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SOC 1 evaluates an organization's internal controls over financial reporting, whereas SOC 2 and SOC 3 examine the organization's control over one or more of the Trust Services Criteria. SOC 3, unlike SOC 2, isn't a private report and is used to showcase publicly how effective an organization's internal controls are.

The primary difference between a SOC 1 and SOC 2 report is in the scope: SOC 1 reports concentrate on financial controls, whereas SOC 2 reports concentrate more extensively on availability, security, processing integrity, confidentiality, and privacy.

A service organization controls (SOC) report (not to be confused with the other SOC acronym, security operations center) is a way to verify that an organization is following some specific best practices before you outsource a business function to that organization.

Every SOC 2 report should have the 5 sections: Management Assertion. Independent Service Auditor's Report. System Description. Applicable Trust Services Criteria and Related Controls, Tests of Controls, and Results of Tests. Other information provided by the Management.

A SOC 1 report focuses on outsourced services that could impact a company's financial reporting. By providing a SOC 1 report from the third-party, companies can effectively communicate information about their risk management and controls framework to multiple stakeholders.

How to Prepare for an SOC 1 Audit Define the Objectives. ... Map the Internal Controls. ... Review Policies and Procedures. ... Inform and Train Employees. ... Perform a Risk Assessment or Readiness Assessment. ... Define the Scope of Your SOC Audit. ... Outline Regulatory Obligations. ... Analyze Vendor Management Practices.

System and Organization Controls 1, or SOC 1 (pronounced "sock one"), aims to control objectives within a SOC 1 process area and documents internal controls relevant to an audit of a user entity's financial statements.