Navigating the SOC Report Journey: Benefits, Process & Key Steps

A SOC report documents an organization’s internal controls and provides a standardized, independently verified assessment that is widely recognized across industries. The SOC report process follows a defined roadmap: select a qualified CPA firm, complete a readiness assessment, address control gaps, and then pursue a Type 1 and/or Type 2 audit. 

Whether your organization is a start-up or a well-established firm, obtaining a System and Organization Controls (SOC) report offers measurable benefits. Although not mandated by current regulations, a SOC report demonstrates that effective internal controls and safeguards are in place — and that demonstration carries real weight with prospective clients. Larger clients in sectors like financial services and healthcare frequently require a SOC report before evaluating a product or service. 

Key Takeaways 

• A SOC report showcases an organization’s internal controls and delivers a competitive advantage by demonstrating commitment to effective safeguards. 

• Selecting a CPA firm with the appropriate expertise, tools, and experience is essential to navigating the SOC report process successfully. 

• A readiness assessment identifies and addresses control gaps before the audit begins, producing a smoother audit process. 

• A Type 1 audit is faster and involves less rigorous testing. A Type 2 audit provides a thorough evaluation of controls over a specified period, delivering a more comprehensive assessment. 

• Allocate at least three months to address identified gaps before starting the SOC audit — this preparation is essential for a successful outcome. 

Step 1: Selecting the Right CPA Audit Firm 

The first SOC audit step is identifying a qualified CPA firm. Only CPA firms are authorized to issue SOC reports. Starting with a request for proposal (RFP) helps organizations evaluate firms against their specific needs. 

When reviewing proposals, consider factors beyond the fee: 

• CPA certification: SOC reports can only be issued by CPA firms. Non-CPA firms cannot provide this service. 

• Audit tools and systems: Determine whether the firm has organized systems for managing requested items and a centralized platform for uploading audit materials. 

• The firm’s own SOC report: Organizations share potentially confidential and sensitive information during an audit. Requesting the audit firm’s own SOC report confirms that the firm maintains proper internal controls to secure shared data. 

• Industry expertise and team experience: Ask how many SOC reports the firm handles annually, the experience level of the assigned team, and their familiarity with the technologies your organization uses. 

• Scope guidance: A qualified firm will clarify the appropriate SOC report type and scope for your customer base, avoiding unnecessary testing procedures that add cost without adding value to report readers. 

• Timeline and resource availability: Confirm that the firm’s resources align with your target timeline. Treat feedback from prospective firms seriously — if a proposed timeline is too ambitious, a qualified firm will say so. 

Culture fit matters as well. Organizations will interact frequently with their audit firm throughout planning and execution, so evaluating communication style and responsiveness is a practical part of the selection process. 

For a deeper look at evaluating audit firms, see How to Choose the Right SOC Audit Provider for Your Organization. 

Step 2: SOC Readiness Assessment — Preparing for Success 

A SOC readiness assessment is a structured review, conducted with organizational stakeholders, to refine the audit scope and identify gaps in the internal control environment. The auditor evaluates whether necessary controls exist and whether sufficient evidence supports them. The readiness assessment typically takes about one month to complete, resulting in a deliverable that details gaps requiring remediation. 

Understanding Remediation Timelines and Requirements 

Remediation timelines vary depending on the number and severity of identified gaps and the availability of internal resources. Most organizations require at least three months — and often longer — to address gaps before the SOC audit can begin. The audit cannot start until all gaps have been resolved. 

An important boundary applies here: while the auditor can offer guidance on remediation actions, the auditor cannot perform the corrective actions directly. Doing so would violate independence requirements under AICPA standards and would disqualify the firm from conducting the SOC audit. Auditors can provide materials or refer organizations to other firms that can assist with remediation. 

For strategies to stay on schedule, see How to Avoid Delays in Your SOC Readiness Assessments. 

Drafting the System Description 

The final requirement during the readiness assessment is drafting a system description. This narrative outlines the scope of the system — including relevant controls and business processes — that will be detailed in the SOC report. Management or a hired consultant must prepare this document. The auditor cannot draft it due to independence rules established by the American Institute of Certified Public Accountants (AICPA), though the auditor can review the description and provide feedback as it is being developed. The system description should be substantially complete before the SOC audit begins. 

Step 3: Type 1 SOC Report — A Preliminary Step With Key Benefits 

A Type 1 SOC report is a point-in-time assessment confirming that controls are suitably designed and implemented as of a specific date. It is an optional step in the SOC process, but many organizations pursue it for practical reasons. 

A Type 1 audit is the fastest way to deliver a signed SOC report to prospects and customers, satisfying their immediate requirements while the organization prepares for a Type 2 audit. Because it establishes the date on which all necessary controls are in place, a Type 1 audit also defines the starting point for the Type 2 audit period. 

Type 1 SOC report testing is less rigorous than Type 2 testing. It functions as a preliminary “open book” exercise that allows organizations to verify that proper evidence is maintained — and to reduce the likelihood of findings in the subsequent Type 2 audit. 

Type 1 Audit Timeline: 

• Testing duration: One to two weeks, depending on audit scope and the number of controls tested 

• Draft report: Issued within 30 days of the end of testing 

• Final report: Issued within 60 days of the end of testing 

Step 4: Type 2 SOC Report — Comprehensive Assurance and Testing 

A Type 2 SOC report provides an auditor’s assessment of the design, implementation, and operating effectiveness of internal controls over a defined period. For most organizations, the Type 2 report is the target deliverable, as it offers the most comprehensive level of assurance. 

The Type 2 audit period typically begins at the date of the Type 1 report. Organizations that did not complete a Type 1 audit define the period in writing with the auditor. While Type 2 reports commonly cover 12 months, organizations can request a shorter period — such as six months — provided that most controls had a reasonable opportunity to operate during that time. 

Type 2 SOC testing is significantly more rigorous than Type 1 testing. Because the auditor must verify the operating effectiveness of controls over time, organizations must supply records such as: 

• Lists of new hires and terminations 

• Change control tickets 

• Other relevant operational documentation 

The auditor uses these records to select random samples and validate that controls operated effectively throughout the period. This sampling requirement extends the testing timeline and increases the demand on the organization to supply materials promptly. 

Type 2 Audit Timeline: 

• Testing duration: Two to three weeks, depending on scope and the number of controls tested 

• Testing timing: Scheduled toward the end of the audit period to capture most of the elapsed time 

• Draft report: Issued within 30 days of completing testing 

• Final report: Issued within 60 days of completing testing 

To understand how Type 1 and Type 2 reports compare in detail, see Type 1 SOC Reports vs. Type 2 SOC Reports: What’s the Difference? 

What Are the Key Benefits of a SOC Report? 

A SOC report delivers three primary business benefits: 

1. Competitive differentiation: A SOC report signals to prospects and existing clients that internal controls meet a recognized, independently verified standard. In competitive sales processes, it can be a deciding factor. 

2. Access to regulated industries: Clients in financial services and healthcare frequently require a SOC report before onboarding a vendor. Without one, organizations may be disqualified from consideration regardless of their technical capabilities. 

3. Operational clarity: The readiness assessment and audit process surface control gaps that organizations may not have identified otherwise, creating an opportunity to strengthen the internal control environment beyond the immediate goal of obtaining a report. 

Frequently Asked Questions About the SOC Report Process 

Q: How long does the full SOC report process take from start to finish? 
The full SOC report process typically takes 12 to 18 months for organizations pursuing both a Type 1 and Type 2 report. The readiness assessment takes approximately one month. Remediation requires at least three months. The Type 1 audit adds one to two months, and the Type 2 audit period generally runs six to 12 months, followed by two to three weeks of testing and a 60-day reporting window. 

Q: Is a Type 1 SOC report required before a Type 2 report? 
No. A Type 1 audit is optional. Organizations can proceed directly to a Type 2 audit. However, many organizations choose to complete a Type 1 audit first because it delivers a signed report to clients quickly, establishes the start date of the Type 2 period, and serves as a lower-stakes practice run for evidence collection. 

Q: What is the difference between SOC 1 and SOC 2 reports? 
SOC 1 reports focus on internal controls relevant to a client’s financial reporting, making them most applicable to service organizations that process financial transactions. SOC 2 reports address controls related to security, availability, processing integrity, confidentiality, and privacy. The appropriate report type depends on the nature of the services provided and the requirements of the organization’s customers. For more detail, see Type 1 SOC Reports vs. Type 2 SOC Reports: What’s the Difference? 

Q: Can the auditor help fix control gaps identified during the readiness assessment? 
The auditor can provide guidance on what remediation actions are appropriate, but cannot perform the corrective work directly. Doing so would violate AICPA independence requirements and prevent the firm from conducting the subsequent SOC audit. If additional support is needed, auditors can refer organizations to other firms that specialize in remediation. 

Moving Forward With Your SOC Report Journey 

A SOC report is a concrete demonstration of an organization’s internal control environment — one that prospective clients, regulated-industry buyers, and third-party reviewers take seriously. Achieving it requires a clear timeline, the right CPA firm, and sufficient preparation time before the audit begins. 

If your organization is considering pursuing a SOC report, reach out to Wolf and Company’s team — our IT Assurance Services group is available to guide you through every stage of the process.