Glossary · Compliance
SOC 2
A third-party audit framework evaluating service organizations against trust service criteria (security, availability, confidentiality, processing integrity, privacy).
SOC 2 reports are issued by independent CPA firms under AICPA standards. Type I reports describe control design at a point in time; Type II reports test operating effectiveness over a period (typically 6–12 months).
Mid-market and enterprise PEO buyers commonly require SOC 2 Type II as a prerequisite for award. Brokers should request the most recent report (and the bridge letter) during PEO evaluation.
Related terms
- SOX (Sarbanes-Oxley Act)Federal law imposing financial-reporting and internal-control requirements on U.S. public companies and their auditors.
- HIPAA (Health Insurance Portability and Accountability Act)Federal law governing the privacy and security of protected health information (PHI), with administrative and technical safeguards required of covered entities and their business associates.
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