If your company sells software, handles customer data, or operates in the cloud, chances are you have already been asked for a SOC 2 report. Sometimes by a prospect, sometimes by a procurement team, sometimes by a very persistent security questionnaire that refuses to go away.
And if you are early in your compliance journey, that request can feel confusing, intimidating, or even slightly unfair.
What exactly is a SOC 2 report? What does it include? How does the process actually work? And do you really need one right now?
This article answers those questions clearly, without legal jargon or unnecessary complexity. Whether you are a startup selling internationally or a SaaS company expanding into enterprise deals, this guide will give you the full picture on SOC 2 compliance.
What does SOC 2 stand for?
SOC 2 stands for System and Organization Controls 2. It is part of a broader family of SOC reports created to help organisations demonstrate how they manage and protect information.
In a nutshell, its a voluntary framework that proves that a company stores and manages data in a safe way.
The “2” matters because it distinguishes this report from others in the SOC framework:
| Report Type | Primary Focus | Typical Audience |
|---|---|---|
|
SOC 1 |
Controls relevant to financial reporting |
Auditors, finance teams, regulators |
|
SOC 2 |
Controls related to security, availability, processing integrity, confidentiality, and privacy |
Customers, partners, procurement teams |
|
SOC 3 |
High-level public summary of SOC 2 controls |
General public, marketing, prospects |
When customers ask for “SOC 2,” they are seeking evidence that your internal systems and processes are designed to protect their data consistently and measurably. And this can be evaluated through a SOC 2 report.
SOC 2 vs SOC 1 vs SOC 3: what’s the difference?
SOC reports serve different purposes, and choosing the wrong one can create unnecessary work.
SOC 1 focuses exclusively on controls related to financial reporting. It is primarily relevant for service providers whose systems impact a customer’s financial statements, such as payroll processors or financial platforms.
SOC 2 evaluates controls related to security, availability, processing integrity, confidentiality, and privacy. It is the most commonly requested report for SaaS companies, cloud providers, and B2B service organisations because it directly addresses data protection and operational risk.
SOC 3 is a high-level, public summary of a SOC 2 report. It contains far less detail and is typically used for marketing or high-level assurance, not for procurement or vendor risk assessments.
If customers, partners, or regulators need detailed evidence of how you protect data, SOC 2 is almost always the correct choice.
Benefits of SOC 2 Compliance- Why do Companies Pursue Compliance?
Companies invest in SOC 2 compliance for the commercial and operational advantages it delivers.
But besides that, being able to produce a SOC 2 report will allow to cast a wider net and work with customers that you would otherwise not be able to work with. Some examples:
- Cloud service providers, SaaS companies, and Data Centers looking to win big enterprise contracts: These businesses are often required to do Vendor Risk Assessment due to regulations such as GDPR, HIPAA, PCI DSS, SOX, and NYDFS.
- Companies in tightly regulated industries: Finance, healthcare, and technology are typically regulated by norms that required SOC 2 reports and Vendor Risk Assessment.
- Companies bidding for government contracts: While not always required, some government bodies will ask for an SOC 2 report or ISO 27001 certification to accept bids.
SOC 2 reports are becoming widespread since they cascade down: Most SOC 2 compliant businesses will require vendors to produce a SOC 2 report, and not having an SOC 2 report will often make you lose a compliant client.
Besides that, the most immediate benefit is trust. A SOC 2 report reduces friction during sales cycles by answering security questions upfront, rather than repeatedly through bespoke questionnaires. So even when its not strictly required, having a SOC 2 report will be beneficial.
It also improves internal discipline. Preparing for SOC 2 forces teams to formalise access controls, incident response, change management, and monitoring processes that often exist informally.
Finally, SOC 2 can be a growth enabler. Many enterprise buyers will not progress without it. Having a current report keeps deals moving and prevents compliance from becoming a last-minute blocker.
A 2023 procurement study published by Wired noted that vendor security reviews are now standard even for contracts under six figures, reflecting how deeply embedded assurance expectations have become.
Who typically needs SOC 2 compliance?
SOC 2 is most often pursued by organisations that handle customer data on behalf of others, especially where trust and security influence buying decisions.
This commonly includes:
-
SaaS and cloud-based software companies
-
Managed service providers, IT, and security firms
-
Data platforms, infrastructure providers, and APIs
-
Companies selling into regulated or enterprise markets
Beyond industry, SOC 2 is often triggered by stage and scale. Startups moving upmarket, companies entering enterprise sales cycles, or vendors undergoing formal vendor risk assessments are frequently asked for a SOC 2 report before deals can progress.
Even when not explicitly required, SOC 2 often becomes a commercial necessity. Customers increasingly expect structured, independent assurance that security controls are not improvised, but designed, documented, and consistently followed.
What is a SOC 2 report?
A SOC 2 report is an independent assurance report that evaluates how well an organisation protects customer data. It is issued by a licensed CPA firm and is based on the Trust Services Criteria (TSC) developed by the American Institute of Certified Public Accountants (AICPA).
In simple terms, a SOC 2 report answers one core question:
Can this company be trusted to handle sensitive information securely and responsibly?
Unlike ISO standards, SOC 2 is not a “certification” in the traditional sense. There is no pass or fail badge. Instead, the report documents:
- Your control environment
- How controls are designed
- How they operate over time
- Any exceptions or gaps identified by the auditor
The result is a detailed report that customers and partners use to assess your security posture.
You can read the official AICPA definition here
SOC 2 Type 1 vs. SOC 2 Type 2 reports
The difference between Type I and Type II is about timing and evidence.
A SOC 2 Type I report evaluates whether controls are suitably designed at a specific point in time. It answers the question: Do these controls exist, and are they designed appropriately today?
A SOC 2 Type II report goes further. It assesses whether those controls operated effectively over a defined period, typically three to twelve months. This shows consistency, not just intent.
Many companies start with Type I to establish a baseline and move to Type II once controls are stable. Customers, especially in enterprise or regulated environments, often prefer Type II because it reflects real operational history rather than a snapshot.
Should I pursue a SOC 2 Type 1 report, Type 2, or both?
If you’re a company pursuing SOC 2 due to vendor requirements, your clients will typically specify which report type they need. Large enterprise and government bodies will usually ask for type 2, whilst smaller companies are typically fine with type 1 reports.
At Axipro, we rarely treat this as an either-or decision. Our standard approach is to implement controls correctly from day one, deliver SOC 2 Type 1 fast, and structure everything so Type 2 is a smooth continuation, not a restart.
Producing both Type 1 and the Type 2 reports will increase your potential customer base, and signals a more serious commitment to data protection and treatment.
What does a SOC 2 type 1 report include?
A SOC 2 type 1 report is far more than a single-page letter or summary. Most reports range from 20 to 50+ pages, depending on scope and complexity.
At a high level, the SOC 2 type 1 report includes the following core sections:
Management’s assertion
This is a formal statement from your leadership confirming responsibility for the design and operation of controls. It sets the tone. Auditors expect this to be accurate and defensible.
System description
This section explains how your product or service works, what data flows through it, and which systems, people, and processes are in scope. It is written in business language but scrutinised carefully by auditors and customers alike.
Trust Services Criteria in scope
SOC 2 is built around five criteria:
- Security
- Availability
- Confidentiality
- Processing Integrity
- Privacy
Security is mandatory. The others are optional, selected based on your business model and customer expectations. Most SaaS companies start with Security only, then expand.
The official criteria are published by AICPA and publicly available here
Control descriptions and testing results
This is the heart of the report. Each control is described, mapped to criteria, and tested. Auditors explain what evidence they reviewed and whether the control operated effectively.
Exceptions and auditor opinion
If something did not work as intended, it appears here. Not all exceptions are deal-breakers, but patterns or serious failures raise red flags during customer reviews.
SOC Type 1 Report Example Structure
Independent Service Auditor’s Report
- Independent Service Auditor’s Report
- Scope
- Service Organization’s Responsibilities
- Service Auditor’s Responsibilities
- Inherent Limitations
- Other Matter (if applicable)
- Opinion
- Restricted Use
Management’s Assertion
- Management’s Assertion
- Description Criteria
Description of the System
Overview of Operations
- Company Background
- Description of Services Provided
Principal Service Commitments and System Requirements
Components of the System
- Infrastructure
- Software
- People
- Procedures / Processes
- Data
Boundaries of the System
Subservice Organizations
Complementary User Entity Controls
Control Environment and Governance
- Control Environmen
- Risk Assessment Process
- Information and Communication
- Monitoring Activities
Changes to the System (if applicable)
Incidents (if applicable)
Criteria Not Applicable to the System (if applicable)
Trust Services Criteria
- Trust Services Categories in Scope
- Trust Services Criteria for Security
- Additional Trust Services Criteria (Availability, Confidentiality, Processing Integrity, Privacy — if applicable)
Control Activities
- Control Activities Specified by the Service Organization
Information Provided by the Service Auditor
- Guidance Regarding the Information Provided by the Service Auditor
What does a SOC 2 type 2 report include?
A SOC 2 Type 2 report demonstrates that a company’s controls are not only properly designed, but also operated effectively over a defined period of time (typically 3–12 months).
In practical terms, the goal is to provide evidence of sustained, real-world compliance, not just intent.
Where a Type 1 answers “Are the controls designed correctly as of a point in time?”, a Type 2 answers:
“Did those controls actually work, consistently, in day-to-day operations?”
It typically includes a lot of the same sections as the type 1 report, with a focus on how they changed through time.
SOC Type 2 Report Example Structure
Independent Service Auditor’s Report
- Independent Service Auditor’s Report
- Scope
- Service Organization’s Responsibilities
- Service Auditor’s Responsibilities
- Independence and Ethical Responsibilities
- Inherent Limitations
- Opinion
- Restricted Use
Management’s Assertion
- Management’s Assertion
Description of the System
Overview of Operations
- Company Background
- Description of Services Provided
Principal Service Commitments and System Requirements
Components of the System
- Infrastructure
- Software
- People
- Procedures / Processes
- Data
Boundaries of the System
Subservice Organizations
Complementary User Entity Controls
Complementary Subservice Organization Controls
Control Environment and Governance
- Integrity and Ethical Values
- Commitment to Competence
- Organizational Structure and Assignment of Authority
- Risk Assessment Process
- Information and Communication
- Monitoring Activities
Changes to the System During the Period
Incidents During the Period
Criteria Not Applicable to the System
Trust Services Criteria
- Trust Services Categories in Scope
- Trust Services Criteria for Security
- Additional Trust Services Criteria (Availability, Confidentiality, Processing Integrity, Privacy — if applicable)
Tests of Controls
- Testing Methodology
- Scope of Testing
- Tests of Operating Effectiveness
- Results of Tests
- Controls Not Tested (if applicable)
Other Information Provided by the Service Organization (if applicable)
What a SOC 2 report does not do
A SOC 2 report does not guarantee that a company will never be breached. It does not replace penetration testing. It does not automatically satisfy GDPR, HIPAA, or other regulatory obligations.
What it does provide is independent, structured confidence. It shows that security is not improvised or ignored, but designed, monitored, and reviewed. It also shows that you are ready to do business with other ISO 27001 and SOC 2 compliant companies.
The SOC 2 compliance lifecycle (from readiness to maintenance)
SOC 2 compliance is not a single event. It follows a clear lifecycle, from early preparation through ongoing operation.
Most companies start by defining scope: which systems, services, and Trust Services Criteria are actually relevant to their business. From there, they assess current controls, identify gaps, and implement the policies, processes, and technical safeguards required to meet the in-scope criteria.
Once controls are in place, a readiness assessment helps confirm whether the organisation is audit-ready before engaging an auditor. The formal audit then evaluates control design (Type I) and, where applicable, control effectiveness over time (Type II).
After the report is issued, the work does not stop. Controls must be operated, monitored, and maintained continuously to remain defensible in future audits and customer reviews. Treating SOC 2 as an ongoing operational process, rather than a one-off project, is what separates clean reports from painful remediation cycles.
What is an SOC 2 audit?
A SOC 2 audit is the formal examination conducted by an independent auditor to evaluate your controls against the Trust Services Criteria in scope.
The process involves evidence collection, walkthroughs, and testing. Auditors review policies, system configurations, logs, tickets, and operational records. They also speak directly with team members to confirm that documented processes reflect reality.
For Type II reports, this testing occurs across the entire audit period, not just at the end.
The audit is not about perfection. It is about demonstrating that controls exist, are understood, and are followed consistently.
How long does it take to get SOC 2 compliant?
The timeline depends less on company size and more on readiness.
For organisations starting from scratch, initial preparation often takes several weeks to a few months. This includes defining scope, implementing missing controls, and training teams.
A Type I report can typically be completed relatively quickly once controls are in place. At Axipro, we aim to complete the readiness assessment and Type 1 report within 6 weeks.
A Type II report requires an operating period, commonly three to six months, before the audit can conclude.
Common mistakes companies make
Many SOC 2 efforts fail or stall for avoidable reasons.
Some start the audit window before controls are ready. Others rely entirely on automation tools without understanding what auditors actually test. Some underestimate the operational effort required from engineering, IT, HR, and leadership.
Perhaps the most expensive mistake is treating SOC 2 as a checkbox exercise rather than a business process. Customers can tell the difference when they read your report.
Ready to move forward?
If you are considering SOC 2, or already under pressure from customers, the best next step is clarity.
A short readiness assessment can tell you:
- Whether you are closer to Type I or Type II
- How long your audit window should be
- What gaps could delay your report
Book a SOC 2 readiness call or request a tailored audit plan to understand your fastest, lowest-risk path to a clean report.
Frequently Asked Questions
Is a SOC 2 report a certification?
No. SOC 2 is not a certification and there is no official “SOC 2 certified” status. Instead, the report documents an auditor’s opinion on whether controls are suitably designed and, for Type II reports, whether they operate effectively over time.
Who issues a SOC 2 report?
SOC 2 reports can only be issued by licensed CPA firms authorised to perform SOC examinations. Automation platforms and consultancies cannot issue the report themselves.
What Trust Services Criteria are included in a SOC 2 report?
SOC 2 reports are based on five criteria:
- Security (mandatory)
- Availability
- Confidentiality
- Processing Integrity
- Privacy
Most organisations include Security only at first and expand scope as customer or regulatory expectations increase.
How long is a SOC 2 report valid?
SOC 2 reports do not technically “expire,” but customers generally expect a report that is no more than 12 months old. Older reports may be rejected during vendor risk reviews.
Does a SOC 2 report guarantee security?
No. A SOC 2 report does not guarantee that an organisation will never experience a breach. It demonstrates that controls were designed and operated in accordance with defined criteria during the audit period.
Is a SOC 2 Report Sufficient for Vendor Risk Management?
A SOC 2 report is a strong starting point, but it is not sufficient on its own. It provides independent assurance that defined controls operated effectively for specific systems, helping establish baseline trust.
However, SOC 2 does not cover financial, legal, or business-specific risks, nor does it assess areas outside the report’s scope. Most organizations use SOC 2 as one input, alongside questionnaires and risk-based reviews, to determine whether a vendor truly meets their requirements.
Are exceptions allowed in a SOC 2 report?
Yes. A SOC 2 report can contain exceptions. Minor exceptions are common and not always disqualifying, but frequent or severe exceptions can raise concerns during customer reviews.
Can customers see our SOC 2 report?
SOC 2 reports are considered restricted-use documents. They are typically shared under NDA with customers, prospects, or partners as part of due diligence.
Does a SOC 2 report cover GDPR or privacy laws?
SOC 2 does not replace GDPR or other privacy regulations. However, if the Privacy criterion is included, parts of the report may support broader compliance conversations.
How long does it take to receive a SOC 2 report?
After the audit window closes, audit fieldwork and report issuance typically take 2–4 weeks, depending on readiness, responsiveness, and report complexity.
Why do customers ask for SOC 2 reports?
Customers use SOC 2 reports to assess vendor risk, reduce internal security reviews, and gain confidence that data is handled responsibly and consistently.
