Why Data Security Is Crucial for Accounting Firms: Best Practices
Your Firm contains tons of client data, all confidential and private. Having an IT team focus on keeping your firm’s data safe is a necessity. Find out more below.
Imagine waking up to find your firm's confidential client data compromised. Not only would this be devastating for your clients, but it could also tarnish your reputation and lead to costly legal difficulties. Safeguarding cloud-based data is not just a necessity; it's a fiduciary duty. In an environment where cyber threats are growing more sophisticated by the day, understanding how to protect this valuable information is crucial.
Our team has put this blog post together to help you understand the risks involved in cloud-based workflow and the best practices needed to preserve the integrity of your cloud-based data.
Understanding the Risks of Cloud-Based Data for Accounting Firms
Cloud computing offers numerous advantages, such as flexibility, scalability, and cost-effectiveness. However, these benefits come with their own set of risks. Cybercriminals are always on the lookout for vulnerabilities to exploit, and accounting firms are prime targets due to the sensitive nature of the data they handle. Common risks include data breaches, unauthorized access, and data loss. Understanding these dangers is the first step in creating a robust security strategy for your accounting firm.
In a 2023 survey titled “The State of Ransomware in Financial Services 2023,” the company Sophos noted that “the rate of ransomware attacks in financial services continues to rise. It went up from 55% in the 2022 report to 64% in this year’s study, which was almost double the 34% reported by the sector in the 2021 report.” 1
Ransomware and data breaches are always a concern, but unauthorized access of data can be equally devastating. Unauthorized access is a scenario where individuals within or outside your firm gain access to data they shouldn't have. Data loss is yet another challenge to an accounting firm’s brand image. This can happen due to system failures, accidental deletions, or inadequate backups, putting your firm at risk of losing crucial information.
Best Practices for Protecting Cloud-Based Data in Accounting
There is an array of tools and protocols that IT professionals utilize to guard the on-site and cloud-based data of an accounting firm. However, for those firms just starting their cybersecurity voyage, here are some mission-critical best practices.
Secure Data Encryption
One of the most effective ways to safeguard your data is through encryption. Even if hackers manage to infiltrate your system, encrypted data will be virtually useless to them without the decryption key. Make sure to use strong encryption algorithms such as Advanced Encryption Standard (AES) to protect your data. In addition, ensure that data is encrypted both in transit and at rest to provide holistic protection.
Encryption plays a vital role in maintaining client trust. When clients know that their data is securely encrypted, they are more likely to feel confident in your firm's ability to protect their sensitive information.
Multi-Factor Authentication
Multi-Factor Authentication (MFA) adds an extra layer of security by requiring users to provide a minimum of two forms of identification before accessing data. Implementing MFA can significantly lower the risk of unauthorized access. It's a simple yet powerful way to enhance your firm's security posture.
To learn more about the setup and management of MFA on your systems, have a talk with one of our team.
Regular Data Backups
Regular data backups are essential for protecting your firm against data loss. Schedule automatic backups. Your backups should always be up-to-date and stored in multiple locations. This way, if a cyberattack or system failure occurs, you can efficiently restore your data and minimize downtime. Cloud service providers and cloud-based applications often offer backup solutions, but it's crucial to verify that they meet your firm's specific needs. Usually, companies need a more robust backup solution than what come standard in cloud workflow solutions.
Test your backup restoration process regularly to identify any potential issues and ensure that your data can be quickly and easily recovered in the event of an emergency.
Employee Cybersecurity Awareness Training
Your employees are the first line of defense against cyber threats. Regular training sessions on cybersecurity best practices can help employees notice and respond to potential threats. Topics to cover should include:
Share cybersecurity awareness articles, updates, and best practices through internal newsletters or team meetings. By investing in employee training, you can create a more resilient and security-conscious workforce.
Compliance and Regulatory Considerations for Cloud-Based Data in Accounting
Accounting firms must adhere to specific security measures, such as encryption and access controls. Familiarize yourself with relevant regulations. Compliance with relevant regulations not only protects your firm from legal repercussions but also demonstrates your commitment to data security. Consider working with a IT compliance expert determine whether your IT use meets all necessary requirements and the highest level of data protection is maintained.
Wrapping it up: The Future of Data Security in Cloud-Based Accounting
Securing your cloud-based data is an ongoing process that requires continuous vigilance and the adoption of best practices. By implementing protocols such as secure data encryption, Multi-Factor authentication, regular backups, and employee training, you can help protect your firm's valuable information and maintain client trust. We encourage you to partner with ChoiceCom to have continuous management of the IT side of your compliance requirements.
Together, we can create a safer and more resilient accounting industry.
1 Source: The State of Ransomware in Financial Services 2023 - Sophos News (Accessed 2024-07-29)
Our team has put this blog post together to help you understand the risks involved in cloud-based workflow and the best practices needed to preserve the integrity of your cloud-based data.
Understanding the Risks of Cloud-Based Data for Accounting Firms
Cloud computing offers numerous advantages, such as flexibility, scalability, and cost-effectiveness. However, these benefits come with their own set of risks. Cybercriminals are always on the lookout for vulnerabilities to exploit, and accounting firms are prime targets due to the sensitive nature of the data they handle. Common risks include data breaches, unauthorized access, and data loss. Understanding these dangers is the first step in creating a robust security strategy for your accounting firm.
In a 2023 survey titled “The State of Ransomware in Financial Services 2023,” the company Sophos noted that “the rate of ransomware attacks in financial services continues to rise. It went up from 55% in the 2022 report to 64% in this year’s study, which was almost double the 34% reported by the sector in the 2021 report.” 1
Ransomware and data breaches are always a concern, but unauthorized access of data can be equally devastating. Unauthorized access is a scenario where individuals within or outside your firm gain access to data they shouldn't have. Data loss is yet another challenge to an accounting firm’s brand image. This can happen due to system failures, accidental deletions, or inadequate backups, putting your firm at risk of losing crucial information.
Best Practices for Protecting Cloud-Based Data in Accounting
There is an array of tools and protocols that IT professionals utilize to guard the on-site and cloud-based data of an accounting firm. However, for those firms just starting their cybersecurity voyage, here are some mission-critical best practices.
Secure Data Encryption
One of the most effective ways to safeguard your data is through encryption. Even if hackers manage to infiltrate your system, encrypted data will be virtually useless to them without the decryption key. Make sure to use strong encryption algorithms such as Advanced Encryption Standard (AES) to protect your data. In addition, ensure that data is encrypted both in transit and at rest to provide holistic protection.
Encryption plays a vital role in maintaining client trust. When clients know that their data is securely encrypted, they are more likely to feel confident in your firm's ability to protect their sensitive information.
Multi-Factor Authentication
Multi-Factor Authentication (MFA) adds an extra layer of security by requiring users to provide a minimum of two forms of identification before accessing data. Implementing MFA can significantly lower the risk of unauthorized access. It's a simple yet powerful way to enhance your firm's security posture.
To learn more about the setup and management of MFA on your systems, have a talk with one of our team.
Regular Data Backups
Regular data backups are essential for protecting your firm against data loss. Schedule automatic backups. Your backups should always be up-to-date and stored in multiple locations. This way, if a cyberattack or system failure occurs, you can efficiently restore your data and minimize downtime. Cloud service providers and cloud-based applications often offer backup solutions, but it's crucial to verify that they meet your firm's specific needs. Usually, companies need a more robust backup solution than what come standard in cloud workflow solutions.
Test your backup restoration process regularly to identify any potential issues and ensure that your data can be quickly and easily recovered in the event of an emergency.
Employee Cybersecurity Awareness Training
Your employees are the first line of defense against cyber threats. Regular training sessions on cybersecurity best practices can help employees notice and respond to potential threats. Topics to cover should include:
- phishing attacks
- password management
- safe internet browsing habits
Share cybersecurity awareness articles, updates, and best practices through internal newsletters or team meetings. By investing in employee training, you can create a more resilient and security-conscious workforce.
Compliance and Regulatory Considerations for Cloud-Based Data in Accounting
Accounting firms must adhere to specific security measures, such as encryption and access controls. Familiarize yourself with relevant regulations. Compliance with relevant regulations not only protects your firm from legal repercussions but also demonstrates your commitment to data security. Consider working with a IT compliance expert determine whether your IT use meets all necessary requirements and the highest level of data protection is maintained.
Wrapping it up: The Future of Data Security in Cloud-Based Accounting
Securing your cloud-based data is an ongoing process that requires continuous vigilance and the adoption of best practices. By implementing protocols such as secure data encryption, Multi-Factor authentication, regular backups, and employee training, you can help protect your firm's valuable information and maintain client trust. We encourage you to partner with ChoiceCom to have continuous management of the IT side of your compliance requirements.
Together, we can create a safer and more resilient accounting industry.
1 Source: The State of Ransomware in Financial Services 2023 - Sophos News (Accessed 2024-07-29)
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