What is an SOC Audit?

As mentioned above, there are three main types of SOC audits that each have a different focus. The following is a more in-depth explanation of each SOC audit:

SOC 1 Audit

The focus of SOC 1 audits is a business or organization’s process and internal controls regarding financial statements and reporting. Any issues with the processing and security of sensitive financial information can have an impact on the business or organization as well as their clients. Internal controls such as the IT infrastructure and management access are audited to assess their effectiveness and identify any vulnerabilities.

SOC 1 audits are especially beneficial for accounting firms, payroll processors, medical claims processors, loan servicing businesses, and any business or organization that processes and stores financial information.

After the SOC 1 audit is complete, the auditor will create a report that includes the following sections:

• Opinion letter: This section includes an outline of the report, report as-of-date or test period, and the opinion of the auditor based on the results of the audit.
• Management’s assertion: This section includes an assertion by the auditor that the description they provide of the system is accurate, discussion of the design and operating efficiency of the controls, and an explanation of the criteria considered in making the assertion.
• Description of the system: This is a description of the policies, procedures, personnel, supporting processes, and operational activities that could impact user financial statements.
• Description of tests of control and results of testing: This section includes a description of the controls tested, the procedures used to test the controls, and the testing results.
• Other information: This section is used to provide additional information not included in the previous sections. Some reports may not include this section.

SOC 2 Audit

The focus of SOC 2 audits is non-financial internal controls regarding security, confidentiality, processing integrity, privacy, and availability of customer data. These audits are crucial for organization oversight, regulatory oversight, vendor management programs, and risk assessment processes. Organizations that process, store, or transmit customer data, including SaaS service providers, data centers, and cloud storage service providers can benefit from SOC 2 audits.

SOC 2 audits evaluate the following Trust Service Categories (TSC):

• Security: Measure of the how effectively a business or organization protects its system against unauthorized access.
• Availability: Measure of the accessibility of the information systems and how easily they can be used, monitored, and maintained while carefully restricting access.
• Processing integrity: Assessment of the processing and effectiveness of information systems.
• Confidentiality: Assessment of how effectively confidential information is secured.
• Privacy: Measurement of how the business or organization collects, retains, uses, discloses, and destroys personal data and whether their processes comply with applicable regulations.

SOC 2 audit reports follow the same structure as the reports for SOC 1 audits. These audits are usually required for businesses and organizations looking to partner with tier-one organizations.

SOC 3 Audit

SOC 3 audits are essentially SOC 2 audits but with a report that is easier for the public to read and understand compared to the long technical reports provided to the business or organization being audited. The purpose of SOC 3 audits is to help businesses market their compliance to the general public.

SOC Type I and Type II Reports

There are two types of reports that can be done for both SOC 1 and SOC 2 audits: Type I and Type II reports.

SOC Type I

An SOC Type I report is an independent audit report that evaluates and verifies a service organization’s internal controls at a specific point in time. These reports focus on whether the organization’s controls are appropriately designed to meet specific trust service criteria (e.g., security, availability, confidentiality, processing integrity, or privacy) and whether those controls were in place and functioning on a particular date. These reports do not cover how well the controls operated over time.

SOC Type I reports can be completed in weeks because the evaluation only covers a specific time. These reports are often used as a starting point for organizations new to SOC audits or for those needing a quicker, less intensive report to demonstrate initial compliance and readiness.

SOC Type II

An SOC Type II report provides a more in-depth assessment than a Type I report by evaluating not only the design and implementation of a service organization’s controls, but also how effectively those controls operated over a defined period of time, typically 3 to 12 months. These reports contain a detailed review of control design, ensuring they are structured to meet the relevant trust services criteria (e.g., security, availability, confidentiality, etc.), and an assessment of operational effectiveness, verifying that the controls were consistently functioning as intended throughout the audit period.

SOC Type II reports are especially valuable for customers and business partners because they provide stronger assurance that a company can maintain reliable processes over time, not just on a single date. They are commonly required by enterprise clients in regulated or security-sensitive industries.

Benefits of SOC Audits

The term “audit” has such a negative connotation among businesses and organizations, but SOC audits are different. These audits do not look for irregularities that need to be punished, but are instead a proactive, voluntary measure that serve as a comprehensive validation of your organization’s control environment, reinforcing credibility and operational reliability.

The following are the main benefits of SOC audits for businesses and organizations as well as the clients they serve:

• Build trust with clients and stakeholders: An SOC audit demonstrates that your organization has effective controls in place to protect sensitive data, helping to instill confidence among clients, partners, and investors.
• Enhances security and risk management: The audit process helps identify weaknesses in your systems and procedures, allowing you to proactively address security risks and improve internal controls.
• Meets compliance requirements: Many industries and enterprise clients require SOC reports as part of vendor due diligence. Completing an audit can help satisfy these regulatory or contractual obligations.
• Provides a competitive advantage: A clean SOC report can set your company apart from competitors by showcasing your commitment to data security and operational excellence.
• Improve internal processes: Preparing for and undergoing an SOC audit often leads to stronger internal documentation, streamlined processes, and better alignment between departments.

Prepare for SOC Audits with PSM

In today’s digital and data-driven world, earning trust and proving your commitment to data security and operational excellence is more important than ever. A SOC audit not only strengthens your internal controls and risk management practices but also enhances your credibility with clients, partners, and regulators. Whether you’re aiming to meet compliance standards, win new business, or simply ensure your organization is operating securely and efficiently, undergoing an SOC audit is a smart, proactive step. By understanding the different types of SOC audits and what each report entails, you can better position your business for growth, transparency, and long-term success.

PSM Partners can help businesses and organizations prepare for and succeed in SOC audits by ensuring that the necessary technical systems, controls, and documentation are in place. Here are some of the ways our professionals can help:

• Policy Development and Review: Businesses must have policies and procedures defined that align to the desired framework (standards such as SOC). The policies identify the controls and standards needed to support the framework. We help customers create and/or update the right policies needed to support SOC requirements.
• Planned Response: A major requirement for organizations trying to attain a SOC accreditation is to have defined, tested, and managed plans for Risk Management, Incident Response, Business Continuity, and Disaster Recovery. We have helped our customers develop, manage, and test the effectiveness of these plans. We can help you.
• Control implementation and management: We assist customers to help implement solutions, processes, and procedures required to meet and maintain the technical controls required by aligned policies.
• Evidence collection: Auditors require detailed evidence of system controls and their effectiveness. Our IT professionals execute technology control reviews and aid customers in capturing information needed to demonstrate that the control is operating effectively.

By providing both technical expertise and operational insight, our IT professionals bridge the gap between business goals and compliance requirements, making them essential partners in the SOC audit process.

To learn more about how we can help your business prepare for SOC audits with our cybersecurity risk assessment services, give us a call at (312) 940-7830.