SOC Vs SOX: Key Differences + How They Overlap in 2025

Things can get a bit hazy when learning all there is to know about the various compliance standards. Luckily, we’re here with a ton of great information about SOX compliance and the three different types of SOC audits and reports. Keep reading to protect your company’s security and compliance and maybe learn a few dinner party ice breakers along the way...IT security is always a crowd pleaser.

SOC vs SOX: Key Differences

SOC and SOX are often mentioned together because they both evaluate internal controls, but they’re built for different purposes and drive different compliance motions. 

For IT and security leaders, understanding how they diverge is critical: SOC reports are customer-trust tools used to prove your service is secure and reliable, while SOX is a legal requirement focused on protecting the integrity of financial reporting. In 2025, many organizations need to navigate both – either because they’re public companies with SOX obligations, or because they provide services to public companies that expect SOC assurance. 

The sections below break down the key differences you need to know before mapping overlap or planning audits. The key differences between SOC vs SOX are:

• Purpose and Goals
• Scope of Controls
• Who It Applies To
• Audit/Report Outputs
• Mandatory Vs Voluntary Nature
• Frequency and Ongoing Requirements

Purpose and Goals

SOC (System and Organization Controls) reports and SOX (Sarbanes-Oxley) compliance both validate internal controls, but they exist for different reasons. SOC reports are assurance reports for service organizations: SaaS companies, cloud providers, payroll processors, and other vendors that handle customer data or run systems customers depend on. Their core goal is to prove that your controls make your services trustworthy and secure, reducing friction in vendor risk reviews and procurement. 

SOX is a U.S. federal law aimed at protecting investors by ensuring the accuracy and reliability of public companies’ financial reporting. For IT and security leaders, SOX is about demonstrating that technology controls supporting financial statements are designed and operating effectively.

Scope of Controls

SOX scope centers on Internal Control over Financial Reporting (ICFR). That typically includes controls over financial applications, access to ERP/revenue systems, change management for in-scope systems, logging and monitoring, backup/recovery, and segregation of duties. 

In other words, SOX digs deep into anything that could create a material misstatement and SOC scope varies by report type. SOC 1 evaluates controls relevant to customers’ financial reporting, while SOC 2/3 assess controls against the Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy. 

Practically, SOC 2 often spans broader security and operational controls than SOX, while SOX is narrower but more prescriptive around financial systems.

Who It Applies To

SOX applies to publicly traded U.S. companies (and many of their subsidiaries), regardless of industry. If you’re public, you’re in scope. 

SOC applies to service organizations whose customers need assurance about outsourced systems and data processing. That’s why many private companies pursue SOC 2 to win enterprise deals, and why public companies request SOC 1 or SOC 2 reports from key vendors to support their own SOX testing. If you’re a public SaaS provider, you may need both.

Audit/Report Outputs

SOX results in management’s assessment of ICFR and an external auditor’s attestation opinion – especially under Section 404. The outputs are built for regulators, auditors, and investors, not for public marketing. 

SOC audits produce a formal CPA report. SOC 1 and SOC 2 reports are restricted-use documents typically shared with customers under NDA, while SOC 3 is a public-facing summary intended for broad distribution.

Mandatory Vs Voluntary Nature

SOX is legally mandatory for covered companies. Noncompliance can trigger regulatory action and serious reputational damage. 

SOC reports are technically voluntary, but in 2025 they’re often commercially required. Enterprise buyers, vendor risk teams, and certain regulators increasingly expect SOC 2 (or an equivalent) before approving a provider. So SOX is enforced by law, while SOC is enforced by the market.

Frequency and Ongoing Requirements

SOX runs on an annual attestation cycle supported by continuous control operation and year-round testing. Deficiencies require timely remediation because they can become material weaknesses. 

SOC Type 1 reports test control design at a point in time, while SOC Type 2 reports test operating effectiveness over a period, commonly 6 to 12 months, and are renewed annually. 

Both frameworks push IT and security teams toward durable, repeatable controls, but SOX ties that rigor to financial risk, while SOC ties it to customer trust and service reliability.

IT SOX Compliance, SOC 2 Type 2 Compliance

SOC audits and reports, on the other hand, exist partly because of how important it is for companies to remain SOX compliant. Governed by the American Institute of Certified Public Accountants, SOC reports are voluntary, verifiable audit reports that help companies show that they are handling sensitive information and data in a consistent, reliable way. What does SOC stand for? This three-letter IT acronym stands for System and Organization Controls.

Typically, SOC reports are given by vendors to companies using their services in order to prove that they are handling financial and other sensitive data correctly. Ultimately, SOC reports help companies be sure that they are working with vendors who will not put their SOX compliance at risk due to inconsistent or ineffective financial and IT practices. With millions of dollars and decades of jail time on the line, you can see why SOC reports are so important.

SOC reports are voluntary, verifiable audit reports that help companies show that they are handling sensitive information and data in a consistent, reliable way.

The Different Types of SOC Audits

There are three different types of SOC compliance standards; SOC 1, SOC 2, and SOC 3. These different compliance standards are all regulated by the American Institute of Certified Public Accountants, but they have different goals.

SOC 1 Type 1 and SOC 1 Type 2:

A SOC type 1 audit and compliance report addresses the company’s financial reporting and the internal controls and checks and limits they have in place to ensure the reporting is correct. There are two different types of SOC 1 reports. SOC 1 Type 1 pertains to how the financial reporting is done at a specific point in time while SOC 1 Type 2 pertains to how the financial reporting is done over a longer duration of time.

The goal of a SOC 1 report is to help the user entity understand how a service organization’s controls are impacting or could impact their financial statements.

If you are with an organization who provides services that could impact your clients’ financial statements, such as a payroll provider or payment processing company, you will likely need to supply a SOC 1 report when working as a vendor with other companies.

SOC 2 Type 1 and SOC 2 Type 2:

So, what is a SOC 2 audit? SOC 2 stands for System and Organization Controls 2 and is the most popular and sought after SOC report. A SOC 2 report looks at specific parameters around IT services and how a company protects non-financial sensitive information. Similar to SOC 1, SOC 2 also has two different types. SOC 2 Type 1 audit confirms that IT and security control do exist within a company and SOC 2 Type 2 audit confirms that these in-place controls actually work to protect the data they are meant to protect.

The goal of a SOC 2 report is to help a service organization report on how they are using internal controls to protect sensitive data.

If you are with an organization that stores or transmits any type of customer data, such as a SaaS company or cloud storage service, you will likely need to supply a SOC 2 report when working as a vendor with other companies.

If you are going to receive a SOC type 2 audit, it could be useful to use a SOC 2 readiness assessment to help you prepare. A SOC 2 readiness assessment is basically a practice run for your formal SOC 2 audit. A SOC 2 readiness assessment can be completed by your internal team, a CPA firm or a consulting company, and it should include these three steps:

1. Review existing controls relevant to the SOC 2 audit and documentation of those controls.

2. Identify existing gaps in these controls and how future gaps could be avoided.

3. Create remediation plans for all existing gaps.

Since SOC 2 audits are the most sought-after type of SOC, we are going to dive deeper into them later in this article.

SOC 3 Type 2:

A SOC 3 audit and compliance report is similar to a SOC 2 Type 2 report, however, since it reports on how current IT and security controls are working, but it includes much less detail and technical language than a SOC 2 Type 2.

The goal of a SOC 3 report is often to use compliance as a tool for marketing to the general public, so it takes the information often found in a SOC 2 audit and tailors it for a general audience.

Like the goal of this report implies, if you are a company looking to share your SOC 2 report with the general public, such as consumer facing SaaS companies and cloud storage services, you will likely need a SOC 3 report to make it so they can actually understand what you are trying to share.

SOC 2 In Detail

SOC 2 reports use five SOC 2 controls called Trust Service Principles to define how customer data should be managed. These Trust Service Principles are as follows:

• Security: This SOC 2 Trust Service Principle refers to how the system’s resources are protected against unauthorized access. Examples of how security is managed in relation to SOC 2 could include intrusion detection and network firewalls. Both of these SOC 2 security tools are useful in preventing unauthorized access to sensitive systems and data.

• Availability: This SOC 2 Trust Service Principle refers to whether or not information and systems are available for use to meet the company’s goals. Examples of how availability is managed in relation to SOC 2 could include performance monitoring and disaster recovery plans.

• Processing Integrity: This SOC 2 Trust Service Principle refers to whether or not a system does what it is supposed to do. Examples of how processing integrity is managed in relation to SOC 2 could include quality assurance and processing monitoring. Both of these techniques help the organization be sure that they are delivering the right data at the right time to the right place for the right price.

• Confidentiality: This SOC 2 Trust Service Principle refers to the protection of all confidential data. In this case, confidential data is data that should only be accessible to a specific group or groups and is not public.  Examples of how confidentiality is managed in relation to SOC 2 could include access controls and data encryption. Both of these management techniques help companies be sure that sensitive data remains confidential and is only available to the correct people or groups.

• Privacy: This SOC 2 Trust Service Principle refers to how companies and organizations collect, use, retain, disclose, and dispose of personal information. Examples of how privacy is managed in relation to SOC 2 reports could include data encryption and two-factor authentication. These management techniques help companies keep sensitive data such as social security numbers and address information private.

During a SOC 2 audit, these SOC 2 principles are applied to five system components. These include:

• Infrastructure: Including everything from physical items like desktop computers and other hardware to telecommunication networks.

• Software: Including all types of software programs such as operating systems and other applications.

• People: Including anyone involved in the use of a system such as developers, managers, and vendors.

• Procedures: Including both manual and automated procedures.

• Data: Including everything from databases to transaction streams.

Requesting a SOC 2 Report

If you are concerned with how a vendor handles their security, availability, processing integrity, confidentiality, or privacy, you need to request an independently audited SOC 2 report from them. SOC 2 reports are unique to the needs of the organization they are being prepared for, meaning the organization is able to choose which Trust Service Principles are important to them when requesting this report from their vendors. Organizations should be sure to request a SOC 2 report from all critical vendors handling sensitive information or data. It’s best practice to request this report during initial vendor selection and contracting to be sure IT and security controls are in place and functioning as intended before getting too far into a contract.

The Link Between SOC 2, Security, and Compliance

While SOC 2 reports are not required, it controls for SOX compliance, making them extremely important for many organizations. SOC 2 reports help organizations maintain oversight of their IT systems and processes and vendors. SOC 2 compliance can also help prevent major IT risks. When it comes to SOC 2 cybersecurity, it’s obvious that complying with SOC 2 guidelines helps organizations defend against cyber attacks by ensuring that there are data safeguards in place that actually work.

One way to get a jump start on this is to conduct regular access reviews. Verifying that only authorized users have access to certain programs can go a long way in ensuring your company is secure and compliant. Access reviews relate directly to an organization’s identity audit as user accounts are analyzed.

An independently audited SOC 2 report goes a long way towards proving compliance with SOX regulations thanks to its strict review of how an organization handles sensitive information and other data. If your company is required to maintain SOX compliance, it’s important that you ensure that each of your vendors provide a SOC 2 report.

Another benefit of SOC 2 compliance is that it gives the complying organization a competitive edge. In today’s digital world, everyone prefers to work with companies who protect data and sensitive information, and having a SOC 2 audit or report done helps prove that the company’s data and sensitive information is being managed in a safe way.

How SOC and SOX Overlap

SOC and SOX are different frameworks, but in real-world audit programs they intersect constantly. That overlap matters most for IT and security leaders because both depend on the same underlying control environment: how systems are accessed, changed, monitored, and governed. 

In 2025, the line between “financial controls” and “security controls” keeps blurring as revenue flows through cloud apps, finance teams rely on SaaS vendors, and regulators expect stronger technology assurance. Understanding where SOC and SOX reinforce each other helps you avoid duplicate work, scope audits smarter, and use one program to strengthen the other.

SOC 1 and SOX Internal Controls

SOC 1 is the SOC report most directly tied to SOX because it evaluates controls relevant to customers’ financial reporting. If your company provides services that impact a customer’s financial statements – payments, billing, payroll, revenue automation, data hosting for finance apps – your SOC 1 report becomes part of their SOX evidence chain. 

From the provider side, a strong SOC 1 control narrative can reduce custom SOX questionnaires and accelerate deal cycles. From the customer side, SOC 1 lets auditors rely on a vendor’s independently tested controls rather than re-testing everything in-house.

In short: SOC 1 is often the “bridge” between your controls and your customers’ SOX requirements.

Shared IT General Controls (ITGCs)

Even when SOC 2 is the primary report, SOC and SOX overlap through IT general controls. Both frameworks expect strong foundations in areas like identity and access management, change management, and system operations. 

SOX tests these ITGCs specifically for systems tied to financial reporting, while SOC 2 tests them more broadly for security and reliability of services. But the control mechanics are similar: provisioning and deprovisioning, MFA enforcement, privileged access review, ticket-based change approvals, separation of duties, incident response, logging, and backup or recovery. 

If your ITGCs are designed to satisfy SOC 2, they are usually close to SOX-ready for any in-scope financial systems, with only scoping and evidence adjustments needed.

Vendor/SaaS Reliance in SOX Programs

Modern SOX programs are deeply dependent on third parties. 

Finance and revenue teams increasingly run critical processes in SaaS platforms: ERP, billing, payments, data warehouses, CRM, and HR/payroll. That means your SOX posture is only as strong as your vendors’ controls. Auditors now expect formal vendor risk management and clear reliance documentation for any outsourced financial process. 

SOC reports provide a standardized way to assess those vendors. SOC 1 covers vendors that affect financial reporting directly; SOC 2 covers vendors hosting sensitive data or supporting operational systems that could indirectly impact finance. Either way, a clean SOC report for key vendors reduces SOX audit friction, while missing or qualified reports can expand your SOX testing scope fast.

How SOC Reports Support SOX Testing

SOC reports support SOX in two practical ways: reliance and risk reduction. First, they provide third-party tested evidence that auditors can rely on, which limits redundant control testing. Second, they help you identify control gaps upstream. 

If a vendor SOC report shows exceptions – say weak access reviews or untested changes – your SOX team can respond early by adding compensating controls, switching vendors, or narrowing reliance. Internally, your own SOC program can also streamline SOX readiness: the policies, control descriptions, evidence routines, and audit cadence you build for SOC 2 often become reusable SOX artifacts once you scope financial systems. 

Done right, SOC and SOX become two lenses on the same control engine, not two separate compliance burdens.

Do you Need SOC, SOX, or Both?

For IT and security leaders, the “SOC vs. SOX” question is rarely academic: it’s about what your auditors, customers, and board will expect you to prove this year. 

In 2025, companies often land in one of three buckets: legally required to do SOX, commercially required to do SOC, or required to do both because their business model touches financial reporting and customer trust. The right answer depends on your ownership structure, how you deliver services, and who relies on your systems.

Public Companies

If your company is publicly traded in the U.S., SOX is non-negotiable. You must maintain and attest to Internal Controls over Financial Reporting (ICFR), and technology controls that support financial systems fall directly into scope. 

Even if your security program is mature, SOX introduces a specific layer of rigor around financial applications, access, change management, and evidence. Many public companies also pursue SOC 2, but that’s usually driven by customer expectations rather than regulation.

Private Company Planning to go Public

If you’re planning an IPO in the next 12-24 months, you should start acting like SOX is already here. The biggest SOX failure mode is trying to “bolt on” ICFR controls late in the process. 

Building SOX-aligned IT general controls early – especially around identity, change management, and audit logging – reduces go-public risk and avoids last-minute remediation. At the same time, many pre-IPO companies need SOC 2 to keep enterprise deals moving. In practice, SOC 2 often becomes your operational warm-up for SOX by forcing repeatable controls and evidence routines.

SaaS or Service Provider

If you’re a SaaS, cloud, fintech, payroll, data platform, or any service provider handling customer data or running systems customers depend on, SOC is typically the expectation. SOC 2 is the default for security assurance, while SOC 1 is relevant if your service impacts customers’ financial reporting (payments, billing, payroll, revenue systems). You may not need SOX unless you’re public, but your customers may still ask how your SOC program supports their SOX obligations; especially if you’re in their financial stack.

Selling to Public Companies

Even if you’re private, selling into public companies can make SOC effectively mandatory. Their vendor risk teams want a standardized assurance report to rely on, and their SOX auditors may require a SOC 1 or SOC 2 from vendors tied to financial processes or sensitive data. 

Without it, you’ll face longer security reviews, repeated questionnaires, and sometimes deal blockers. A clean, current SOC report turns those reviews into a fast verification step.

Common Scenarios Where Both are Required

You typically need both SOC and SOX when you’re public and also a service provider. 

For example: a public SaaS company that processes customer billing data, a public fintech that both reports its own financials and supports customers’ revenue flows, or a public payroll platform used in customers’ ICFR processes. 

In these cases, SOX proves your internal financial controls to regulators and investors, while SOC proves your service controls to customers. The smart move is to design one control environment that serves both: scoped differently, but executed through the same evidence, automation, and governance engine.

SOC Vs SOX Trends for 2026

As SOC and SOX programs mature, the big shift heading into 2026 is that compliance is no longer a once-a-year audit scramble. For IT and security leaders, the expectation is moving toward always-ready controls, faster evidence, and clearer accountability across hybrid, SaaS-heavy environments. 

The trends below show where SOC and SOX are converging operationally; even if their purposes remain different.

Automation of Controls and Evidence

Automation is becoming table stakes for both SOC and SOX. Instead of manually collecting screenshots, exports, and ticket trails, teams are wiring controls directly to systems of record: IAM platforms, CI/CD pipelines, cloud security tools, and ITSM workflows. 

Evidence like access reviews, change approvals, and backup success logs can increasingly be generated or attested automatically. The payoff is twofold: fewer human errors and a dramatic reduction in audit prep time. In 2026, auditors will expect to see not just automated collection, but automated validation – proof that controls are functioning, not just documented.

Continuous Compliance and Real-time Monitoring

SOC 2 Type 2 and SOX 404 have always required controls to operate over time, but 2026 pushes this further into continuous compliance. More organizations are adopting real-time control monitoring for key areas (privileged access, configuration drift, critical changes, incident response SLAs). This means problems get surfaced while they’re small, rather than after an audit period closes.

For SOX, this is especially relevant as financial processes shift to cloud and data pipelines; for SOC, it aligns with customer expectations for always-on security. The emerging norm is “audit readiness by default,” backed by dashboards rather than quarterly evidence hunts.

Identity and Access Governance as a Core Control Area

Identity has quietly become the control plane for both frameworks. With finance, engineering, and operations running through dozens of SaaS tools, access is the risk most likely to become a SOC finding or SOX deficiency. 

Expect heavier focus on: automated joiner-mover-leaver workflows, MFA enforcement, privileged access management, role-based access reviews, and tighter segregation of duties inside cloud apps. In 2026, identity governance isn’t just a security best practice; it’s the backbone of defensible SOC and SOX programs.

Increasing Third-party and Vendor Risk Pressure

Vendor reliance is accelerating, and so is scrutiny. SOX programs increasingly require validated assurance for any vendor in the financial reporting chain (ERP, billing, payments, payroll, data warehousing). SOC programs face similar pressure from customers who want proof that your suppliers don’t undermine your controls. 

The result: deeper third-party risk management, more frequent SOC report reviews, and a growing expectation for compensating controls when vendors have exceptions. In 2026, “our vendor’s risk is our risk” is an audit reality, not a slogan.

AI’s Role in Security and Audit Readiness

AI is moving from experimentation to embedded compliance operations. Teams are using AI to map controls to frameworks, draft narratives and policies, detect anomalies in logs, and flag evidence gaps early. 

At the same time, AI introduces new risks auditors will care about: model access to sensitive data, hallucination or decision error impacts, and governance over AI-driven workflows in finance or security. The trend for 2026 is AI-assisted compliance paired with AI governance – using automation to strengthen audits, while proving that AI itself is controlled, monitored, and accountable.

SOC 2 and Your Company

We’re here to help you understand the best ways to protect your company’s sensitive information. Typically, preparing for a compliance audit takes hours and involves long, tedious spreadsheets. At Lumos, we help your company prepare for compliance audits by making it easy to manage vendor security risks, grant and log account access requests, and make least privilege part of your everyday workflow.

SOC vs SOX FAQs

What’s the difference between SOC 1 and SOX?

SOC 1 is an assurance report for service organizations whose systems affect their customers’ financial reporting: think payroll providers, billing platforms, payment processors, or SaaS tools in the revenue stack. It tells your customers (and their auditors) whether your controls are reliable for their financial statements. SOX, on the other hand, is a U.S. law that requires public companies to maintain and attest to internal controls over their own financial reporting. In practice, SOC 1 often becomes evidence that a vendor’s controls can be relied on inside a customer’s SOX program.

Is SOC 2 required for SOX compliance?

Not by law. A public company can be SOX compliant without having a SOC 2 report. But SOC 2 is increasingly expected if you’re a SaaS or service provider selling to enterprises; especially public companies. For SOX teams, a vendor’s SOC 2 helps validate security and operational controls that could indirectly impact financial systems (like incident response, access governance, or availability). So SOC 2 isn’t a SOX requirement, but it’s often a commercial requirement and a practical way to reduce SOX audit friction with customers.

How long does a SOC audit take?

A SOC 2 Type 1 audit (design effectiveness at a point in time) can often be completed in 6-10 weeks, depending on readiness. A SOC 2 Type 2 audit (operating effectiveness over time) typically spans a 6-12 month observation period, plus several weeks of fieldwork and report drafting. If you’re starting from scratch, add time for remediation and control tuning before the audit window begins. SOC 1 timelines are similar, with Type 2 also requiring a multi-month control period.

Can private companies follow SOX voluntarily?

Yes, and many do. Private companies, especially those planning to go public or preparing for acquisition, often adopt SOX-style internal controls as a maturity move. Voluntary SOX alignment helps you institutionalize financial rigor early (segregation of duties, change controls, access reviews, evidence trails), which makes a future IPO or audit transition far less painful. It can also boost buyer confidence during due diligence, even without a formal SOX attestation.

What’s the difference between SOC 2 and SOC 3?

SOC 2 and SOC 3 evaluate the same control areas using the Trust Services Criteria. The difference is the audience and level of detail. SOC 2 is a detailed, restricted-use report meant for customers and auditors, usually shared under NDA. It includes control descriptions, test procedures, and results. SOC 3 is a shorter, general-use summary designed to be public-facing. It’s useful for marketing and broad trust signaling, but it typically won’t satisfy deep vendor risk reviews on its own.

How often do SOC and SOX audits need to be renewed?

SOX is an annual compliance cycle tied to yearly financial reporting, with controls expected to operate continuously throughout the year. SOC reports are also typically renewed annually, especially SOC 2 Type 2, because customers and auditors want current assurance. Some companies run SOC audits back-to-back to maintain continuous coverage. If your customer base includes public companies or regulated buyers, letting a SOC report lapse can quickly trigger procurement delays or expanded questionnaires – so annual renewal is the norm.