The following is an excerpt from Microsoft web site:
Increasingly, businesses outsource basic functions such as data storage and access to applications to cloud service providers (CSPs) and other service organizations. In response, the American Institute of Certified Public Accountants (AICPA) has developed the Service Organization Controls (SOC) framework, a standard for controls that safeguard the confidentiality and privacy of information stored and processed in the cloud. This aligns with the International Standard on Assurance Engagements (ISAE), the reporting standard for international service organizations.
Service audits based on the SOC framework fall into two categories — SOC 1 and SOC 2 — that apply to in-scope Microsoft cloud services.
- A SOC 1 audit, intended for CPA firms that audit financial statements, evaluates the effectiveness of a CSP’s internal controls that affect the financial reports of a customer using the provider’s cloud services. The Statement on Standards for Attestation Engagements (SSAE 18) and the International Standards for Assurance Engagements No. 3402 (ISAE 3402) are the standards under which the audit is performed, and is the basis of the SOC 1 report.
- A SOC 2 audit gauges the effectiveness of a CSP’s system based on the AICPA Trust Service Principles and Criteria. An Attest Engagement under Attestation Standards (AT) Section 101 is the basis of SOC 2 and SOC 3 reports.
At the conclusion of a SOC 1 or SOC 2 audit, the service auditor renders an opinion in a SOC 1 Type 2 or SOC 2 Type 2 report, which describes the CSP’s system and assesses the fairness of the CSP’s description of its controls. It also evaluates whether the CSP’s controls are designed appropriately, were in operation on a specified date, and were operating effectively over a specified time period.
- Auditors can also create a SOC 3 report — an abbreviated version of the SOC 2 Type 2 audit report — for users who want assurance about the CSP’s controls but don’t need a full SOC 2 report. A SOC 3 report can be conferred only if the CSP has an unqualified audit opinion for SOC 2.