SOC 1 vs SOC 2 vs SOC 3: What is the Exact Difference? - Sprinto

Summary

This video explains the differences between SOC (System and Organization Controls) reports, focusing on SOC 1, SOC 2, and SOC 3. SOC 1 is related to financial reporting controls, while SOC 2 assesses data and operations against five trust service criteria: security, availability, processing integrity, confidentiality, and privacy. SOC 3 is a public version of SOC 2. The video emphasizes the benefits of using compliance automation software, like Splinter, to streamline and save time and money on obtaining SOC reports.

Takeaways

• 😀 SOC (System and Organization Controls) reports are designed to evaluate the effectiveness of an organization's controls, focusing on system-level controls.
• 😀 A SOC 1 report focuses on internal controls related to financial reporting, primarily used by accountants to audit financial statements.
• 😀 SOC 1 Type 1 reports assess a company's controls at a specific point in time, while Type 2 reports evaluate controls over a longer duration (3-12 months).
• 😀 SOC 2 evaluates a business's controls over data and operations, specifically in the areas of availability, security, processing integrity, confidentiality, and privacy.
• 😀 Businesses that rely on cloud services or have sensitive data often get asked for SOC 2 reports to demonstrate compliance with security practices.
• 😀 SOC 2 reports have two types: Type 1 (prerequisite controls at a specific point) and Type 2 (controls assessed over time).
• 😀 SOC 3 is a public, shareable version of the SOC 2 report that communicates security posture to external stakeholders.
• 😀 The key differences between SOC 1 and SOC 2 include scope (financial vs. trust service criteria), auditing standards, and the types of controls tested.
• 😀 SOC 1 falls under the SSAE 18 standard and focuses on financial reporting, whereas SOC 2 is under different auditing standards (AT-C 105, 305) and focuses on operational security.
• 😀 SOC 2 reports are typically more comprehensive than SOC 1 reports, as they address a broader range of trust service criteria beyond financial reporting.
• 😀 Automation tools like Splinter can help companies streamline the compliance process for SOC reports, saving time and costs.

Q & A

What does the term 'SOC' stand for?

SOC stands for System and Organization Controls. It refers to a suite of services offered by the AICPA based on system-level controls at service organizations.

What is the purpose of a SOC report?

A SOC report provides stakeholders with insights into the effectiveness of a company's controls, as determined by an independent third-party audit. It verifies that these controls are properly implemented and functioning.

What is the difference between SOC 1 and SOC 2 reports?

SOC 1 reports evaluate controls over financial reporting, while SOC 2 reports evaluate controls related to data and operations, focusing on five trust service criteria: availability, security, processing integrity, confidentiality, and privacy.

Who typically requests a SOC 1 report?

SOC 1 reports are commonly requested by accountants who audit the financial statements of companies, especially in industries like employee benefits, retirement plans, payroll processing, and loan services.

What are SOC 1 Type 1 and Type 2 reports?

SOC 1 Type 1 reports focus on the suitability of a company's system controls at a specific point in time, while SOC 1 Type 2 reports assess the effectiveness of these controls over a broader period (3 to 12 months).

What are the five trust service criteria covered by SOC 2?

The five trust service criteria covered by SOC 2 are availability, security, processing integrity, confidentiality, and privacy.

What is the difference between SOC 2 Type 1 and Type 2 reports?

SOC 2 Type 1 reports assess the controls in place at a specific point in time, while SOC 2 Type 2 reports evaluate whether the controls have been followed effectively over a longer duration, typically between 3 to 12 months.

What is SOC 3 and why is it important?

SOC 3 is a public and shareable version of a SOC 2 report. It allows companies to share their security posture with external stakeholders without revealing sensitive operational details.

What are the key differences between SOC 1 and SOC 2 reports?

SOC 1 reports focus on financial controls, while SOC 2 reports focus on the five trust service criteria. Additionally, they differ in auditing standards and controls tested.

How can businesses reduce the cost and time required for SOC compliance?

Businesses can use compliance automation software, such as Splinter, to save up to 80% of both cost and time, making the SOC compliance process more efficient.