliance. General B2B services have more flexibility, but the market trend is clearly shifting toward Type II expectations across all segments.
Four mistakes consistently derail SOC 2 audits. First, treating compliance as purely a technical project — roughly 50% of SOC 2 requirements are non-technical (HR processes, vendor management, incident response plans, policy governance), so assigning it solely to engineering creates inevitable gaps. Second, choosing the cheapest auditor without reference-checking — inexperienced auditors cause delays through poor communication and excessive exception findings. Third, inconsistent documentation during the Type II observation period — if it's not documented, it didn't happen, and auditors will sample extensively across the entire window. Automated evidence collection eliminates the risk of human forgetfulness creating gaps. Fourth, waiting too long to start — with 56% of organizations spending 3–6 months on preparation alone, the total timeline is longer than most founders expect.
