The significance of data security cannot be understated, as it poses a crucial concern not only for small organizations but also for large enterprises such as Google, Apple, and Amazon for example. For accounting firms and individual accountants, safeguarding confidential client information is essential to the success of their business. Therefore, ensuring data security is one of their topmost priorities.
Encryption is a widely adopted data security measure utilized by most accounting firms and Certified Public Accountants (CPAs) to safeguard confidential client data. Although encryption is considered the simplest and most reliable means of data security, some individuals still hesitate to implement it due to the perception that it is too complicated or may restrict their own access to the data.
This blog will touch upon several cases that exemplify the adverse consequences of inadequate data security for accountants and firms. Additionally, it will provide solutions to prevent such situations.
Data Security Breach
A data breach occurs when confidential or sensitive information is accessed, viewed, or stolen by unauthorized individuals, groups, or software. This security breach can happen for various reasons, such as weak passwords, system vulnerabilities, phishing attacks, or insider threats. Data breaches can result in severe consequences, including financial losses, legal repercussions, reputational damage, and identity theft.
Data breaches have become increasingly common in recent times, and unfortunately, many accountants and accounting firms have fallen victim to these cybercrimes in the past. The theft or loss of laptops and other electronic devices that contain proprietary and sensitive client and corporate information is the most prevalent cause of data breaches in this industry. If this information falls into the wrong hands, the consequences can be catastrophic in a matter of moments.
The worst part is that in such situations, the accountant or the firm is usually held accountable for any potential loss or damage, which can result in class-action lawsuits or fines to cover data recovery costs. Moreover, the loss of industry reputation and client trust is even more detrimental to accountants and firms in such cases.
Data Security Accounting Solutions
In addition to their conventional roles, modern accountants and accounting firms must also function as data collectors and managers, dealing with vast amounts of data. This data often comprises confidential financial, payroll, and tax-related information, which needs to be handled and distributed with utmost care.
Moreover, in addition to their client’s data, accounting firms and accountants must also manage and safeguard their personal information to ensure robust data security practices throughout.
In the event of a data breach or cyber-attack, both confidential client data and accounting firm data are vulnerable. This jeopardizes not only the reputation and credibility of the accountant or firm but may also result in legal action and significant financial losses for them and their clients.
Here are a few key takeaways from Tech Guru on “7 Security Tips to Keep Your Accounting Firm Secure,” which can help you gain a better understanding of the latest data security practices and standards in the accounting industry.
Secure Mobile Devices for Data Security Accounting
Mobile device data breaches are primarily caused by application-specific cyberattacks, which constitute 42% of all such breaches. Web application attacks account for 31% of these breaches. These application-specific attacks make up a significant portion (73%) of all cyberattacks targeting the finance industry. This trend is attributed to the growing reliance of accounting firms on cloud technologies, web extensions, mobile apps, and client portals.
- Using 2-Factor Authentication (with biometrics and strong passwords)
- Encrypting devices
- Installing antivirus applications
- Updating software whenever available
- Avoiding public or free Wi-Fi
Enforce Cybersecurity Training
The first line of defence against cyberattacks is proper training. Having advanced security systems and protocols in place is futile if an employee falls prey to a phishing email or inadvertently downloads malware from an attachment.
Managers must ensure that the entire team is equipped to identify and handle phishing attacks. Additionally, employees must be educated about other threats, including:
- Malware and viruses
- Distributed denial-of-service (DDoS)
- Insider threats
- Brute force attacks
- Social engineering
Invest in a VPN
By using a virtual private network (VPN), users can send and receive data sets on a public network as if they were directly connected to their firm’s private network. A VPN also grants access to other resources that may be inaccessible on a public network.
However, it’s important to note that not all VPN service providers offer encrypted connections, even though encryption is typically utilized. Benefits of a VPN include:
- Increased security
- Enhanced network management
- Functionality and convenience
Keep All of Your Software Up to Date
To obtain the most up-to-date security features, users must update their software regularly. This doesn’t just apply to antivirus software, as major hardware and software developers such as Microsoft and Apple incorporate the most advanced security measures in their products.
It is crucial for accounting firms to download the most recent versions of computer operating systems, programs, and applications onto their technical infrastructure, office equipment, and individual computing devices used by staff members.
Use Password Management Software
Password managers are useful tools that allow users to store usernames and passwords securely across their entire team. They are cost-effective and simple to use, whether a company has a small or large workforce.
These programs offer features like setting password strength rules and whitelisting the company’s IP addresses and those of its associates. Passwords can also be locked using IP restrictions or geo-locking, which prevents those outside the geographic area from accessing them. The two most popular and highly secure password management software programs are Practice Protect and LastPass.
Extra tip: To keep passwords secure, it’s important to enforce strong passwords and disable the “save password” feature on all work devices. This is because insider threats often use this method to obtain data for malicious purposes.
Backup All of Your Data to the Cloud
To improve data security, migrating to the cloud is crucial for accounting firms. Cyber attackers may not always intend to steal data for their own use or sell to others. Instead, they encrypt data and demand a ransom to release it.
By backing up data on cloud-based platforms, firms can avoid paying the ransom and still access their data. The following are two recommended cloud-based data platforms:
Hire a Team of Experts
Accountants are knowledgeable in finance, but not necessarily in IT. Cybercriminals are adept at bypassing even the most advanced security systems. In contrast, employees within accounting firms may have limited knowledge of basic security features within their tech stack.
This is where IT strategists come in. They specialize in cybersecurity and are able to monitor a firm’s security infrastructure for both internal and external threats. Additionally, IT strategists can educate and train staff on the most effective processes, protocols, and best practices for ensuring optimal security.
Nowadays, data security is a crucial factor that determines the reliability and credibility of accountants and accounting firms. For some clients, data security is even the top priority when selecting an accounting partner.
Large enterprises have the necessary knowledge and resources to ensure top-notch data security. However, smaller firms and individual accountants often lack the same knowledge and resources to establish a robust and dynamic data environment.
Data security has become one of the highest priorities for accountants and accounting firms today. It is an indicator of a firm’s or an accountant’s reliability and reputation, distinguishing between a secure data environment and a total data breach disaster.
What we can do for you
Martina Quinn Finance Recruitment specialises in the placement of qualified accountants up to the executive level nationwide. Our teams have extensive experience (67 years combined) in recruiting in the Irish Market.
We also provide interview preparation to ensure you have the best chance of landing the job. Reach out to the team here at Martina Quinn Finance Recruitment for the best advice and support in building your finance teams contact us today.