What is the difference between SOC 2 Type 1 and Type 2 reports?

There are two ‘types’ of SOC 2 report that your organisation can obtain: Type 1 and Type 2.  A Type 1 report involves the auditor assessing your organisation’s security processes’ and controls’ alignment with your selected TSC at a specific point in time.  A Type 2 report, on the other hand, covers the same areas as a Type 1 report (the same scope, processes and controls), but over a specified period of time.  For a Type 2, you need to not only demonstrate that you have a set of compliant policies and processes, but also the operational effectiveness of these controls and processes, i.e., that they have been operating effectively and consistently over a defined time period (known as a ‘reporting period’).  

Type 1 reports are less common than Type 2 and provide a lower level of assurance.  The purpose of a Type 1 report is frequently misunderstood, with many organisations believing they can be used as a means of ‘easing into’ SOC 2.   In reality, Type 2 reports should only be used in two very specific circumstances that leave you unable to demonstrate operational effectiveness over a significant time period: if your information security control framework has only recently been put in place, or if your organisation has experienced major change (e.g., a restructure).  So, if you need a SOC 2 report by a specific date, but you will not be able to demonstrate operational effectiveness in time, you will need a Type 1 report.   If you do receive a Type 1 report, it is quite likely that the client requesting it will ask why you are unable to demonstrate operational effectiveness, and only the above reasoning will be a sufficient response.  If you are able to demonstrate operational effectiveness before your initial SOC 2 audit, or if you are undergoing a subsequent audit, you will need a Type 2 report.