Just as the digital era introduced a world of possibilities for businesses, it also raised security concerns. Though of paramount importance across all industry verticals, security is something accounting firms must be extra careful about.
The vulnerability of financial data can never be exaggerated, and accounting firms handle a huge volume of sensitive information. These include tax records, financial statements, as well as personal details of clients.
This is what makes these companies a goldmine for cybercriminals. According to Statista, nearly 8 million records were at risk of a data breach in the fourth quarter of 2023 itself. What’s even more alarming is that the average cost of data breaches worldwide reached $4.45 million in 2023. That’s a 15% increase when compared to the previous three years.
If there was a best time to invest in data security, it is now. Around 51% of companies are planning to increase investments in security. If your accounting firm wishes to do the same, this article will guide you. Listed below are four ways in which accounting firms can improve data security.
Prioritize Physical Security
Let’s start with the basics as they are important too – restriction of access to spaces with sensitive client information. No unauthorized person must be allowed the opportunity to casually stroll into an accounting office (and steal crucial data).
This can be done with the help of employee badges, key cards, visitor logs, and security cameras. A visitor management system can be used to compartmentalize spaces and control access to each of them.
Even many accounting firms utilize the hybrid working model. This means certain employees will be able to carry their devices back home. If yours is similar, ensure all employee devices are also physically secure.
This could be done by intuiting remote work access policies so that third parties have only limited access to the devices.
Finally, implement strict hardware encryption as well as remote wipe features. This way, the data stored in the work devices cannot be accessed and tampered with even if the device were lost or stolen.
Don’t Ignore Basic Cybersecurity
The next step to lasting data security is to ensure a strong firewall protects your firm’s network. Also, the firewall should be updated with the latest patches. You can use the help of anti-malware and antivirus software so that no potentially dangerous website or file may be opened.
It’s also a good time to follow a new security model that makes all network traffic untrusted. In other words, traditional IT security measures are based on the castle-and-moat approach – building a system’s defenses only against external sources.
This means everyone within the network is automatically trusted. Now, what if a security breach is the result of an insider job? It is best to apply an IT security model like Zero Trust where every resource must be verified and all traffic must be logged and inspected.
Control Sensitive Data Transfers
One aspect of data security for accounting firms is to keep all data within their systems and networks safe. Another side of the coin is to secure the phase where data is transferred or exchanged between different parties.
All sensitive financial information passes between the clients and at least three categories of professionals – auditors, consultants, and regulators. Client portals for accountants are easy-to-use software that help with data security during file transfers.
According to Mango Practice Management, this software comes with advanced encryption technologies that prevent unauthorized access. Not only that but the data’s integrity is maintained through strict compliance with data security regulations. A secure client portal also becomes a safe alternative to email for collaboration and communication.
Focus on Employee Training
The fourth way in which accounting firms can tighten their security is through rigorous employee training. Unless everyone within the firm is devoted to data security, there is little that can be done. Employee training may comprise the following key elements –
- Cybersecurity awareness – employees must be aware of the different types of cyber threats like phishing emails, malware, social engineering tactics, etc. They must understand why data security is so important to your organization.
- Password and access management – employees must know what a strong password is and how to create one. They should also be advised against keeping the same password for extended periods.
- Data handling protocols – there must be clear guidelines on handling sensitive information, physically or digitally. Employees must be aware of storing, transmitting, and disposing of any information safely. This includes an understanding of audit trails and authentication.
- Incident response process – a security breach may happen despite the most robust measures. This is why it is important for employees to know how to respond so as to mitigate the risk of future damage.
- Process for handling client data and payments – there must be a definite process for handling sensitive client data and payments. This could include asking for credentials before data access, verifying the person’s identity, and requesting confirming documents like company verification and bank statements.
Much of an accounting firm’s data includes personally identifiable information (PII), including national IDs, social security numbers, and bank details.
Malicious intruders always have their eye for the smallest crack that would facilitate hacking. Since the costs of data breaches are too steep, accounting firms cannot afford to take a risk.
The above-mentioned tips, when implemented well, will enable accountants, IT managers, and administrators to stay protected against cyberattacks.
Also read: Ensuring Data Security in Digital Health
