The American Institute of Certified Public Accountants (AICPA) manages several certification programs for service organizations, including software-as-a-service (SaaS) providers. When clients are uncertain about a SaaS company’s data protection measures, obtaining SOC 2 Type 2 Certification provides concrete assurance of trust.
The key benefits of this certification include increased customer confidence, reduced impact from security incidents, and simplified regulatory compliance.
Benefits of SOC 2 Type 2 Certification
While Type 2 Certification is just one type of SOC 2 report, it is the most comprehensive. Obtaining SOC 2 Type 2 Certification offers your organization several key advantages:
- Robust security assurance for your clients – Demonstrates that your systems and processes reliably protect customer data.
- Long-term cost savings and loss prevention – Helps reduce the financial impact of potential security incidents.
- Protection from reputational damage – Builds trust with clients, partners, and stakeholders.
- Streamlined regulatory compliance – Simplifies adherence to industry standards and audits.
To maximize the benefits of AICPA’s certification, it’s important to understand the different SOC levels, the Trust Services Criteria used for SOC 2 and SOC 3, and the two types of reporting available at each level.
Benefit #1: Robust Security Assurance
The SOC 2 Type 2 Certification process is an in-depth audit that provides unmatched insights into your organization’s security controls compared to other SOC reports (SOC 1, SOC 2 Type 1, and SOC 3). Its comprehensive value comes from the extensive evaluations performed by auditors, which examine both the design and effectiveness of your security controls over an extended period.
The duration of a full SOC 2 Type 2 audit depends on your company’s size, complexity, client base, and risk environment. While a SOC 2 Type 1 report typically takes about two months, a SOC 2 Type 2 report usually spans 12 months. This year-long testing period ensures thorough validation and provides strong evidence of your security posture.
Benefit #2: Long-Term Cost Savings
The cost of a SOC 2 Type 2 Certification audit can range from $20,000 to $80,000, depending on your company’s size and complexity. Additional expenses, such as staffing and software needed for the audit, can further increase the total investment. For comparison, a SOC 2 Type 1 audit may cost under $17,000, but when factoring in lost productivity and other indirect costs, the total can exceed $140,000.
While these numbers may seem high, they are minimal compared to the average cost of a data breach. According to IBM:
- In 2021, the average cost of a data breach was $4.24 million, up 9.8% from 2020.
- “Mega” breaches affecting over 50 million records can multiply these costs by 100.
- Lost business due to reputational damage accounts for roughly 38% of total costs.
By reducing the likelihood of such breaches, a SOC 2 Type 2 Certification helps your organization avoid direct costs from data theft and the long-term opportunity costs associated with lost business.
Benefit #3: Brand Reputation Protection
Reputational damage can be one of the most costly consequences of a data breach. While statistics show that lost business accounts for about 38% of the total breach cost, this figure can underestimate the long-term impact on your brand.
All service organizations rely on clients’ trust. Companies that have experienced a breach, or are at risk of one, may lose clients, potentially resulting in significant business loss. A SOC 2 Type 2 Certification provides strong assurance to clients, helping organizations recover from past incidents and protect their reputation against future risks.
Even for companies that have never suffered a breach, obtaining SOC 2 Type 2 Certification can create a competitive advantage, signaling to prospective clients that security and trust are top priorities.
Benefit #4: Streamlined Compliance Mapping
Obtaining SOC 2 Type 2 Certification can simplify regulatory compliance by aligning your security controls with other frameworks and standards relevant to your business. For example:
- Healthcare compliance: If your organization handles healthcare data, you may need to comply with HIPAA or HITECH as a covered entity or business associate.
- Payment security compliance: Companies that accept credit card payments must adhere to the Payment Card Industry Data Security Standards (PCI DSS) and related PCI regulations.
- Data privacy compliance: Depending on your business location and where your clients’ data is stored, data privacy regulations such as California’s CCPA or Europe’s GDPR may apply.
The AICPA provides mapping guides that highlight overlaps between the Trust Services Criteria (TSC) and other compliance frameworks, helping organizations streamline their audit and compliance efforts.
SOC 1, SOC 2, and SOC 3 Report Comparison
When deciding whether to pursue a SOC 2 Type 2 Certification, it’s important to understand how SOC 2 compares to other SOC reports. The choice depends on the type of service your company provides and the intended audience for the report.
- SOC 1 audits focus on organizations that handle financial reporting and are primarily intended for user entities and their auditors.
- SOC 2 and SOC 3 audits evaluate security, availability, processing integrity, confidentiality, and privacy for service organizations. While they cover the same companies, SOC 2 reports are typically shared with specific clients under confidentiality agreements, whereas SOC 3 reports are general-use reports suitable for public distribution.
Understanding these differences helps your organization choose the SOC level that best aligns with your business needs and client expectations.
SOC 1: Report on Internal Control over Financial Reporting
The full title of SOC 1 is “Report on Controls at a Service Organization Relevant to User Entities’ Internal Control over Financial Reporting” (also called SOC for Service Organizations: ICFR). Internal control over financial reporting (ICFR) refers to the measures that service organizations’ clients, along with their internal staff or contractors (“user entities”), use to safeguard financial records and documentation.
SOC 1 audits are primarily designed for financial service providers, such as payroll management companies. However, they can also apply to specific business segments within other organizations. For example, a SaaS company that offers both cloud hosting and financial services may pursue a SOC 1 audit for its financial services operations, while relying on SOC 2 or SOC 3 audits for other service areas.
SOC 2: Report on Trust Services Criteria (TSC)
The full title of SOC 2 is “Report on Controls at a Service Organization Relevant to Security, Availability, Processing Integrity, Confidentiality, or Privacy” (also called SOC for Service Organizations: Trust Services Criteria). While companies may use alternative control frameworks for SOC 2 audits, the AICPA’s Trust Services Criteria (TSC) is the most widely adopted by auditors.
Unlike SOC 1, SOC 2 audits evaluate a service organization’s overall security and operational controls, rather than focusing solely on financial reporting. This makes SOC 2 applicable to a broad range of service organizations, including SaaS providers, cybersecurity firms, and other technology-driven businesses.
SOC 2 reports are generally intended for a specific audience, such as clients or auditing authorities. Organizations may provide either a SOC 2 Type 1 or Type 2 report, depending on their operational and compliance needs.
SOC 3: Report on Trust Services Criteria (TSC) for General Use
The full title of SOC 3 is “SOC for Service Organizations: Trust Services Criteria for General Use Report” (also called “Trust Services Report for Service Organizations”). As the name suggests, SOC 3 is a simplified version of SOC 2.
SOC 3 uses the same framework as SOC 2, whether Type 1 or Type 2, and verifies the same information. However, it does not provide detailed information about individual security controls or the specific Trust Services Criteria (TSC) applied.
SOC 3 reports are designed for a general audience. They are often published publicly, such as on a company’s website or included in marketing materials, to demonstrate the organization’s commitment to security without disclosing sensitive operational details.
The AICPA Trust Services Criteria (TSC)
For service organizations, SOC 2 and SOC 3 audits are often more relevant than SOC 1. Both audits are based on the Trust Services Criteria (TSC), a framework developed by the AICPA to evaluate the effectiveness of security controls.
The TSC measures controls across five key categories, security, availability, processing integrity, confidentiality, and privacy, and is grounded in principles established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework.
The AICPA Trust Services Categories
At the core of the Trust Services Criteria (TSC) framework are five key categories:
- Security – Protects against unauthorized access to data or the systems that process it.
- Availability – Ensures data, products, and services are accessible and usable when needed.
- Processing Integrity – Guarantees that processes are complete, valid, accurate, timely, and authorized.
- Confidentiality – Prevents misuse of data designated as sensitive or protected.
- Privacy – Protects personal or personally identifiable information (PII) from misuse.
These categories intentionally overlap, reflecting the interconnected nature of security controls and their combined role in safeguarding organizational data and systems.
To learn more about SOC 2, check out these related articles:
TSC Common and Supplemental Criteria
The Trust Services Criteria (TSC) framework includes both common and supplemental criteria that correspond to the five TSC categories. These criteria guide organizations in implementing and evaluating effective controls:
Common Criteria (CC Series) – Applied across all categories, covering:
- CC1: Control Environment
- CC2: Communication and Information
- CC3: Risk Assessment
- CC4: Monitoring Activities
- CC5: Control Activities
- CC6: Logical and Physical Access Controls
- CC7: System Operations
- CC8: Change Management
- CC9: Risk Mitigation
Availability Criteria (A Series) – Focus on ensuring system availability, including:
- Maintaining current processing capacity (A1.1)
- Designing environmental protections (A1.2)
- Implementing a recovery plan (A1.3)
Confidentiality Criteria (C Series) – Focus on protecting sensitive information:
- Identifying and safeguarding confidential data (C1.1)
- Secure disposal of protected information (C1.2)
Processing Integrity Criteria (PI Series) – Ensure accurate and complete processing:
- Identifying and defining specifications (PI1.1)
- Controlling system inputs (PI1.2), processing activities (PI1.3), and outputs (PI1.4)
- Managing storage of relevant data (PI1.5)
Privacy Criteria (P Series) – Address personal data protection:
- Notice and Communication of Objectives (P1)
- Choice and Consent (P2)
- Collection (P3)
- Use, Retention, and Disposal (P4)
- Access (P5)
- Disclosure and Notification (P6)
- Quality (P7)
- Monitoring and Enforcement (P8)
The CC Series applies to all categories, while the other supplemental series are specific to their respective categories. Notably, Security relies solely on the CC Series criteria.
SOC Type 1 vs. Type 2 Report Comparison
When deciding whether to pursue a SOC 2 Type 2 Certification, it’s important to understand the differences between Type 1 and Type 2 audits.
- SOC Type 1 audits provide a snapshot of your security controls at a specific point in time. They are quicker and more cost-effective but offer limited insight into ongoing cybersecurity practices.
- SOC Type 2 audits evaluate the design and effectiveness of your security controls over an extended period, offering more comprehensive and robust insights. However, they require more time and resources to complete.
Understanding these differences helps organizations choose the audit type that best aligns with their operational needs, client expectations, and risk environment.
SOC Type 1: Suitability and Design of Controls
A SOC 2 Type 1 audit results in a report evaluating the design and implementation of controls at a service organization at a specific point in time. While it provides a snapshot of your security posture on that day, it does not predict how controls perform over time. However, it confirms that controls are designed in accordance with Trust Services Criteria (TSC) standards.
SOC 2 Type 1 audits are generally less resource- and time-intensive than SOC 2 Type 2 audits. Many organizations use SOC 2 Type 1 reports as a preparatory step before pursuing a full Type 2 audit. The insights gained on control design can help companies implement improvements to ensure ongoing operational effectiveness.
SOC Type 2: Operational Effectiveness of Controls
A SOC 2 Type 2 audit results in a report assessing the operational effectiveness of your controls over an extended period. This long-term evaluation provides robust evidence that controls were properly implemented and consistently functioned throughout the testing period. While a SOC 2 Type 2 report cannot guarantee future security, it signals to potential clients that your organization maintains a reliable and secure environment.
SOC 2 Type 2 audits are significantly more resource- and time-intensive than SOC 2 Type 1 audits. Auditors monitor your organization’s controls closely over the evaluation period, which may include on-site verification. Any irregularities or security incidents could impact certification unless effectively managed according to the Trust Services Criteria (TSC).
Comprehensive SOC Compliance
The most significant benefits of SOC 2 Type 2 Certification include robust security assurance, long-term cost savings, brand reputation protection, and streamlined regulatory compliance management.
At RSI Security, we recommend that service organizations consider pursuing SOC 2 Type 2 certification. Our expert team supports every step of the process, including readiness assessments, patch management, and auditing services.
Begin your journey toward SOC 2 Type 2 Certification today by contacting RSI Security to ensure your organization meets the highest standards of security and compliance.
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