Data security has been a critical concern of not only small organizations but larger enterprises like Yahoo as well. For accounting firms and even individually practicing accountants, their entire business relies on handling confidential client data and thus the importance of data security for accountants and firms is one of the top most priorities.
Most accounting firms and CPAs employ the simplest and yet also the most reliable data security measure to protect classified client data, which is encryption. However, there are many still out there who put off data encryption and other data security measures, simply because of the fact that they feel they are too complicated or due to the fear of restricting their own access.
In this article, we shall briefly discuss a few cases which highlight the negative impact of poor data security for accountants and firms and the associated solutions to avoid such situations.
Data breaches have become commonplace nowadays and many accountants and accounting firms have fallen victim to such cyber crimes in the past. The most common cause of data breach in this industry is due to theft or loss of the laptop or other electronic devices, which are usually filled with the proprietary and sensitive client and corporate information. If this information gets into the wrong hand the results could become catastrophic in the blink of an eye.
And the worst part is that in such situations, the accountant or the firm is usually held responsible for any possible loss or damage and may even lead to class action lawsuits or fines to the cost of data recovery. But that not all, in such cases, the loss of industry reputation and client trust is far more damaging to accountants and firms.
The modern accountants and accounting firms, apart from their conventional profiles, now have to act as both data collectors and data managers, handling and distributing large volumes of data. This data includes sensitive and confidential financial, payroll, and tax related information. But that’s not all, on top of all client data, accounting firms and accountants also have to manage and oversee their personal data and ensure tight data security all around.
In the case of a data breach or cyber attack, both the confidential client data and the accounting firms data is at risk. This not only puts the reputation and credibility of the accountant or firm at risk but may even lead to lawsuits and substantial financial loss for the accountant or firm as well as their clients.
Here are a few pointers from a more comprehensive article I wrote mentioning “6 Practical Tips To Keep Your Accounting Firm’s Data Secure” which shall help you to get a clear idea about the best practices and the latest standards of data security in the accounting industry.
– Monitor and administer proper access protocols
– Encrypt and back-up
– Create physical security protocols
– Employee training
– Create a contingency plan
Data security nowadays has become a huge ingredient which determines the reliability and credibility of accountants and accounting firms. Some clients even consider data security to be the top most priority when choosing an accounting partner.
Large enterprises on one hand have all the necessary knowledge and resources to ensure top-notch data security, but smaller firms and individually practicing accountants, on the other hand, lack the very same knowledge and resources to build a robust and dynamic environment for their data.
The importance of data security for accountants and accounting firms in today’s time has become one of the top most priorities. It has become an indicator of a firm’s or an accountant’s reliability and reputation and helps draw a line between a secure data environment and total data breach disasters.