What is the difference between SOX and SOC in cybersecurity audits?

Table of Contents

• What is SOX (Sarbanes-Oxley Act)?
• What is SOC (System and Organization Controls)?
• SOX vs. SOC: What's the Difference?
• Why Should IT and Cybersecurity Professionals Care?
• Common Misconceptions
• How Can I Learn More or Get Certified?
• Conclusion
• Frequently Asked Questions (FAQs)

In the world of IT, cybersecurity audit, and compliance, two similar-sounding terms often confuse newcomers — SOX and SOC. While they may look alike, their meanings and purposes are completely different. If you're planning a career in GRC (Governance, Risk, and Compliance) or IT Audit, understanding the difference is a must.

This blog will break down the definitions, use cases, and key differences between SOX and SOC — using simple, practical examples so you can remember them easily.

What is SOX (Sarbanes-Oxley Act)?

SOX, short for Sarbanes-Oxley Act, is a U.S. federal law passed in 2002 after several major financial scandals like Enron and WorldCom. The main goal of SOX is to protect investors from fraudulent accounting activities by companies.

Key Features of SOX:

• Applies to publicly traded companies in the U.S.

• Focuses on financial reporting and internal controls

• Companies must prove their financial data is accurate and secure

• Internal IT systems that impact financial reporting are audited

• Failure to comply with SOX can lead to legal penalties

  
  

Example:

If a company like Microsoft or Apple is traded on the stock market, they are legally required to follow SOX. Their IT systems that deal with payroll, sales, or inventory must have controls in place that can be tested during audits.

What is SOC (System and Organization Controls)?

SOC stands for System and Organization Controls, and it's not a law — it's a set of audit reports developed by the American Institute of Certified Public Accountants (AICPA). SOC reports are optional but highly valuable, especially for businesses that handle customer data or provide cloud services.

Types of SOC Reports:

• SOC 1 – Focuses on internal controls related to financial reporting

• SOC 2 – Focuses on security, availability, confidentiality, processing integrity, and privacy

• SOC 3 – Similar to SOC 2 but meant for public distribution

Who Uses SOC?

• Service organizations, like cloud providers, payroll processors, or data centers

• Clients ask for SOC reports to evaluate the company’s trustworthiness

Example:

A company like AWS (Amazon Web Services) may not be legally required to get a SOC 2 report, but clients like banks or healthcare companies will demand it to ensure their data is in safe hands.

SOX vs. SOC: What's the Difference?

Why Should IT and Cybersecurity Professionals Care?

Understanding SOX and SOC is more than just textbook knowledge — it’s real-world skill.

If You’re in IT Audit or GRC:

• You’ll often be part of SOX testing or help prepare systems for a SOC 2 audit.

• You need to design controls that meet compliance standards.

• Knowing how to interpret a SOC report can help you assess third-party risks.

If You’re a Job Seeker:

• Many cybersecurity analyst or IT compliance job descriptions ask for knowledge of both.

• Being able to explain the difference clearly shows you’re serious and well-prepared.

Common Misconceptions

“Is SOC part of SOX?”

No. They are completely separate frameworks. However, SOC 1 may be used as evidence during SOX compliance testing.

“Do startups need to follow SOX?”

Not unless they go public. But many still prepare for SOX in advance to improve internal controls.

How Can I Learn More or Get Certified?

If you're aiming for a role in IT audit or cybersecurity compliance, consider learning:

• SOX controls through GRC courses

• SOC report structures via audit or CPA training

• Tools like Splunk, Nessus, SailPoint, or RSA Archer used in compliance monitoring

Conclusion

Both SOX and SOC play major roles in building trust in technology and finance. While SOX is about legal compliance for public companies, SOC is about proving your security posture to clients.

Understanding the difference helps you avoid confusion — and positions you as a credible candidate in the field of IT audit, cybersecurity, and GRC.

FAQs

What is SOX compliance in IT audit?

SOX compliance ensures that publicly traded companies implement proper internal controls over financial reporting. It often involves IT audits to secure financial data and prevent fraud.

What does SOC stand for in cybersecurity?

SOC stands for System and Organization Controls, a set of audit reports evaluating how service organizations handle data security, availability, and processing integrity.

Is SOX a law or a framework?

SOX (Sarbanes-Oxley Act) is a U.S. federal law enacted in 2002 to improve the accuracy of financial reporting and protect investors.

Who needs to comply with SOX?

All publicly traded U.S. companies and their external auditors must comply with SOX. It also affects some private companies, especially those preparing for IPOs.

What are the different types of SOC reports?

There are three types: SOC 1 (financial reporting controls), SOC 2 (data security and privacy), and SOC 3 (a simplified version of SOC 2 for public distribution).

How does SOC help a company?

SOC reports help companies prove to clients and stakeholders that they manage data responsibly, which builds trust and ensures regulatory compliance.

Do SOX and SOC overlap?

They may touch on similar internal control topics but serve different purposes—SOX is about financial reporting, while SOC is about operational and IT controls.

What is SOC 2 Type II?

SOC 2 Type II is an in-depth report showing how a company’s data controls perform over a period of time (typically 6–12 months).

Does SOX apply to cybersecurity?

Indirectly, yes. SOX requires controls that protect financial data, which includes aspects of cybersecurity like access control and change management.

Are SOC audits mandatory?

They are not legally required but are often requested by customers, especially in the SaaS, cloud, and data processing industries.

Which is more technical: SOX or SOC?

SOC is generally more technical because it dives into system-level controls like encryption, uptime, and intrusion detection.

What role does internal audit play in SOX?

Internal audit evaluates and tests controls related to financial reporting to ensure SOX compliance.

Can a company be both SOX and SOC compliant?

Yes, many companies, especially large enterprises and service providers, adhere to both SOX and SOC requirements.

Who conducts a SOC audit?

Certified public accountants (CPAs) or firms licensed by the AICPA perform SOC audits.

What is the difference between SOC 1 and SOC 2?

SOC 1 focuses on financial controls, while SOC 2 examines controls related to security, availability, processing integrity, confidentiality, and privacy.

Is SOX relevant for tech companies?

Absolutely. Public tech companies must ensure SOX compliance, especially for IT systems that manage financial data.

What is the Trust Services Criteria?

These are the guiding principles (security, availability, processing integrity, confidentiality, privacy) used in SOC 2 and SOC 3 reports.

How long does a SOC audit take?

A SOC 2 Type II audit typically takes 6 to 12 months, depending on the audit period and system complexity.

What’s the benefit of SOC 3 over SOC 2?

SOC 3 reports are public-facing and do not contain sensitive details, making them ideal for marketing and transparency.

Do private companies need SOC reports?

Yes, if they offer services that involve handling customer data, SOC reports can serve as proof of trust and control strength.

Are SOX and SOC part of GRC?

Yes. Both are essential parts of Governance, Risk, and Compliance (GRC) strategies in large organizations.

What is a control in SOX and SOC?

A control is a process or policy designed to mitigate risk. In SOX, it relates to financial integrity; in SOC, it relates to data and IT systems.

Can one person handle both SOX and SOC responsibilities?

In smaller companies, yes. However, in large enterprises, these roles are usually divided between finance and IT compliance teams.

Is SOC only for cloud services?

No, any service organization that handles client data—whether cloud-based or not—can undergo a SOC audit.

Does SOX require encryption?

SOX does not mandate specific technologies but expects adequate controls to protect financial data, which may include encryption.

What’s the penalty for SOX non-compliance?

Penalties can include fines, imprisonment, and delisting from stock exchanges, depending on the severity of the violation.

Who is responsible for SOX compliance?

The company’s executives, particularly the CEO and CFO, are legally accountable for SOX compliance.

What industries need SOC reports?

Common industries include cloud computing, finance, healthcare, HR platforms, and any service handling sensitive client data.

How do I prepare for a SOC audit?

Define system boundaries, identify key controls, collect evidence, and work with a licensed CPA or audit firm.

Does SOC help with ISO or GDPR?

Yes. SOC 2 reports, in particular, help demonstrate compliance with broader data protection laws like GDPR and ISO 27001.

Are SOX and SOC global standards?

SOX is U.S.-specific, but its principles influence global regulations. SOC reports, while U.S.-based, are recognized internationally in outsourcing and cloud services.