When should organisations pursue both SOC 1 and SOC 2 reports instead of only one?

When both reports are the right fit for the same service

SOC 1 and SOC 2 answer different stakeholder questions, so organisations usually need both when the service can affect financial reporting and also creates operational or privacy exposure. That combination is common in payroll, billing, accounting, claims, and outsourced finance or administration services, where one report would leave a material audience without the assurance it needs.

The practical test is whether the control environment touches both reportable outcomes: financial statement assertions on one side, and trust services such as security, availability, confidentiality, or privacy on the other. If the service only affects one of those domains, one report is usually enough; if it affects both, separate assurance scopes are justified.

For service providers, this is usually less about duplication and more about avoiding a gap. Customers, auditors, and counterparties often ask different questions, and a single report cannot fully satisfy both if the underlying risk profile spans both financial processing and data protection expectations.

What SOC 1 and SOC 2 each prove

SOC 1 is designed to support user entities and their auditors by evaluating controls that matter to internal control over financial reporting. It is the report that matters when a provider’s processes can influence transaction accuracy, completeness, cutoff, authorisation, or recordkeeping in a way that affects the customer’s financial statements.

SOC 2, by contrast, is built around the Trust Services Criteria, which focus on how a provider protects systems and data. In practice, this means customers look to SOC 2 when they want assurance about security controls, privacy handling, availability commitments, and broader operational trust. The SOC 2 Trust Services Criteria (AICPA) are the clearest external reference for that scope.

That distinction matters because the reports are not substitutes for each other. A strong SOC 2 does not automatically satisfy an auditor assessing financial reporting controls, and a strong SOC 1 does not tell a customer how the provider handles security, privacy, or availability obligations. Organisations that combine regulated processing with customer data handling usually need both lenses to match their actual obligations.

How to decide whether one report is enough

The best decision rule is to map the service to the kinds of risk it creates. If the service only supports internal control over financial reporting, SOC 1 is the more relevant report. If it only processes customer data or supports general trust and resilience expectations, SOC 2 is usually the better fit. When it does both, pursuing both reports is the cleaner assurance strategy.

Readiness also depends on how your controls are organised. A provider with one integrated control environment can often scope both reports efficiently, but the control objectives and testing procedures still need to be separated by purpose. That is especially important for outsourced providers, platforms, and software services that sit inside customer finance workflows while also storing sensitive operational data.

Public-facing assurance should also match buyer expectations. Many procurement teams now use SOC 2 as a baseline for vendor risk review, while finance teams may insist on SOC 1 before relying on a third party for reportable processes. If either group would be left without the evidence it needs, one report is probably incomplete for the business model.

Risk and Threat Considerations

Choosing only one report can create an assurance gap when the service actually straddles both financial and data protection obligations. The risk is not only audit inconvenience, it is misaligned oversight, where one stakeholder believes controls are covered while another still lacks evidence over the area that matters most to them.

Failure mechanism: The organisation scopes assurance too narrowly, so financial control failures, security weaknesses, or privacy issues remain outside the report that stakeholders rely on. That can leave a provider with passing assurance in one area while the other exposure continues untested.

Impact: Customers, auditors, and partners may demand additional due diligence, delay procurement, or treat the provider as higher risk. In regulated or financially sensitive services, the mismatch can also create rework, audit friction, and loss of trust in the control environment.

Practitioner Guidance

What to verify: Start by mapping each important service to the outcome it can affect. If the same process can influence financial reporting and customer data protection, treat that as a strong signal that both reports are justified rather than trying to force one report to carry both narratives.

Decision rule: If auditors, finance stakeholders, and enterprise buyers are asking different questions about the same service, split the assurance objective accordingly. The goal is not report volume, but coverage that matches how the service is actually used and what evidence each audience needs.

Practitioner takeaway: Use SOC 1 for financial reporting reliance and SOC 2 for trust and data handling reliance, and pursue both when one service genuinely creates both kinds of exposure.

Related resources from NHI Mgmt Group

• Why do organisations need different controls for HIPAA, PCI-DSS, GDPR, and SOC 2 instead of treating compliance as one checklist?
• Why do organisations often combine NIST CSF, ISO 27001, and SOC 2 instead of relying on one framework?
• How should security teams govern non-human identities for SOC 2 compliance?
• When do NHI access reviews create more value than a one-time cleanup?