ISO 27001 vs SOC 2: Which Does Your Business Need?

If your business is being asked to demonstrate its approach to information security, you may find yourself comparing ISO 27001 certification with a SOC 2 report.

Both are widely recognised forms of independent security assurance, particularly among organisations supplying software, technology or services that involve handling sensitive information.

However, they serve different purposes, and choosing between them isn't simply a matter of deciding which standard offers better security.

The right approach depends on your organisation, the services you provide and, importantly, what your customers expect to see.

Important to know: UK/EU compliance teams usually understand and are more familiar with ISO 27001, and instantly "tick the box" when they see it. SOC2 isn't as widely understood in the UK/EU, despite it being a strong certification - this should be factored into your business decision.

One of our international clients had SOC2 and needed ISO 27001 on top to get past procurement teams in the UK - This is not an attack on SOC2 - because it is fantastic - this is a heads up!

What is the difference between ISO 27001 and SOC 2?

ISO 27001 is an international standard specifying requirements for an Information Security Management System (ISMS).

An ISMS establishes how an organisation identifies and manages information security risks, implements appropriate controls, evaluates performance and continually improves its arrangements.

An independent certification body can assess the organisation against ISO/IEC 27001 and, where the requirements are met, issue certification.

Certification normally follows a three-year cycle, with surveillance audits during that period and recertification before the certificate expires.

SOC 2 takes a different approach.

Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 provides a framework for independent examinations of controls at service organisations.

An appropriately qualified independent CPA practitioner examines controls against the applicable Trust Services Criteria and issues an attestation report containing an opinion and supporting information.

SOC 2 is not a certification, and there is no equivalent SOC 2 certificate.

For customers evaluating a supplier, the distinction matters.

An ISO 27001 certificate provides assurance that the organisation's ISMS has been independently assessed against the standard within its defined scope.

A SOC 2 report provides more detailed information about a specified service organisation's system, the controls examined and the auditor's conclusions.

Neither should be treated as proof that an organisation is immune to security incidents.

What does each assessment cover?

ISO 27001 is concerned with the organisation's management of information security.

Its requirements address areas including leadership, risk management, security objectives, resources, operational planning, performance evaluation and improvement.

Annex A of ISO/IEC 27001:2022 provides 93 reference controls covering organisational, people, physical and technological security.

The organisation determines which controls are necessary through its risk treatment process and other applicable requirements. Its Statement of Applicability documents the necessary controls, their implementation status and the justification for including or excluding relevant Annex A controls.

SOC 2 assessments use the AICPA's Trust Services Criteria, which address five categories:

• Security – protecting systems and information against unauthorised access and other threats

  
  

• Availability – ensuring systems remain available in line with commitments and requirements

  
  

• Processing integrity – ensuring system processing is complete, valid, accurate, timely and authorised

  
  

• Confidentiality – protecting information designated as confidential

  
  

• Privacy – addressing the collection, use, retention, disclosure and disposal of personal information

Security forms the foundation of a SOC 2 examination. Additional categories are included where relevant to the organisation's services, commitments and intended users.

This makes the initial scoping exercise particularly important.

For example, a software provider handling confidential customer information may need to consider more than Security alone, depending on the nature of its services and the assurance its customers require.

SOC 2 Type 1 vs Type 2: What's the difference?

If you're considering SOC 2, you'll also need to understand the two report types.

A SOC 2 Type 1 report provides an independent opinion on whether the relevant controls were suitably designed as of a specified date.

A SOC 2 Type 2 report goes further, addressing both the suitability of the control design and whether the controls operated effectively throughout a defined period.

That distinction affects the evidence your organisation must maintain.

Consider a process for reviewing employee access permissions.

For a Type 1 examination, the practitioner may examine how the process is designed and implemented at the relevant date.

For a Type 2 examination, they may also select evidence from throughout the reporting period to determine whether the reviews were carried out as required.

Type 2 reports therefore require a sufficient history of operational evidence.The reporting period should be agreed with the CPA firm and planned around customer expectations.

A Type 1 report can provide useful assurance where controls have recently been established, although it won't necessarily satisfy customers requesting evidence of sustained operation.

If a prospective customer specifically requires a Type 2 report, make sure that requirement is understood before committing to a Type 1 engagement.

Do you need SOC 2 if you already have ISO 27001?

Not necessarily.

There is considerable overlap between ISO 27001 and the SOC 2 Trust Services Criteria. Organisations with an established ISMS may already have many of the processes and controls needed to support a SOC 2 examination.

However, the two assessments aren't interchangeable.

ISO 27001 certification doesn't automatically satisfy a request for a SOC 2 report, and a SOC 2 report doesn't replace ISO 27001 certification where that is a contractual requirement.

The practical starting point is to establish what assurance your customers, prospective customers and other stakeholders actually require.

For organisations operating in the UK and Europe

ISO 27001 is internationally recognised and is commonly used to demonstrate information security governance.

It can be particularly relevant where customers want assurance that a supplier has a structured, independently assessed approach to managing information security risks.

However, procurement requirements vary.

For example, organisations supplying NHS services or handling NHS information may also be required to complete the Data Security and Protection Toolkit (DSPT), depending on their activities and contractual obligations.

Similarly, some UK public sector contracts require Cyber Essentials or Cyber Essentials Plus.

Holding ISO 27001 certification does not automatically remove these requirements.

Before beginning a certification project, review the contracts, procurement documents and assurance requirements relevant to your market.

For organisations selling into the United States

SOC 2 may become particularly relevant when supplying software or technology services to US businesses.

Some prospective customers, especially larger organisations with established supplier assurance programmes, may specifically request a SOC 2 Type 2 report.

This does not mean ISO 27001 is unsuitable for American customers. Its international recognition remains valuable.

The difficulty is often practical: a customer's procurement process may specify particular evidence, regardless of whether another form of assurance addresses similar risks.

If a significant potential customer requests SOC 2, ask which report type and Trust Services Criteria they require.

It's also worth establishing whether they will accept alternative assurance while your organisation works towards completing the examination.

These conversations can prevent unnecessary expenditure and help you prioritise work that supports an identifiable commercial requirement.

What happens if a SOC 2 report identifies exceptions?

A SOC 2 examination can identify instances where controls did not operate as expected.

For a Type 2 report, the results of control testing, including relevant exceptions, provide useful information to the report's intended users.

An exception does not automatically mean the practitioner must issue a modified opinion.

The significance of the findings needs to be evaluated in the context of the applicable criteria and the examination as a whole.

SOC 2 reports can include unmodified or modified opinions, depending on the circumstances.

Customers reviewing the report should consider the auditor's opinion, the scope of the examination, any identified exceptions and the potential effect on the services they receive.

This is another reason why it's important to understand what a SOC 2 report contains rather than treating its existence as sufficient assurance on its own.

Is ISO 27001 or SOC 2 more expensive?

Costs vary too much to give a reliable universal comparison.

For ISO 27001, expenditure may include consultancy support, internal implementation work, technical or organisational improvements, certification body fees and ongoing surveillance and recertification audits.

For SOC 2, the costs may include readiness assessments, control implementation, evidence management and the independent CPA examination.

The selected Trust Services Criteria, the complexity of the environment and the reporting period will influence the work involved.

An organisation with mature security processes may need relatively little additional implementation work. Another may discover substantial gaps that need addressing before either assessment is appropriate.

When comparing proposals, separate the fees charged by the independent assessor from the cost of preparing the organisation.

You should also consider the internal time needed to manage controls, retain evidence and respond to findings.

That ongoing commitment is relevant to both approaches.

What if your business needs both?

There are circumstances where maintaining ISO 27001 certification alongside a SOC 2 report makes commercial sense.

Consider a hypothetical UK software provider with established European customers that is expanding into the US market.

Its existing customers may value ISO 27001 certification, while prospective US customers may request SOC 2 Type 2 reports during supplier onboarding.

In that situation, maintaining both forms of assurance could help satisfy the different requirements.

Fortunately, much of the underlying security work can be shared.

Access management, incident response, supplier oversight, risk management and security awareness are relevant to both frameworks.

Rather than creating entirely separate processes for each assessment, the organisation can map its controls against the applicable requirements.

For example, a single access review process might generate evidence relevant to ISO 27001 and SOC 2, provided it satisfies the requirements being assessed.

There will still be differences in scope, terminology, reporting and the evidence required by the respective auditors.

The objective is to maintain consistent security practices while making it easier to demonstrate conformity or control effectiveness under each framework.

How should you decide?

Before committing to either approach, I'd recommend answering a few questions.

What are your customers asking for?

Review existing contracts, supplier questionnaires, tender documents and procurement requirements. Where the requirements aren't clear, ask for clarification.

Which services and information need to be covered?

Think about the systems, locations, processes and data involved in delivering your services. The scope of an assessment needs to provide meaningful assurance.

How mature are your existing security arrangements?

If policies and controls have only recently been introduced, there may be substantial work required before you can demonstrate that they operate consistently.

What are your plans for the business?

An organisation entering a new market may have different assurance priorities from one serving a well-established customer base.

Can you maintain the requirements over time?

Both approaches require continuing attention to security controls, evidence and improvement. These responsibilities should be considered when planning resources and budgets.

Final thoughts

ISO 27001 and SOC 2 both provide valuable independent assurance, but they address different needs.

For some organisations, ISO 27001 certification will be the most appropriate starting point. Others may have a clear commercial requirement for SOC 2, particularly where customers specifically request a Type 2 report.

Some businesses will benefit from both.

The decision should be informed by your customers' requirements, your operational risks and the security arrangements you already have in place.

Whichever approach you choose, the underlying objective should remain the same: security controls that are appropriate for your organisation, consistently applied and supported by reliable evidence.

If you're considering ISO 27001, SOC 2 or both, Kafico can help you review your requirements, identify gaps and plan your approach to information security assurance.

Jeff Pullen, CISSP, CCSP

Information Security Consultant

Kafico