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Why is it Critical for Your Accounting Firm to Implement Data Security?

By Analytix Editorial Team

September 9, 2022 0 Comments
Critical for Accounting Firm to Implement Data Security

Financial data, including banking information, accounting, and tax details, are vulnerable to theft and security breaches. Given the high volume of detailed financial data that accounting firms manage, data security should ideally form an essential element in accounting operations.

A report in the Journal of Accountancy says that accounting firms are a top target for cybercriminals because of their access to financial and other personal client data. Cybersecurity breaches are estimated to cost businesses as much as $1.5 trillion annually.

However, like most businesses, accounting firms often choose diverse safety practices and programs. Business size, customer profile, demographics, and requirements all play a crucial role in determining the data security approach taken by accounting firms.

However, the one fact underlining these differences is that data security needs to be taken more seriously. Here are some reasons why accounting firms must consider data security as a critical requirement:

#1. Mitigating Threats to Business Continuity

Any breach in data security can jeopardize sensitive financial information belonging to an accounting firm or that of its clients. This can negatively impact existing businesses, trust, and goodwill at a large scale, in addition to threatening business continuity and sustainability.

#2. Ensuring Financial Data Safety

Because accounting firms handle a high volume of financial data, implementing data security and safety provisions is critical to ensure that breaches do not occur.

Human error may not be entirely avoidable. Studies report that 80 percent of breaches are caused by human error.

Some of the steps to reduce such mistakes include implementing better security practices, using safer software, and deploying consistent and timely data safety measures, including automation of high-volume and attention-intensive tasks like invoicing, inventory tracking, and payroll.

#3. Reducing the Risk of Extensive Loss                                              

Data breaches can lead to even more severe issues. These include unintentional fraud, which can then lead to the accounting firm losing credibility, customer trust, and eventually, their business. Furthermore, cyberattacks such as phishing and hacking can also constitute major risks to data security. Malware is also a massive threat to accounting data as attacks can leave data encrypted or leave entire computer networks incapacitated through infection.

How Can Data Security be Better Implemented?

  • Ensure adequate training for in-house employees in matters related to data security
  • Implement cybersecurity practices in business operations
  • Teach stakeholders to understand the prevention of data loss and the techniques involved in this security measure
  • Invest in adequate backup and data storage
  • Organize and clean up backup files and data storage hubs regularly
  • Delete older data periodically
  • Secure essential data as a backup on offsite premises
  • Authorize access to data and limit the access individuals have to data pools

Ensuring Data Security for Your Accounting Firm

Data security measures do not need to be expensive. If handled professionally, data security and the necessary backup and storage solutions can offset the investment made by businesses, thus helping them thrive and become profitable.

Given the critical nature of accounting data, investing in professional assistance can help accounting businesses gain the data security they need to protect client data. Professional assistance can take over data security in the following ways:

  • Ensuring data safety from the beginning, given their robust infrastructure and resources.
  • Ensuring up-to-date and robust security for existing accounting firm client data.
  • Choosing professional assistance to identify business operation areas needing critical data security.
  • Harnessing professional resources and infrastructure to optimize security measures
  • Ensuring backup and storage as needed and wherever it’s most critical.
  • Ensuring freedom from the hassle of setting up and maintaining data security maintenance systems.
  • Helping train in-house resources in security measures; helping build security compliance in operations.
  • Helping accounting businesses build efficiencies in overall operations, building a competitive edge to ensure business building efforts.

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