Accounting firms are prime targets for cyberattacks due to the sensitive data they hold. Bad actors want access to this data and are developing increasingly sophisticated technology to compromise client information. Certified public accountant (CPA) firms of all sizes should take note of proactive strategies to secure data.
Learn more about CPA cybersecurity and how you can protect both your clients and your company.
The Importance of Cybersecurity for the Accounting Industry
Accounting firms and CPAs need robust safeguards in place to protect their clients. As de facto aggregators of important financial and personally identifiable information (PII), accounting firms and CPAs are a key target for bad actors. While large data breaches from big accounting firms get the most publicity, attackers are increasingly targeting smaller firms, which may not have robust cybersecurity protections and protocols.
Prioritizing cybersecurity is also in the accounting firms' best interest. It ensures business continuity by preventing disruptions associated with data breaches and other cybersecurity threats. Breaches can also come with significant costs — in one report, the average cost of a breach was $4.88 million in 2024. Companies can also be liable for fines and lawsuits on top of those costs.
A strong security posture enhances client trust, giving organizations an advantage in a competitive market. Large-scale data breaches can also result in reputational damage, impacting future revenue.
Understanding Cybersecurity Challenges in the Accounting Sector
Accounting firms and CPAs face many challenges in protecting PII and client data. Bad actors are relentless in their pursuit of vulnerabilities, making it essential to understand the threat landscape.
Key Risks Facing CPA Firms
The most common types of cybersecurity risks for accountants include:
- Phishing
- Ransomware
- Malware
- Denial-of-service (DoS) attacks
- Social engineering
CPAs need to stay vigilant for these attacks, which means bolstering IT and cybersecurity systems in response to:
- Third-party risks: Many breaches actually result from third-party vendors and partners, particularly software. Properly vetting the security of vendors and partners is essential to protecting data.
- Outdated infrastructure: Outdated IT infrastructure can pose serious cybersecurity risks for CPAs, especially as cyberattacks become more advanced.
- Evolving threat landscapes: Advanced technologies, including artificial intelligence (AI), are rapidly changing the threat landscape. Using AI to craft compelling phishing attempts has increased attackers' success, and some have even employed deepfake technology to make convincing images and videos.
- Insider threats: In some cases, data breaches can result from the actions of those inside the organization. Employee negligence or a lack of cybersecurity training can lead to mistakes that have serious consequences for the entire organization. Malicious actions by disgruntled employees should also be a concern.
- Remote work: Firms that rely on remote work or independent contractors may have extra vulnerability, as insecure networks and bring-your-own-device (BYOD) policies can expose risks.
Navigating CPA Data Security Laws and Regulations
In addition to maintaining client trust, accounting firms and CPAs need to follow relevant data security laws and regulations, such as:
- IRS Security Summit: The IRS formed the Security Summit in 2015, involving state and private agencies across the nation. Its work aims to protect taxpayers by promoting security awareness, collecting data and identifying emerging threats.
- Gramm-Leach-Bliley Act (GLBA): The GLBA requires financial institutions to safeguard customer data, outline their data-sharing policies and offer methods to opt out of some data sharing.
- Sarbanes-Oxley Act (SOX): SOX establishes comprehensive auditing and financial regulations to protect employees, shareholders and the public. It regulates internal audits, financial reporting and other practices for publicly-traded companies.
- General Data Protection Regulation (GDPR): Accounting firms dealing with organizations and clients in the European Union must comply with the GDPR, one of the most stringent data privacy and security regulations.
- System and Organizational Control (SOC): While not mandatory, the SOC was created by the American Institute of Certified Public Accountants (AICPA) to provide a framework for CPA firms to ensure the right protections are in place to safeguard client data.
In the event of a breach, states and other regulatory bodies have specific requirements regarding notifying a person whose data may be involved.
Best Cybersecurity Practices for CPAs
Accounting firms need to protect themselves from cyber threats with proactive measures. Cybersecurity for CPAs should include:
Employee Training and Secure Access Controls
Security awareness training is essential to educate employees about cyber threats and their role in protecting the organization. Topics for these trainings should include how to recognize and avoid phishing and other social engineering attacks, and proper password creation and management. Organizations can increase the effectiveness of their employee training programs by frequently reinforcing lessons through real-time simulations.
Accounting firms and CPAs should also enforce role-based access control (RBAC). For example, a customer support agent may have access to account details but cannot access financial information, as that would be the purview of a different department. Even if the agent's credentials are compromised, attackers cannot gain access to client financial data.
Data Encryption and Secure Storage Solutions
Encryption is another key step in data security for CPAs. It makes data unreadable without the right key to unlock and translate it. This means that even if an unauthorized party gains access to your data, they will have a harder time deciphering it.
Since accounting firms deal with large amounts of data, they need a secure place to store it where attackers can't access it. Secure cloud storage with data encryption and access controls is one of the best ways to ensure data is protected. Organizations should also have a data loss prevention (DLP) plan to ensure that data is backed up frequently and stored in a safe environment.
Incident Response Planning
Handling security incidents quickly and effectively is key to recovering with minimal damage. Some aspects of an incident response plan (IRP) include:
- Develop a comprehensive IRP and share it with stakeholders and all relevant employees.
- Establish a team that's responsible for response and recovery in the event of an attack.
- Implement tools to detect and analyze security incidents.
- Have a plan to contain and eradicate any security threats.
- Conduct regular tests and drills to simulate an incident and test responses.
Benefits of Partnering With a Managed IT Provider
Accounting firms and CPAs can benefit greatly from managed IT services to monitor and support their IT infrastructure. These benefits include:
- Peak season support: Tax season sees increased activity for accounting firms, leading to higher risk factors. With 24/7 assistance, a managed IT provider can ensure continued operations and reduce downtime.
- SOC compliance: An IT services provider can help your organization maintain its AICPA SOC 1, SOC 2 and SOC 3 compliance.
- Expertise and resources: Managed IT service providers have access to specialized cybersecurity expertise and resources that organizations may not have access to internally.
- Threat monitoring and detection: Firms can benefit from 24/7 threat detection and monitoring services. Managed IT service providers can identify and respond to incidents in real time, allowing organizations to focus on mission-critical operations. Backup and disaster recovery also ensure your data is stored securely.
- Cost savings: Hiring an already-established team of experts saves money. Services like vendor management, software support and documentation management streamline employee workflows so your team can prioritize essential tasks and you can reduce labor costs.
- Scalability: The accounting industry can shift rapidly. A managed IT service can scale to meet your firm's changing needs.
Contact IT Assure for a Cybersecurity Consultation
Successful CPAs must balance rapidly changing regulations and an evolving threat landscape while maintaining top customer service and compliance. IT Assure provides managed IT services for accountants and customized cybersecurity solutions to meet your CPA firm's cybersecurity needs.
IT Assure can ensure your organization complies with relevant data security regulations with data encryption and secure data storage. Choose IT Assure for proactive IT management — contact us to schedule a free consultation.
