Organizations have a variety of third-party reporting options, raising key questions about the most effective means to convey the control environment in place to users. System and organization control (SOC) reports are designed by the American Institute of CPAs (AICPA) to communicate those controls, but organizations must understand which report to choose to help users assess the risks of outsourcing providers.
For example, a SOC 1 report focuses on internal controls over financial reporting, with a Type 1 report assessing the design and implementation of controls as of a point in time and a Type 2 report assessing the design and implementation as well as the operating effectiveness of controls over a period of time. However, users are often more interested in security, availability, processing integrity, confidentiality or privacy. In these cases, a SOC 2 or SOC 3 report may be more appropriate.
In addition, with cyberthreats emerging and evolving each day, organizations are under pressure to document and detail their controls and capabilities to detect, deter and recover from cybersecurity events. In response, the AICPA has developed a SOC for cybersecurity reporting framework to help users gain a better understanding of an organization’s cybersecurity risk management efforts.
The following chart provides details on the objectives of and differences between each SOC reporting option: