Why Accounting Firms Should Prioritize Cybersecurity
Accounting firms across the country are increasingly relying on digital systems to deliver services more efficiently and manage growing swaths of client data. But with increased connectivity and data exposure comes greater cybersecurity risk. If you’re looking to grow your business and build trust with clients and prospects, cybersecurity is an essential piece of the puzzle.
Here are four reasons why accounting firms must make cybersecurity a priority—and how to do it.
4 Reasons to Make Cybersecurity a Priority
1. Accounting Firms are Prime Targets for Cyber Criminals
Accounting firms handle large amounts of confidential data, including tax records, financial statements, personally identifiable information (PII), and even payment card data. This makes them an attractive target for cyber criminals. In recent years, phishing attacks and ransomware incidents have increasingly targeted the accounting industry.
In many cases, bad actors view accounting firms as entry points into a broader ecosystem of sensitive data. A single breach can have far-reaching consequences, affecting not only the firm itself, but also its clients and vendors. Proactively strengthening your cybersecurity defenses reduces this risk and helps ensure your firm doesn’t become a weak link in your clients’ security posture.
2. Cybersecurity Risk is a Business Risk
Cybersecurity is not just an IT issue. A security incident can lead to operational disruptions, financial losses, reputational damage, and legal liability. For accounting firms, even a short service interruption or data breach can significantly affect client trust and business continuity.
Investing in cybersecurity not only helps to protect your systems and data, but also helps you build long-term resilience. By integrating cybersecurity into your overall risk management strategy, you can make more informed decisions and demonstrate a proactive approach to safeguarding client assets.
3. Pressure from Regulators and Clients
Regulators and clients alike are placing increasing pressure on organizations to implement robust cybersecurity measures. For instance, depending on the services your firm provides, you may be required to comply with regulatory standards such as PCI DSS, which is required for organizations that store, manage, or process payment card data.
Client due diligence processes have also become more rigorous. Firms that fail to demonstrate adequate security controls risk losing out on new business opportunities. Establishing a security program now can reduce friction later and position your firm as a trusted service provider.
4. Build Trust with Clients and Partners
Demonstrating a proactive, well-documented approach to cybersecurity can strengthen relationships with clients, partners, and stakeholders. In many cases, security is a key differentiator, especially in competitive and highly regulated markets.
“CPA firms deal with a lot of sensitive financial and personal information, which makes them a big target for cyberattacks,” says Brett Davis, senior consultant at BARR Advisory. “In the current landscape, clients are looking for that extra layer of trust, and knowing their data is secure can really set a firm apart and build long-term confidence.”
By implementing and maintaining a security program that aligns with industry best practices, your firm signals to clients that their data is handled with the highest level of care. In turn, this can support client retention, help you win new business, and reinforce your reputation as a dependable partner.
How to Build an Information Security Program
At the core of any strong information security program are three vital principles: confidentiality (ensuring data is secured from unauthorized access), integrity (keeping information accurate and free from tampering), and availability (making sure data is accessible when needed). These principles serve as a foundation for protecting client information, preserving business operations, and maintaining trust—especially for accounting firms that routinely handle highly sensitive data.
How can your accounting firm build a security program that embodies these principles? Here’s how to get started:
1. Define Accountability
The first step in establishing an information security program is determining who is responsible for its oversight and execution. It starts at the top. Executive leadership should set the direction for the program by establishing policies, setting risk tolerance, and allocating resources. From there, leaders should designate a team who is responsible for implementing and managing the program on a day-to-day basis.
If your organization isn’t ready to hire full-time staff to manage security, consider outsourcing to a consultant who can help guide you through creating and managing a governance, risk, and compliance (GRC) program. For instance, BARR Advisory’s consulting team has years of experience helping organizations simplify complex requirements, stay ahead of evolving regulations, and foster customer trust. We can offer strategic guidance to help you build your security program from scratch, as well as provide access to automated compliance solutions and tools to enhance your program’s visibility.
2. Conduct a Risk Assessment
To effectively secure your organization and its data, you must first understand what needs to be protected. Start by identifying all assets that could store, process, or transmit sensitive data. This includes physical hardware, internal systems, cloud platforms, third-party applications, and data repositories such as databases or shared folders.
Next, identify potential threats to these assets, such as malware, ransomware, insider misuse, or physical damage. This can help you determine what incidents are most likely to occur so you can prioritize and develop a sound response plan.
You should also include third-party risk in this process. Make a list of vendors or service providers who have access to your systems or data, and assess each one based on the sensitivity of the data they can access. High-risk vendors should be subject to documented security requirements and ongoing monitoring.
Penetration testing is another valuable tool for identifying technical vulnerabilities. By simulating an attack, you can uncover potential security gaps before they are exploited.
3. Make a Plan to Manage Risk
Once risks are identified and prioritized, determine how each risk will be addressed within your firm. There are four general options for this:
- Reduce the risk: Implement security measures such as firewalls, multi-factor authentication (MFA), or employee training to reduce the likelihood or impact of the risk.
- Transfer the risk: Purchase insurance or outsource high-risk activities to a qualified third party.
- Accept the risk: If a risk is low in impact or too costly to mitigate, it may be formally accepted with appropriate documentation.
- Avoid the risk: Discontinue the activity that introduces the risk. While this is not always feasible, it may be appropriate in certain high-risk situations.
Another key part of your risk management plan is deciding how to respond to incidents. Even the most well-protected environments can be breached, and power outages and IT system crashes are inevitable. A good incident response plan will identify common incidents and outline what needs to be done—and by whom—in order to recover data and IT systems.
4. Educate Your Team Members
Employees play a key role in the success of any security program. Conduct regular training to ensure all members of your team understand their responsibilities, including how to identify and report suspicious activity such as phishing emails. New security policies or procedural changes should be communicated promptly to ensure all team members understand their unique roles in keeping your firm—and client data—secure.
“Everyone who works from a computer and has an email account should undergo basic security training,” BARR Cybersecurity Consulting Manager Larry Kinkaid wrote in a recent blog post, noting that training should be specific to each role within your organization.
“Role-based security awareness training doesn’t need to be an expensive investment or tedious task for your employees,” Kinkaid explained.
He added: “It can be as simple as starting a book club for developers who can meet on a bi-weekly or monthly basis to discuss educational books on secure development. At a minimum, employees should receive training appropriate to their role upon hire and annually thereafter. The goal is to be engaging and effective, not dull and time-consuming.”
5. Pursue Attestation
The best way to determine the effectiveness of your information security program is to hire a third-party auditor to offer an unbiased assessment of your current security posture and existing gaps. In some cases, undergoing a third-party audit might even be mandatory.
Third-party assessors can also perform vulnerability assessments, which include penetration tests to identify weaknesses in your organization’s networks, systems, and applications, along with audits against frameworks such as SOC 2, ISO 27001, PCI DSS, and HITRUST. Your firm can also conduct regular internal audits to assess your security controls and ensure they’re designed and operating effectively to keep sensitive data out of the wrong hands.
The Bottom Line
Developing a strong strategy for managing risk and ensuring data security is essential for accounting firms. As cyber threats become more sophisticated and regulatory expectations increase, firms must take proactive steps to secure their systems and protect client data. By building a comprehensive information security program, your firm can meet today’s security demands while preparing for tomorrow’s challenges.
Is your accounting firm’s cybersecurity posture up to par? Contact us today for a free consultation.