Transitioning From SOC Type 1 to Type 2: What You Need to Know

If your organization has completed a SOC Type 1 report, you've taken a meaningful first step in demonstrating the security and reliability of your systems to customers and partners. But many organizations quickly find themselves facing a follow-up question: When should we move to a Type 2?

Here's a clear breakdown of what differentiates the two report types, what it takes to make the transition, and what you need to get right along the way.

Understanding The SOC Reporting Frameworks

The terms "SOC 1" and "SOC 2" are frequently and incorrectly used interchangeably with "Type 1" and "Type 2." These are actually two separate dimensions of SOC reporting.

There are five distinct SOC reporting frameworks: SOC 1, SOC 2, SOC 3, SOC for Cybersecurity, and SOC for Supply Chain. Each of these frameworks can be performed as either a Type 1 or a Type 2 examination.

So when someone says "we have a SOC 2," that's the framework. When they say "we have a Type 2," that refers to the depth and duration of the assessment. Understanding the distinction is foundational because the decision to move from Type 1 to Type 2 applies regardless of which SOC framework you're operating under.

SOC Type 1 vs. Type 2

The difference between SOC Type 1 and Type 2 comes down to the period of coverage and the extent of control testing.

A Type 1 report is a point-in-time assessment and is almost always tied to a single calendar date. It evaluates whether your controls are properly designed and implemented as of that date. It should be treated like a snapshot in time during which your auditor is confirming that the right controls exist and appear to be in place.

A Type 2 report goes significantly further. It indicates everything in a Type 1, but also evaluates whether those controls operated effectively over a defined period of time, typically around six months to one year. Critically, the auditor doesn't just conclude that controls worked. Instead, the specific tests performed and the result of every single test are documented directly within the report. Customers and partners reviewing your Type 2 can see not just what you claim, but exactly how it was verified.

In sort: Type 1 tells the world your controls exist and Type 2 proves that they actually work consistently, over time.

Five Things to Know Before You Transition From Type 1 to Type 2

1. Definitions are standardized. Type 1 and Type 2 are formally defined by the AICPA and governed by authoritative guidance. There's no room for interpretation as the same standards apply to every organization, every auditor, and every engagement.

2. The testing burden increases substantially. In a Type 2 audit, your auditor will test each in-scope control multiple times across the reporting period to validate consistent operation. This means your internal teams need to be prepared to provide evidence of controls operating throughout the period, not just at a single point in time.
3. Your reporting period must be chosen carefully. This is where many organizations fall short. Your reporting window, whatever start and end dates you select, must encompass all controls that are necessary to meet your control objectives. If a critical control falls outside your chosen reporting period, it cannot be audited and may result in a significant finding. The fix is either to schedule those controls within the window or to expand the window to include them
4. Document and evidence maturity matters. A Type 2 audit surfaces gaps that a Type 1 may never expose. If your control evidence is inconsistent, incomplete, or hard to retrieve, the transition period is the time to address it, before your auditor begins testing.
5. There's no single "right" reporting period length. Many organizations start with a six-month window for their first Type 2, then move to annual reporting once the process is established. The right window depends on your business rhythm, customer requirements, and the cadence of your controls.

Key Takeaway for Transitioning from SOC Type 1 to Type 2

The move from Type 1 to Type 2 is a meaningful increase in rigor that requires advance planning, internal alignment, and a clear understanding of how your controls operate day to day.

As experienced assessors at Schellman, we have guided organizations through this transition thousands of times. The specific decisions, including which controls are in scope, how to structure the reporting period, and what evidence to gather are exactly the kinds of questions we as your seasoned compliance partner can help you navigate.

If you're considering the move to a Type 2 report or want to understand what the process would look like for your organization, contact us today or email training@schellman.com.