Small Business

Data Security for Accounting Firms

Accounting firms must have the best security measures to reduce the chance of a data breach.

With the advancement of technology in the last 20 years accounting firms are evolving at an astounding pace. Many accountants have moved on from keeping a written record and are now managing client data electronically. In fact, in this day and age, with the huge amount of data that accounting firms have access to, accountants are more like data collectors and managers.

Accounting firms not only have to manage their own data but also the data of their clients. And with all this data moving around its imperative that firms are able to keep it organized and secure.

Data security has now become a primary facet of any accounting firm. Let’s be honest, nowadays no system is completely secure. However, you can take steps to minimize attacks. Investing in a robust security network should keep you and your clients’ data secure and reduce instances of breaches.

So how exactly do accounting firms maintain robust security?

1. Take Data Encryption Seriously

With the move towards a cloud-based system, data encryption is a necessity. This applies not only to data stored on the cloud servers but also for all the communication that goes back and forth between clients and the firm.

Many CPAs and accounting firms have already implemented data encryption as standard operating procedure however, there are still many more who find it too complicated or think a breach just won’t happen to them. Regardless of the reasoning if you haven’t encrypted your data it will get hacked, it just depends on when.

2. Always Back Up Your Data

This may seem counter-intuitive to the concept of security as you’re creating another copy of data that could be hacked. However, if the backup is also stored securely over a proprietary or public network to an off-site server it drastically minimizes chances of a breach or data loss. There are additional fees associated with this type of backing up although it’s currently one of the best methods of security.

3. Ensure Staff is Regularly Trained

As systems evolve and become more sophisticated they’ve now surpassed human regulation. According to a survey by Computer Weekly, security professionals claimed “human error, lack of staff and a flood of security alerts are the chief reasons cyber attackers are managing to breach organisations.” In fact, “the survey revealed 84% of respondents whose company has suffered a cyber-attack attribute it, at least in part, to human error.”

These are actually quite alarming – but as they say ‘the numbers don’t lie’. As hackers and programs become more refined they will only target operations and tasks with human involvement. Phishing and spear-fishing attempts are almost a daily occurrence now. It’s for this reason staff training becomes crucial to maintaining robust security.

Employees need to be educated and aware of the methods by which hackers will try to exploit them. Accounting firms need to frequently update their employees on protocols and best practices. Education about how passwords should be maintained and what to look out for in a phishing scam is vital for keeping data secure.

Why it Matters

When a data breach occurs it not only means a loss of data and money it can also result in loss of reputation. Word travels fast and no accounting firm wants to be in a situation where they have to explain to their clients they weren’t able to keep their data secure, especially when it could have been prevented.

With the shift in technology accountants really need to stay up to date on security updates and protocols. Accounting firms manage sensitive data from multiple clients and personnel, from Social Security numbers and salaries, to bank account details ; a lot is at stake in this business. The biggest nightmare for any accounting firm owner is a data breach, so follow the best practice frameworks to ensure your client data is always safe.

For more information on how QXAS secures it’s clients’ data visit our security page.

Laurence is a manager at QX Accounting Services & Founder of Accounting Leaders. QX Accounting offers outsourced accounting services, tax return preparation, bookkeeping and payroll compliance for small to medium sized accounting firms. Laurence focuses on freeing up small practitioners in order to get them to focus on growing their practice.

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