SOC 2 Type 1 vs Type 2: Understanding Your Options

While Type 1 reports serve a purpose in certain scenarios, most organizations find that Type 2 provides greater value for enterprise customers. Here's what you should know about each option.

Key Takeaways

Point	Summary
Type 2 is generally preferred	Enterprise customers typically expect Type 2 as evidence of ongoing compliance
Type 1 is a point-in-time snapshot	Single-day audit that demonstrates controls exist at a specific moment
Type 2 demonstrates effectiveness	Observation period (typically 3 months) validates controls work consistently
Consider going straight to Type 2	For most organizations, this provides more value without significantly changing the overall timeline
Type 1 has specific use cases	Can be helpful as a bridge solution when timing is critical

Quick Answer: For most organizations, pursuing Type 2 directly makes the most sense. Type 2 takes 4.5-6 months but demonstrates that your controls actually work over time, which is what most enterprise customers are looking for.

Comparing the Two Approaches

Aspect	Type 1	Type 2
What it evaluates	Control design on a single day	Control effectiveness over a period (typically 3 months)
Customer acceptance	Limited (often seen as a stepping stone)	Widely accepted industry standard
Time to achieve	4-6 weeks	4.5-6 months total
Best for	Bridge solutions, urgent situations	Demonstrating ongoing compliance to enterprise customers

Understanding Type 1's Limitations

Type 1 is a point-in-time audit. An auditor verifies that your controls exist on a specific date. While it can be completed relatively quickly, enterprise customers often view it as insufficient on its own.

The reason is straightforward: controls that are well-designed on audit day may not be consistently maintained over time. Type 1 doesn't demonstrate that your security practices work reliably in day-to-day operations.

When prospects see a Type 1 report, they often follow up with questions about when Type 2 will be available.

Why Type 2 Is Typically Preferred

Type 2 involves auditors monitoring your controls over an observation period (typically 3 months). They can pull evidence from any point in that window: any pull request, any deployment, any access log.

This is what enterprise customers typically expect when they ask for "SOC 2." (Note: Technically, "SOC 2 certified" is a misnomer. SOC 2 is an attestation engagement, not a certification.)

Type 2 Elements	What It Demonstrates
Observation period	Controls work consistently over time
Random evidence sampling	Compliance is genuine, not staged
Operating effectiveness	Security practices function as intended
Annual renewal	Ongoing commitment to compliance

The Observation Period: Understanding the Timeline

A common question from organizations new to SOC 2: while the AICPA does not mandate a specific minimum observation period, most auditors look for at least 3 months to demonstrate operating effectiveness. This is an industry practice accepted by auditors to provide sufficient evidence, not a regulatory requirement. (Note: No explicit AICPA minimum exists; 3 months reflects commonly accepted auditor practice.)

Typical timeline breakdown:

• Implementation: 6-8 weeks
• Observation period: 3 months (industry standard minimum)
• Final report: 2-3 weeks after observation ends
• Total: 4.5-6 months from kickoff to final report

The implementation phase can sometimes be accelerated for organizations that are well-prepared. The observation period length is determined in consultation with your auditor based on the nature and complexity of your controls.

When Type 1 Can Be Valuable

There are specific scenarios where Type 1 makes sense:

Bridge solution during Type 2 observation: If you're in the middle of your SOC 2 Type 2 observation period and a prospect needs documentation to move forward with a contract, a Type 1 can serve as interim proof of your commitment to compliance.

In this case, a Type 1 can often be completed relatively quickly to help unblock business conversations while Type 2 continues in the background.

It's best thought of as a tactical bridge, not the end goal.

What Happens During the Observation Period

From your team's perspective, the observation period is relatively low-touch.

During this time:

• You continue normal business operations
• Auditors can sample evidence from any point in the observation window
• Your compliance partner monitors for any control issues and alerts you if needed
• You can share "audit in progress" letters with prospects

Business continues as usual:

• Enterprise conversations can move forward (prospects often appreciate seeing active auditor engagement)
• You can add new employees and contractors
• Infrastructure changes are fine, as long as core controls remain in place

Things to keep in mind:

• Maintain the security controls you've implemented
• Consult before making fundamental architectural changes
• Keep evidence collection running

The observation period is essentially demonstrating that what you've implemented works consistently over time.

"In-Progress" Letters: Supporting Sales Conversations

Once the audit begins, auditors can provide letters confirming:

• Your organization has engaged in the SOC 2 audit process
• The security controls being examined
• Expected completion timeline
• Current assessment status

These letters can help you:

• Continue enterprise conversations during the observation period
• Satisfy procurement requirements for "certification in progress"
• Demonstrate commitment to compliance (with actual auditor engagement backing it up)

Many prospects are comfortable moving forward when they can see you're actively working toward completion with a credible timeline.

Reconsidering the "Type 1 First" Approach

Some advisors recommend starting with Type 1 then progressing to Type 2. It's worth understanding why this may not always be the best path:

The "Type 1 first" approach:

Month 1-2:    Preparation + Type 1 audit
Month 2-5:    Observation period begins after Type 1
Month 5-6:    Type 2 audit
Total:        ~6 months, with Type 1 report at month 2

The "Direct to Type 2" approach:

Month 1-2:    Preparation, observation begins immediately
Month 2-5:    Observation period
Month 5-6:    Type 2 audit
Total:        ~6 months, no Type 1 report

The total timeline is similar, but the Type 1 approach adds additional audit costs. For most organizations, "in-progress" letters from auditors can serve a similar purpose for sales conversations.

When the Observation Period Starts

An important point: The observation period starts when your auditor confirms readiness, not simply when you sign a contract.

Prerequisites for starting observation:

• Core controls implemented (typically at least 90%)
• Evidence collection systems in place
• Policies deployed to your team
• Security tools operational

Once these elements are ready, the observation period can begin. Any evidence from that point forward may be sampled by auditors.

Observation Period Length Options

The typical minimum is 3 months, though longer periods are also common:

Period	Common Use Case
3 months	Standard for first Type 2, fastest path to report
6 months	Often used for first-time renewals
12 months	Full year coverage, aligns well with annual renewal cycle

A common approach: Start with 3 months for a first Type 2, then consider moving to 12 months for renewals once the annual rhythm is established.

Many organizations choose 3 months initially because it reaches the first report most efficiently.

Common Questions

"Can we go directly to Type 2?"

Yes, and many organizations do. The observation period can begin during your implementation phase, so there's no requirement to complete Type 1 first.

"What if we need something very quickly?"

Type 1 can be completed in a compressed timeframe when urgency requires it. However, it's worth understanding that most sophisticated buyers will still want to know about Type 2 plans.

"How long is a SOC 2 report considered current?"

While reports don't technically expire, customers generally expect annual renewal. After 12 months, reports tend to be viewed as stale, and you'll likely receive questions about renewal plans.

"What if issues arise during observation?"

It's normal to identify and address some issues during the observation period. The key is documenting them and demonstrating remediation. Having some findings noted in a report is common. What matters is showing a mature approach to identifying and addressing issues.

"Do we need to use the same auditor for renewal?"

Not necessarily, but switching auditors does add some friction. A new auditor will need time to understand your environment, which can affect timeline and cost. Many organizations maintain the same auditor relationship unless there's a specific reason to change.

Understanding the Cost Difference

Cost Element	Type 1 Only	Type 2 (Direct)
Implementation	Similar	Similar
Type 1 Audit	Additional cost	Not required
Type 2 Audit	N/A	Included
Pen Test	Included	Included
Platform + Tools	Included	Included

The Type 1-only path may have a somewhat lower initial cost but provides limited customer value. Many organizations that start with Type 1 end up pursuing Type 2 shortly afterward anyway.

Making the Decision

Type 2 may be the better choice if:

• You have 4.5+ months before needing the report
• Your customers typically require Type 2
• You'd prefer to avoid paying for two separate audits
• You can use "in-progress" letters to support sales during observation

Type 1 may make sense if:

• You have an urgent situation requiring some form of SOC 2 documentation very quickly
• You're already in the Type 2 observation period and need interim documentation
• A customer has specifically indicated Type 1 would be acceptable (worth confirming directly)

For most organizations, pursuing Type 2 directly (starting observation as soon as controls are ready) tends to be the more efficient path.

How Bastion Approaches Type 1 vs Type 2

Our focus is on helping you reach Type 2 efficiently:

Implementation: Typically 6-8 weeks, working with your team's availability

Observation Start: Begins once core controls are in place

Evidence Collection: Automated and continuous from the start

Auditor Letters: Available to support sales conversations during observation

Type 2 Report: 4.5-6 months from kickoff

Managed service approach: We bring additional hands to handle the heavy lifting, ensuring things are done right the first time and minimizing rework

If your situation requires Type 1 as a bridge solution, we can help with that as well, though we'll typically recommend keeping Type 2 as the primary goal.

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Have questions about the right path for your organization? Talk to our team

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Sources

• AICPA SOC Suite of Services - Official SOC 2 framework overview
• SOC 2 Type 1 vs Type 2 (AICPA) - AICPA guidance on report types
• SSAE 18 Attestation Standards - Standards governing SOC 2 audits