SOC 1 vs SOC 2 vs SOC 3

SOC 1, SOC 2, and SOC 3 solve different problems

The "SOC" in SOC 1, SOC 2, and SOC 3 stands for System and Organization Controls — a reporting suite from the AICPA for service organizations. The three reports share a common heritage in the SSAE 18 attestation standard, but they address different audiences and different kinds of controls. Choosing the right report is a strategic decision that depends on what your company does, who your buyers are, and what those buyers need for their own compliance and risk programs.

This page compares the three at a practical level, including when each applies and how they interact in organizations that maintain more than one.

The three reports at a glance

SOC 1 in depth

SOC 1 reports on a service organization's controls that are relevant to customer financial reporting. The standard applies when a service organization performs functions that, if controlled weakly, could lead to misstatements in the customer's financial statements.

When SOC 1 applies

• Payroll service providers whose processing affects customer payroll liabilities
• Benefits administrators
• Claims processing for insurance
• Transaction processing for banks and fintechs
• Billing or invoicing platforms that record customer revenue
• Fund administrators and asset management services
• ERP-adjacent services that feed customer accounting systems

What SOC 1 tests

SOC 1 is organized around control objectives defined by the service organization based on the financial statement impact of their services. The auditor evaluates whether controls are designed (Type I) or operating effectively (Type II) to achieve those objectives.

Typical control objectives in a SOC 1 report might cover:

• Transaction processing accuracy and completeness
• Timely recording of transactions
• Authorization of processing changes
• Access restrictions to financial systems
• Protection of financial data

Who reads SOC 1

The primary audience is the customer's financial statement auditor. Under PCAOB and AICPA standards, customer auditors must understand and, in some cases, test controls at service organizations that affect their audit. A service organization that produces a SOC 1 gives customer auditors a ready-made reference they can rely on.

SOC 2 in depth

SOC 2 reports on controls aligned to the Trust Services Criteria — security (required), availability, processing integrity, confidentiality, and privacy. Unlike SOC 1, which is oriented around financial reporting, SOC 2 is oriented around how a service organization protects and manages customer data.

When SOC 2 applies

SOC 2 applies broadly to any service organization that handles customer data. Common pursuers include:

• B2B SaaS platforms
• Cloud infrastructure and managed service providers
• Data analytics and processing companies
• CRM, marketing automation, and customer success platforms
• Fintech platforms (often in combination with SOC 1)
• Healthcare technology (often in combination with HIPAA)

What SOC 2 tests

SOC 2 tests controls against the applicable Trust Services Criteria. Security is required in every SOC 2 engagement; additional criteria are selected based on customer commitments. The auditor assesses:

• Design of controls (Type I) or design plus operating effectiveness (Type II)
• Evidence produced across the observation period (for Type II)
• Coverage of every point of focus in the selected criteria
• Exceptions or deficiencies identified during testing

Who reads SOC 2

The primary audience is the customer's security, risk, or procurement team. SOC 2 is requested during vendor due diligence, security questionnaires, and contract negotiations. See type 1 vs type 2 and the SOC 2 Type 2 glossary entry for more.

SOC 3 in depth

SOC 3 is a short-form public report based on the same Trust Services Criteria as SOC 2. It produces an auditor's opinion without the detailed system description or control testing results that fill a SOC 2 report.

When SOC 3 applies

SOC 3 is optional. Organizations produce it when they want a public-facing assurance document — often to display on a trust page or use in marketing materials. The report can be freely distributed and does not require an NDA.

What SOC 3 contains

• Company description and services covered
• Auditor's opinion on whether controls met the criteria
• Management's assertion about its system

SOC 3 does not contain the control descriptions, testing procedures, or results that are standard in SOC 2. Enterprise buyers generally do not accept SOC 3 in lieu of SOC 2.

Who reads SOC 3

The general public — prospects browsing your trust page, press researching your security posture, smaller buyers who do not have a formal vendor assessment process. For buyers with mature procurement, SOC 3 is a marketing artifact and SOC 2 is the substantive document.

How this fits into the broader compliance picture

SOC 2 is the most common report and the default starting point for B2B SaaS. SOC 1 is added when the organization touches financial reporting. SOC 3 is added for public-facing assurance.

Related frameworks that buyers may ask about alongside SOC:

• ISO 27001 — international security certification; complements SOC 2 in global markets
• HIPAA — US healthcare law; SOC 2 controls cover many HIPAA safeguards
• PCI DSS — payment card industry standard; applies when cardholder data is handled
• NIST CSF — US government-adjacent framework; maps well to SOC 2 security

For tooling comparisons, see Vanta vs Drata.

Can you pursue multiple SOC reports?

Yes. Many service organizations maintain both SOC 1 and SOC 2, and add SOC 3 for public assurance.

• SOC 1 + SOC 2 is common for fintech and billing platforms. The same CPA firm can usually perform both audits in the same cycle with shared walkthroughs where controls overlap.
• SOC 2 + SOC 3 is common for SaaS companies that want public assurance. The SOC 3 is often produced from the same underlying engagement as a companion deliverable.
• SOC 1 + SOC 2 + SOC 3 is rare but possible for companies with diverse customer bases.

The cost of an additional report is typically less than the cost of a standalone engagement because controls, evidence, and walkthroughs are shared.

Common mistakes

• Pursuing SOC 1 when SOC 2 is what buyers want. SOC 1 is irrelevant to most security questionnaires. Verify with your sales team which report prospects are asking for.
• Assuming SOC 3 replaces SOC 2. Enterprise buyers will still ask for SOC 2. Use SOC 3 as a complement, not a substitute.
• Single auditor for all reports without shared evidence. If you engage one CPA firm for multiple reports, insist on shared walkthroughs and evidence where possible. This is one of the main reasons to use one firm.
• Missing the financial reporting link. If customers' auditors request information about your controls during their audit, you probably need SOC 1. Listen for this signal.

Implementation tips

• Before starting any SOC report, confirm with your top customers and prospects which report they want.
• If you may eventually need both SOC 1 and SOC 2, scope them together during readiness so the control inventory covers both.
• Treat SOC 3 as a marketing project once SOC 2 is in place. It is inexpensive to add.
• Renew each report annually to maintain continuous coverage. Gaps between reports can block deals.

How episki helps

episki supports SOC 1 and SOC 2 programs in the same workspace. Controls tagged to financial reporting objectives feed SOC 1, and controls tagged to Trust Services Criteria feed SOC 2 — with shared evidence when controls satisfy both. Start a free trial or see the broader SOC 2 framework guide to learn how multi-report programs run together.