Why Get a SOC Report? Customer Assurance and Business Value

Corrected October 30, 2026. The original publication date is retained.

A SOC report can help a customer understand controls at a service provider. The right report depends on the outsourced service and the question the customer needs answered. Start with that need before agreeing to an audit simply because a contract mentions an old standard number.

This article originally discussed SSAE 16. That historical standard has been superseded; the practical question today is which SOC report, scope and reporting period are appropriate.

When Does a Customer Need a Report?

A customer may request a SOC 1 report when outsourced activities affect its internal control over financial reporting. It may request SOC 2 for assurance over controls relevant to security, availability, processing integrity, confidentiality or privacy within the agreed scope.

A public company is not universally required to use a provider that holds a SOC 1 report. Its auditor may obtain relevant evidence in other ways. Individual contracts can still require a particular report. PCAOB AS 2601 describes alternatives for understanding and evaluating controls involving service organizations.

What Value Can the Work Provide?

• A defined system and scope that customers can compare with the services they use.
• Independent reporting on the relevant controls, including limitations and findings.
• A reason to clarify ownership, retain evidence and address control weaknesses.

Example Scenario: A payroll provider’s customer wants assurance relevant to payroll amounts in its financial statements. The parties discuss the payroll service, relevant control objectives, report type and period rather than treating a generic security document as equivalent.

Keep Expectations Realistic

A report does not guarantee security, uninterrupted service or a successful business relationship. Read the opinion, scope, dates, exceptions and responsibilities that remain with the customer. Type 1 and Type 2 reports answer different timing and operating-effectiveness questions.

Management remains responsible for its controls. Discuss preparation services and examination services separately with a prospective firm so that responsibilities and independence boundaries are clear. For the report-selection distinction, see our SOC 1 and SOC 2 comparison.