What do you need to know about data security?

Accounting firms are responsible for a wealth of sensitive client information such as tax file numbers, bank account information, and financial data, making them a prime target for cybercriminals. The loss of clients’ sensitive information can have devastating consequences for the client and the accounting firm. It can risk clients’ financial security and possibly lead to identity theft. It may also disrupt business operations and cause a loss of reputation and clients for the accounting firm, so extra precautions must be taken to safeguard this data.

There are several ways accounting firms can reduce their data risk and manage their security. This article will discuss common methods cybercriminals use when targeting accounting firms and provide tips on protecting accounting firms’ and clients’ data and what to do should a data breach occur.

The Most Common Ways Accounting Firms are Targeted by Cybercriminals

Phishing

Accounting firms are increasingly being targeted by scam emails that appear to be from a legitimate, trusted source. These emails, known as phishing, are designed to entice the recipient to click on a link to a malicious website and trick the victim into providing confidential information such as a username or password. The hacker would then use this to steal the account or access the business’s network. The email may also trick the recipient into downloading malicious software (malware) onto their device.

Malware

Malicious software (Malware) is a broad term that describes software designed to harm a computer, device, or network deliberately. Malware can be used as a way for cybercriminals to gain access to a computer without the user’s knowledge. Once the malware is installed, cybercriminals can access the computer and steal information, hold it to ransom, or install other programs on the computer.

Ransomware

Ransomware is a type of malware that can lock or encrypt files when unknowingly installed on a computer. The cybercriminal responsible for the attack will then demand a ransom from the victim to release the computer and files back to them. Ransomware can be very costly for businesses as the ransom can be in the thousands of dollars and can cause massive disruption to the operation of the business. It is often difficult to retrieve the data that the ransomware has encrypted.

How to Protect Your Firm’s and Clients’ Data?

Implement and review security policy and practices regularly

Accounting firms must thoroughly assess their network security to identify vulnerabilities and develop a robust cyber security policy. The policy should include a clear outline of the firm’s responsibilities and focus on preventative measures to protect the accounting firm from cyber-attacks rather than recovering from a breach. The goal is to make sure that they adhere to best practices and keep up with the latest security threats. Security strategies need to be regularly reviewed to mitigate the risk and ensure compliance with laws and regulations.

Install Security Software

Security software must be installed on all computers and mobile devices, including laptops, tablets, and phones. Security software should include a firewall, antivirus/antimalware program, and antispyware program. These programs can help prevent malware from being downloaded, protect from unauthorised access to and from the internet, and monitor all incoming and outgoing traffic on the network. They can also help to block unwanted emails from entering the inbox. It is also crucial that the security software is up-to-date, which can be done by allowing automatic updates and keeping an eye out for notifications about new software versions to install manually.

Regularly update software

Software should be regularly updated for patches and security updates to protect against the latest threats. It is also essential to avoid using outdated software that is no longer supported, as this puts firms at risk of being hacked by cybercriminals that exploit known vulnerabilities.

Physical Security

Accounting firms should have a physical security strategy to protect sensitive data from being stolen. They should keep all of their devices secure and restrict access to only authorised personnel. This may include using employee key cards, biometric scans, passwords, and monitoring of foot traffic in the areas where critical data and systems are stored. They should also have a policy to dispose of confidential data, such as shredding documents or deleting files securely.

Administrative security

Administrative security is the process of protecting data by restricting access to it. Accounting firms should create user accounts for each employee and limit their access to only those files that are relevant to their duties. This mitigates the risk that the entire organisation is breached if there is a breach on one computer. This also restricts the ability of someone to view or share sensitive information, which may be either deliberately or inadvertently misused.

Employee training and education

Accounting firms should train their employees to recognise phishing emails and other scams to avoid falling victim to them. They can also educate them about proper password hygiene, such as choosing strong passwords and never sharing them with anyone else or using the same password for multiple accounts. They should also be aware of the risk of social engineering when someone tries to trick them into revealing confidential information.

Obtain cyber security insurance

Another way to protect an accounting firm from the consequences of cybercrime is to have cyber security insurance. Cybersecurity insurance can help cover the costs associated with data breaches, including forensic investigations, notification expenses, and credit monitoring services for affected individuals and assist with data recovery.

Strong Password Policy

A strong password policy is essential for accounting firms. Employees should use a long, random string of characters for their passwords and never reuse them across multiple accounts or devices.

Multifactor Authentication

Firms should consider enabling two-factor authentication on their accounts. Which requires two forms of identification, such as a password and a code sent to a mobile phone, to log in.

Encrypt critical data

Accountants can also protect their data by encrypting it. Even if cyber criminals obtain the information, they will not be able to read it without a decryption key. It is also a good idea to encrypt any emails communications with clients.

Regularly Back up data

Accounting firms can protect their data by having several backup strategies. The strategy will vary depending on the size of the business. It may include real-time backups or generation backups, backups to an external hard drive that is kept offsite, or a cloud storage service. This ensures that the data can be restored from a backup if there is a cyber incident, potentially limiting the disruption.

How to Respond to a Data Breach?

If an accounting firm has experienced a data breach, it’s essential to take immediate action. Accounting firms should report any potential breaches to their specialist IT department or external security team as soon as possible. They should also contact their cyber security insurers to determine if they have coverage for data breaches and what support they will provide to remedy the situation.

If there is evidence that cybercriminals have accessed sensitive information such as client data or financial records, the appropriate authorities must be notified. Once the breach has been contained, accountants should begin advising their clients and employees, and they should also work with their clients to help them protect themselves from identity theft.

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