What Accountants Need to Know About Data Security

As a professional accountant, you know the importance of maintaining the confidentiality and privacy of your client’s sensitive information. But if you don’t have a robust data security strategy in place, your business and client information is at risk of being hacked. 

From safeguarding your network to proper employee onboarding and training, there are several things all accountants need to know about data security. In this post, we’ll cover the three reasons why you need a data security strategy for your accounting firm and the seven best practices you should be implementing in your accounting practice today. 

Why Do Accountants Need a Data Security Strategy? 

Collecting and analyzing sensitive financial and personal information is an essential function of an accountant’s role. Ensuring that information is secure protects accountants from the risk of a data breach. 

Accountants need a robust data security strategy to protect themselves from three types of risk:

Reputational Risk

Without a strong data security strategy in place, accountants are susceptible to data breaches of both business information and sensitive client information. If client information is stolen due to weak data security, you run the risk of diminishing your reputation within the industry. 

As a professional, you understand how important your reputation is for your long-term success. Shield yourself and your accounting from reputational risk by ensuring your data security program is robust and consistently maintained. 

Operational Risk

Your accounting business cannot operate if you lack the information and data to conduct business. If your accounting firm suffers a data breach, you risk losing the essential processes and systems you need to successfully serve your clients. 

Operational risk due to failed internal systems can severely damage your ability to continue operating your business. Ransomware and other malicious data security threats are developed to overrun your systems, sometimes making it impossible to retrieve any of your stored information. 

Financial Risk

Financial risk may be the biggest obstacle to overcome if your system suffers a breach. Hackers are known to hold sensitive information hostage until you pay a certain amount to recoup your system. 

The financial loss from clients, transactions, and likely lawsuits are a serious threat to your accounting firm. 

Luckily, you can reduce the reputational, operational, and financial risk stemming from information breaches by working with a professional IT management team to establish a comprehensive data security program. 

Data Security Best Practices for Accountants 

Establishing a strong data security strategy is an essential business strategy for accountants. With over 20 years of experience creating and maintaining data security systems, we found seven essential practices every accountant should implement in their businesses.

Secure Your Networks

It’s easy to imagine that your small to mid-sized accounting firm has an adequately secured network. But the reality is data security is constantly evolving – and so are hackers! Protect your accounting firm from a potential breach, stolen data, and malicious threats by:

1. 1. Keeping all computers and equipment updated.
2. 2. Installing a business-grade firewall. 
3. 3. Updating passwords regularly. 
4. 4. Establishing a secured password protection plan with strong passwords.
5. 5. Installing and updating antispam software across the network.

Consistent Data Backup

Data backup is an essential strategy to protect your financial records and client information from data breaches and natural disasters that may impact your equipment and system. Your accounting firm should have a robust data backup and recovery plan in place to secure your domain and server information and store it on an off-site server. 

To re-access your information quickly after a breach or unforeseen circumstance, ensure you regularly and consistently back up:

1. 1. All computers at your worksite
2. 2. All data stored across your network
3. 3. Hard drives

Cloud-Based Storage

Storing your data on a cloud-based computing solution ensures your system is protected from loss and breaches. Cloud storage is an excellent way to backup your data for easy and immediate recovery after a loss. 

Storing your information in a cloud-based system makes it easier to conduct business from any location and gives you the control to manage your systems and data from any computer. 

Install Authentication Tools

Verifying the identity of a user through a strong password protection strategy is an essential component of keeping your accounting data secured. Ensuring all computers and equipment are secured with a unique username and password is an important step in securing sensitive client information. 

The following systems, software, and apps should use authentication technology:

1. 1. All computer systems
2. 2. Your network
3. 3. Any databases your team uses to store information
4. 4. Client portals on your website
5. 5. Any network-based apps 

Use Encryption Software

Encryption is a critical component of cybersecurity. Encryption software converts messages and files into coded text that is only accessible to authorized people. Your email provider may offer an encryption option for sending emails that contain sensitive information. 

Encryption is extremely important for accountants as sensitive financial and personal information is often sent using email or other computer-based systems. 

Leverage Access Controls 

If you manage a team of accountants, ensuring you have appropriate access controls should be a standard best practice at your firm. Access controls give you the power to limit access to certain data and resources to only a few verified users. 

Implementing access controls across your systems limits the risk of sensitive business or client information from being breached or lost. Access control complements authentication and encryption efforts and should be a part of any successful data security plan. 

Employee Training & Managed Services

Your data security system is only effective if your entire team knows the importance of securing information and how to execute your data security strategy properly. Every accounting business is unique, which is why you should consider hiring an IT managed services team to customize and tailor an IT package that fits your company’s needs. 

Hiring an IT team to manage your data security services is one way to ensure your entire company is on the same page with your data security plan. From employee training to regular maintenance of your systems and software, a managed IT solution is a great fit for any accounting firm. 

If you’re interested in what an IT team can do for your accounting firm’s data security plan, contact us today. We can manage all your IT services for a flat-rate fee and protect your company from the risk of data breaches.