SOC 2 Type 1 vs Type 2: Which Should Your Business Choose?

February 16, 2026

If you’re working towards SOC 2 compliance in Australia, one of the first decisions you’ll face is whether to pursue a Type 1 or Type 2 report. The difference between SOC 2 Type 1 vs Type 2 comes down to timing, depth, and what your customers actually need to see. Both reports assess your organisation’s security controls, but they do it in fundamentally different ways.

Understanding which path makes sense for your business can save you time, money, and frustration. It also helps you meet customer expectations without overcommitting resources before you’re ready.

What Is SOC 2 Type 1?

A SOC 2 Type 1 report is a point-in-time assessment. It evaluates whether your security controls are properly designed and in place on a specific date. Think of it as a snapshot. The auditor reviews your policies, procedures, and technical controls and gives an opinion on whether they’re suitable to meet the Trust Services Criteria (usually Security, but sometimes Availability, Confidentiality, Processing Integrity, or Privacy as well).

The audit itself typically takes two to six months to complete, depending on how prepared you are. If your documentation is organised and your controls are already implemented, you can move through it faster. If you’re starting from scratch, expect the longer end of that range.

Type 1 audits are less expensive than Type 2. Costs generally range from $5,000 to $25,000, though this varies based on your organisation’s size, complexity, and the auditor you choose. It’s a solid option if you’re new to compliance or need to demonstrate security posture quickly without the extended observation period that Type 2 requires.

What Is SOC 2 Type 2?

A SOC 2 Type 2 report goes further. It doesn’t just confirm that your controls are designed properly. It tests whether those controls actually work over time. The audit period typically spans six to twelve months, during which the auditor collects evidence to prove your controls are operating effectively.

This makes Type 2 much more comprehensive. It’s like the difference between showing someone your security plan and proving you’ve followed it consistently for a year. Enterprise customers and regulated industries usually expect Type 2 because it demonstrates ongoing commitment, not just good intentions.

The audit takes longer and costs more. Type 2 reports generally range from $7,000 to $50,000, depending on the same factors that affect Type 1, plus the length of the observation period. You’ll also need to maintain consistent evidence collection throughout the entire audit window, which requires internal discipline and often a compliance platform to manage it all.

Key Differences Between SOC 2 Type 1 and Type 2

Here’s where the two reports differ in practical terms:

Scope: Type 1 evaluates control design at a single point in time. Type 2 assesses operational effectiveness over a sustained period.
Duration: Type 1 can be completed in two to six months. Type 2 requires an observation period of at least six months, often twelve.
Cost: Type 1 is less expensive, typically $5,000 to $25,000. Type 2 ranges from $7,000 to $50,000 or more.
Evidence requirements: Type 1 needs proof that controls exist. Type 2 requires ongoing evidence that they’re working throughout the audit period.
Customer perception: Type 1 shows you’re serious about security. Type 2 proves you can sustain it.

Both reports use the same Trust Services Criteria. The difference is depth, not the standards themselves.

If you’re trying to figure out which report your customers will actually accept, ask them directly. Some will be satisfied with Type 1, especially if you’re a newer vendor or they’re evaluating you for a lower-risk use case. Others, particularly in finance, healthcare, or enterprise SaaS, will expect Type 2 as the baseline.

Siege Cyber works with Australian businesses at every stage of SOC 2 readiness. If you’re not sure where your organisation stands, a gap analysis is a good starting point. We offer these as a standalone service, and they give you a clear picture of what needs to happen before you’re audit-ready. You can learn more at siegecyber.com.au/services/soc2.

When Should You Choose Type 1?

Type 1 makes sense in a few situations. If your business is relatively new to compliance, starting with Type 1 lets you prove control design without committing to a year-long audit cycle. It’s faster, cheaper, and gives you a report you can share with customers while you work towards Type 2.

It’s also a smart choice if your customers or partners have specifically requested SOC 2 but haven’t clarified whether they need Type 1 or Type 2. You can deliver Type 1 first, which often satisfies initial requirements, then upgrade to Type 2 on your next audit cycle once your controls have matured.

Some organisations use Type 1 as a dress rehearsal. It surfaces gaps in your control environment and documentation before you commit to the longer Type 2 process. If the auditor identifies issues during Type 1, you can fix them before entering the observation period for Type 2, which reduces the risk of findings later.

When Should You Choose Type 2?

If you’re selling to enterprise customers, regulated industries, or anyone handling sensitive data at scale, Type 2 is usually non-negotiable. These buyers want proof that your security controls work consistently, not just that they existed on a particular day.

Type 2 is also the right choice if you’re confident in your control environment and you’ve already been operating those controls for at least six months. There’s no point starting a Type 2 observation period if your policies were only finalised last week. You’ll spend the entire audit period rushing to generate evidence, and you’ll likely end up with findings that could have been avoided.

Most organisations in Australia begin with Type 1, then progress to Type 2 once their controls and evidence processes have matured. This staged approach reduces cost and risk while still giving you a report to share in the meantime.

How Long Does SOC 2 Actually Take?

The timeline depends on which report you’re pursuing and how prepared you are.

For Type 1, expect four to eight weeks of preparation (policy creation, control mapping, evidence setup), followed by two to four weeks for the actual audit once you’re ready. If you’re starting from scratch, add another month or two to get your control environment up to standard.

For Type 2, the observation period itself is six to twelve months. That’s after you’ve already completed the preparation phase. So if you’re starting today and aiming for Type 2, you’re realistically looking at nine to fifteen months before you have a final report.

Compliance platforms like Vanta and Drata can significantly shorten the preparation phase by automating evidence collection and integrating with your existing tools. Siege Cyber is an official partner of both platforms, which means we can help businesses that have purchased either tool but still need expert guidance to actually achieve certification. The platform handles the repetitive tasks. We handle the strategy, documentation, and audit readiness.

How Much Does SOC 2 Cost in Australia?

Total SOC 2 compliance costs typically range from $30,000 to $50,000 when you factor in preparation, auditor fees, and platform costs.

That breaks down roughly as follows:

Gap analysis and readiness: $5,000 to $15,000
Type 1 audit: $10,000 to $30,000
Type 2 audit: $25,000 to $70,000
Compliance platform: $6,000 to $20,000 per year

These are global averages, and Australian businesses can expect similar figures. Smaller organisations with simpler control environments will sit at the lower end. Larger businesses with multiple systems, custom integrations, or complex infrastructure will be at the higher end.

Siege Cyber offers fixed-price compliance packages that spread the cost over twelve months with no hourly billing. You can view our SOC 2 pricing at siegecyber.com.au/#compliance-pricing.

Is SOC 2 Mandatory in Australia?

No. SOC 2 is not a legal requirement in Australia. However, it’s increasingly expected by enterprise customers, particularly those based in the US or Europe, and it’s becoming the de facto standard for SaaS providers and service organisations handling sensitive data.

Australian businesses pursuing SOC 2 do so because their customers demand it, or because they want to differentiate themselves in competitive markets. It’s a strong signal that your organisation takes security seriously and has invested in formal controls and independent verification.

If your customers haven’t asked for SOC 2 yet, it doesn’t mean you should ignore it. Many Australian businesses pursue certification proactively to unlock enterprise sales opportunities and reduce friction during vendor due diligence.

Next Steps

If you’re ready to start working towards SOC 2 compliance, the first step is understanding where you are today. Siege Cyber offers gap analysis, readiness services, and full audit preparation for both Type 1 and Type 2 reports. We work with businesses across Brisbane, Sydney, and throughout Australia, and we’ve guided numerous organisations through the process. Every single one has passed their audit.

Siege Cyber has been helping businesses across Australia with penetration testing, compliance, and cyber risk for over 20 years. If you’d like to discuss what type of testing makes sense for your organisation, or if you’re preparing for an ISO 27001 or SOC 2 audit and need testing as part of that process, get in touch.

You can reach us at siegecyber.com.au or email [email protected] directly. We’re based in Brisbane but work with clients across the country.