Whether you run your own firm or work in-house, you're at high risk of cyber attack as an accountant. After all, you work with critical financial data daily that's desired by bad actors. Other factors, such as remote work and a boost in the use of cloud technology are muddying the cybersecurity waters even further.
A recent poll by Deloitte found that almost half of executives expect the number and size of cyber events targeting accounting and financial data to increase in 2023. This comes after a staggering 300% increase in cyberattacks that occurred in 2020 due to the pandemic.
The best way forward is to keep your accounting data under lock and key. In this guide, we dive into the basics of cybersecurity for accountants, so you can safeguard your data and protect your clients.
Before we get started, here are the five key things you should know:
- Accountants access and use large volumes of financial and customer data making them a common target for cybersecurity threats.
- There are many types of data at risk in accounting firms or departments, including bank account numbers, tax records, and credit card information.
- Common accounting cybersecurity risks range from data breaches and phishing to ransomware and data misuse.
- To protect your critical data, there are various best practices to follow, such as implementing data backups and developing a cybersecurity strategy.
- Using a password management tool like TeamPassword is a simple way to protect your critical accounting data from security threats.
[Table of Contents]
- Why Should Accountants Be Concerned With Cybersecurity?
- What Are the Cyber Risks for Accounting Firms?
- Cybersecurity for Accountants: 7 Ways to Safeguard Your Data
Why Should Accountants Be Concerned With Cybersecurity?
As technology expands, cyber threats follow suit, making cybersecurity a necessity. This is especially true for accountants, who must access, use, and manage large volumes of financial data.
Cybersecurity events of any kind can be detrimental to your organization. For example, a data breach can lead to severe financial loss. According to IBM, the average cost of a data breach in 2023 is $4.45 million in the US. Other potential losses include reputational damage that could prevent the growth of your organization.
These events not only threaten to harm your business; financial or other personally identifiable information (PII) falling into the wrong hands can lead to many consequences for your clients too. For example, clients could become victims of identity theft or suffer financial loss from leaked social security or bank account numbers.
Rest assured, it's not all doom and gloom. Putting a cybersecurity strategy in place can help you prevent these consequences and protect everyone involved.
Types of Accounting Data at Risk
Protecting your data requires you to understand the types of data at risk. In accounting specifically, there are many critical data types, including:
- Bank account numbers
- Tax records
- Client demographics (name, date of birth, address, etc.)
- Social security numbers (SSN)
- Credit card and payment information
Of course, various data types are at risk across all industries, including passwords, emails, employee files, and beyond.
What Are the Cyber Risks for Accounting Firms?
Accounting firms and organizations face a wide range of cybersecurity risks that threaten their critical data. Some of these risks include:
- Data breaches: A data breach occurs when an unauthorized individual gains access to sensitive data. These breaches may happen due to hackers trying to steal data or by mistake. For example, an employee may accidentally share a confidential document.
- Phishing: Phishing occurs when a cybercriminal pretends to be another entity to try and get personal or financial information. For example, they may pose as a bank looking for financial information about a client. Phishing can happen via phone, email, or even text message.
- Ransomware: Ransomware is a type of malware used by cybercriminals to hold your data for ransom. This often happens after clicking a suspicious email link or visiting a website infected with ransomware.
- Data misuse: Some threats happen simply due to the misuse of data. For example, data may be stored improperly or there may be a lack of access control for critical files.
Cybersecurity for Accountants: 7 Ways to Safeguard Your Data
To protect your critical accounting data from the above risks, there are several cybersecurity best practices to put into place. And luckily, you can take many of these steps today.
#1. Know Your Risks
How can you prevent accounting cybersecurity risks when you're not sure what they are? The first step in securing your data is performing a risk assessment. This assessment will help you pinpoint the specific risks threatening your organization so you can take the necessary action to eliminate them.
To get started with a risk assessment, take inventory of the devices and services you use to access and store data. Do a thorough review of these devices and services to pinpoint security risks. Then, determine your next steps based on which risks should be mitigated first.
#2. Backup Your Data
Data backups ensure your organization can continue serving your clients in the event of a breach or other security incident. In its simplest form, a data backup is simply a copy of all of your critical data. If something happens to your primary dataset, you'll still have access through your backup.
To get started, most experts recommend the 3-2-1 rule for backups. This means you should:
- Have one primary backup and two copies of your data.
- Save backups to two different media types.
- Keep one backup file in another location.
#3. Enable Data Encryption
While the devices and services you use to access data are probably password-protected, that's simply not enough. For iron-clad data security, you must implement data encryption.
With encryption, even if an authorized individual were to get through using your password, they would be unable to read the "encrypted" data. Many apps, services, and devices include some level of encryption. However, it's best to reach out to a cybersecurity professional who can ensure your data is protected.
#4. Use Email Safely
It's a common practice for accountants to use email to communicate with colleagues and clients. While convenient, email comes with its own security challenges. For example, email inboxes are common targets for phishing scams and malware.
It's important to use email safely by following these best practices:
- Don't click suspicious links or open attachments from unknown senders.
- Avoid sending out sensitive information (such as bank account numbers or social security numbers) via email.
- Log out of your email after every session (a password manager makes this less of a pain).
- Use a spam filter to push suspicious emails out of your inbox.
- Don't use your personal email for business, and vice versa.
- Change your email password regularly (every three months at least).
#5. Share Files Appropriately
Accounting requires numerous different types of files, from tax returns to balance sheets. Often, these documents must be shared between clients and colleagues. To avoid these documents being accessed by the wrong party, it's important to share them appropriately.
Use a secure file-sharing service that offers security features such as end-to-end encryption and access control. And for highly sensitive files, consider password-protecting them before you share.
#6. Create a Cybersecurity Strategy
A cybersecurity strategy outlines how your accounting team or firm secures its data and how you'll respond to security incidents when they occur. Having a clear strategy in place ensures all the necessary steps are followed in the event of a breach. Plus, it keeps all stakeholders on the same page, from threat detection to mitigation.
When developing your cybersecurity strategy, there are several components to include. Some of these components are as follows:
- Inventory of devices, apps, and services
- Risk assessment
- Data privacy policy
- Acceptable use policy
- Security incident response plan
Want to learn more about cybersecurity strategy? Check out the Cybersecurity Resource Center offered by the American Institute of Certified Public Accountants.
#7. Improve Your Password Hygiene
Passwords are the first line of defense when protecting your critical data. That's why it's important to follow these password best practices:
- Use strong passwords: Avoid using easy-to-guess words and phrases such as your name and birthdate. Instead, create passwords that are at least 12 characters long using a combination of letters, numbers, and special characters.
- Update passwords regularly: Update those strong passwords at least every three months for the best protection.
- Use two-factor authentication (2FA): Two-factor authentication (2FA) requires a second factor for access, such as a passcode, in addition to your password. Using 2FA, if your password was compromised, the individual would also need to have the second factor to gain access to your data.
- Implement a password manager: For the best protection, use a password manager to keep your passwords secure. TeamPassword allows you to securely share passwords with your team while reaping the security benefits of robust access control. Using a password manager, all of your passwords are stored in one centralized location—no risky spreadsheets required.
Manage & Share Passwords Safely With TeamPassword
Taking the above steps will help you protect your critical accounting data. And if you're ready to get started quickly, implementing a password manager is an excellent first step.
TeamPassword was built for teams who want to store and share passwords securely. We can help you in protecting your most valuable assets through access control, password generation, two-factor authentication (2FA), and more. Sign-up for TeamPassword to get started!
