Last Updated on September 26, 2025 by Narendra Sahoo
Which SOC Report Do I Need?
As a service organization, you are familiar with audit requests from clients who are required to meet specific compliance and audit requirements. One of the most common questions you may face is about SOC 1 vs SOC 2—specifically, whether your organization is compliant with either of these important reporting standards.
Clients frequently ask questions as to what is the differences between a SOC 1 and SOC 2? Which SOC report should they get? Do they need both? In this article today we have discussed the differences between SOC1 and SOC2, and which one’s do organizations need to be compliant with.
Question is: What are the differences between a SOC 1 and SOC 2? Which SOC report should I get? Do I need both? These are questions we, as auditors, are frequently asked. Let’s take a look at the differences between the two, and why you could be asked for either, or both, as you continue to grow your business.
Do I need a SOC 1?
A Service Organization Control 1 (SOC 1) engagement is an audit of the internal controls that directly impact your client’s financial reporting.
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These audits are performed in accordance with SSAE 16 standards.
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A SOC 1 assessment evaluates control objectives used to represent Internal Control over Financial Reporting (ICFR).
Example: A payroll processing company or claims processor that manages financial transactions on behalf of clients will almost always be asked for a SOC 1 report.
In our experience, SOC 1 report requests are less frequent than SOC 2 requests—but when financial accuracy is at stake, clients often insist on it.
Do I need a SOC 2?
If your business handles sensitive client data—but not necessarily financial records—chances are you’ll be asked for a SOC 2 audit.
A SOC 2 report evaluates your organization’s internal controls, policies, and procedures against five criteria known as the Trust Services Principles:
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Security
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Availability
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Processing Integrity
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Confidentiality
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Privacy
Example: A SaaS provider, cloud hosting company, or healthcare tech vendor that stores sensitive personal information will usually be required to provide SOC 2 compliance.
In fact, according to AICPA statistics (2024), SOC 2 reports have grown by 35% year-over-year, driven largely by the rise of cloud computing, fintech, and digital health providers.
Do I need a SOC 1 and a SOC 2 report?
In some cases—yes.
If your organization provides services that affect financial reporting and manages sensitive customer data, you may need both.
???? Example: A FinTech company that processes financial transactions (SOC 1) and also manages personal user data (SOC 2).
By obtaining both reports, you demonstrate to clients and stakeholders that your controls meet financial accuracy standards and security expectations.
SOC 1 vs SOC 2 – Quick Comparison
| Feature | SOC 1 Report (ICFR) | SOC 2 Report (Trust Services) |
|---|---|---|
| Purpose | Internal Controls over Financial Reporting (ICFR) | Security, Availability, Processing Integrity, Confidentiality, Privacy |
| Best For | Payroll processors, financial services, claims processors | SaaS providers, cloud hosting, IT services, healthcare tech |
| Client Expectation | Assurance over accurate financial reporting | Assurance over secure handling of sensitive data |
| Report Users | Auditors, CFOs, regulators | Clients, prospects, risk teams |
How to Decide Which SOC Report Makes Sense for You
Choosing between SOC 1 and SOC 2 (or both) depends on:
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Your business objectives (current and future)
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Your client contracts and commitments
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The industry regulations you need to align with
Many growing service providers start with SOC 2, as it covers a wider range of client concerns, especially in cloud-first industries. However, if your services impact financial reporting, SOC 1 becomes equally critical.
Frequently Asked Questions
1.What is the main difference between SOC 1 and SOC 2 reports?
A SOC 1 report focuses on internal controls over financial reporting (ICFR) – it’s used when the client’s financial statements may be impacted. Meanwhile, a SOC 2 report evaluates controls related to Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy. It’s about how well systems protect and manage data beyond just financial implications.
2.Do I need a SOC 1 or SOC 2 report for my business?
It depends on what your clients require. If you’re handling data that impacts their financial statements, clients may ask for a SOC 1 report. If you’re managing sensitive data, ensuring uptime, or providing cloud services, a SOC 2 report is more appropriate. Some organizations may need both, depending on their services and customer expectations.
3.Can an organization have both SOC 1 and SOC 2 audits in place?
Yes. If your business operations include services that affect financial reporting and services involving data security, privacy, or operational availability, you may benefit from having both SOC reports. It gives stakeholders confidence that both financial and non-financial assurances are met.
4.Which stakeholders/customers are most interested in SOC 1 vs SOC 2 reports?
Clients like banks, financial institutions, or those regulated for financial reporting tend to ask for SOC 1 reports. On the other hand, technology customers, SaaS clients, or companies concerned with data protection, uptime, or privacy will often request SOC 2 reports. The stakeholder type often drives the report requirement.
5.How do I decide on the scope for a SOC 2 report?
Start by identifying what your clients require (which criteria: security, availability, etc.), assessing your system boundaries (which services, infrastructure, or processes are in scope), and considering regulatory or contractual obligations. Also, factor in whether you want Type 1 or Type 2 (single point vs over a period). Clarify scope early with auditors to avoid surprises.
Final Thoughts
At the end of the day, the right SOC report depends on what your clients expect and what your services impact.
With over 20 years of global compliance expertise, VISTA InfoSec has helped organizations in FinTech, SaaS, healthcare, and cloud services prepare for SOC 1 and SOC 2 audits.
Next Step: Don’t guess which report you need.
Book a free 15-minute consultation with our experts, and we’ll help you determine:
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Which SOC report makes the most sense for your business
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How to scope your engagement correctly
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What steps to take now to save time and cost later
[Schedule Your Free Consultation Today]
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Narendra Sahoo (PCI QPA, PCI QSA, PCI SSF ASSESSOR, CISSP, CISA, CRISC, 27001 LA) is the Founder and Director of VISTA InfoSec, a global Information Security Consulting firm, based in the US, Singapore & India. Mr. Sahoo holds more than 25 years of experience in the IT Industry, with expertise in Information Risk Consulting, Assessment, & Compliance services. VISTA InfoSec specializes in Information Security audit, consulting and certification services which include GDPR, HIPAA, CCPA, NESA, MAS-TRM, PCI DSS Compliance & Audit, PCI PIN, SOC2 Compliance & Audit, PDPA, PDPB to name a few. The company has for years (since 2004) worked with organizations across the globe to address the Regulatory and Information Security challenges in their industry. VISTA InfoSec has been instrumental in helping top multinational companies achieve compliance and secure their IT infrastructure.
