SOC 1 vs SOC 2 vs SOC 3: What’s the Difference?

If you’re navigating the world of SOC compliance, you’ve likely come across different types of SOC reports: SOC 1, SOC 2, and SOC 3. But what do these reports actually cover, and how do you know which one is right for your business?

In this guide, we’ll break down the key differences between SOC 1, SOC 2, and SOC 3, helping you make an informed decision about which compliance path best fits your needs.

What is a SOC Report?

SOC stands for System and Organization Controls. SOC reports are developed by the American Institute of Certified Public Accountants (AICPA) and provide independent validation of how a company manages controls related to:

• Financial reporting

• Security and data protection

• Privacy and trust

Each type of SOC report serves a different purpose and audience, and selecting the right one depends on your services and the needs of your customers.

SOC 1: Financial Reporting Controls

SOC 1 reports focus on internal controls over financial reporting (ICFR).

This report is relevant if your organization provides services that impact a customer’s financial reports. Common examples include:

• Payroll providers

• Billing services

• Payment processors

• Financial software vendors

SOC 1 reports are typically requested by customers’ party auditors to help them validate their own controls over financial reporting.

Key audience: Financial auditors, customers with compliance-driven financial reporting needs.
Content: Controls related to the accuracy, completeness, and integrity of financial transactions.

SOC 2: Security and Trust Controls

SOC 2 is the most commonly pursued SOC report for technology and cloud service providers.

It focuses on operational effectiveness and operational controls related to the Trust Services Criteria:

• Security

• Availability

• Processing Integrity

• Confidentiality

• Privacy

SOC 2 is the right report if your customers want assurance that you can securely handle their data and operate with strong risk management and data protection practices.

Key audience: Customers, prospects, procurement teams, partners.
Content: Security policies, risk management practices, and operational controls.

Tip: SOC 2 audits often align with frameworks like ISO 27001, helping organizations build an integrated risk mitigation and compliance program.

SOC 3: Public SOC 2 Report

SOC 3 is a simplified version of the SOC 2 report, designed for public distribution.

While SOC 2 reports are typically shared under NDA and contain detailed test results, SOC 3 reports:

• Contains a high-level overview of controls

• Do not include sensitive or detailed information

• Can be published on your website or shared with the public

SOC 3 is useful for marketing and trust-building, allowing you to demonstrate that your organization meets key security standards without exposing confidential details.

Key audience: Prospective customers, general public, partners.
Content: Summary of SOC 2 controls and audit outcome (without detailed testing).

Choosing the Right SOC Report

Selecting the appropriate SOC report depends on the nature of your services and the expectations of your customers:

• If you impact financial reporting, pursue SOC 1.

• If you provide cloud services, handle data processing, or need to demonstrate data security and risk management, pursue SOC 2.

• If you want to showcase your compliance publicly, consider adding a SOC 3 to your portfolio.

Regardless of the type, pursuing SOC compliance is an essential part of building trust, managing risk, and standing out in competitive markets.

Building Trust Through SOC Compliance

Understanding the differences between SOC 1, SOC 2, and SOC 3 allows organizations to tailor their compliance strategies to meet both customer and market expectations.

By embracing SOC 2 audits, aligning with the Trust Services Criteria, and adopting frameworks like ISO 27001, your organization can strengthen its control environment, support robust system and organization controls, and build lasting trust.

As customer expectations continue to evolve, especially in cloud service markets and data center operations, having the right SOC reports will help position your business for long-term success.