A USA-based cyber security company, “CrowdStrike” recognises that accounting industry is going to be the next prime target for cyber criminals as any company’s main asset is its accounting department, where they have information stored regarding their monetary ins and outs.
In Crowdstrike’s 2022 and 2023 annual cyber threat report, they have revealed the following statistics of cybercrimes related to accounting firms:
- Annually, cyber threats cost small accounting firms an average of $46,000
- For medium-sized practices the numbers goes up to $97,200
- And for large practices it is nearly $71,600
The personal financial and other sensitive data held by CPAs and accounting agencies make them hacker’s prime targets for cyber attacks. This makes it critical for them to not just be well-composite in cybersecurity best implementation but to actively train their clients and team members on these best exercises as well.
Why Cybersecurity Matters in Accounting
It is known that cyber attacks can have long lasting and harmful impacts on accounting agencies and this threat continues to increase. According to a survey conducted in 2023, 35% of executives reported that their companies’ accounting data has already been a victim of various cyber adversaries. In fact, this cyber attacking has become such a major problem for the accounting industries across the world that it is now decided to include a new section in CPA exam specifically focused on information systems and restrictions, to make sure all new accountants have the technical knowledge required to protect all the sensitive information.
The pandemic has only elevated the cybersecurity threat to accounting firms
The 2019 pandemic has not just worsen other businesses but also made a huge impact on accounting industries. With the overnight working-from-home mutiny due to the lockdown, the added cyber provocation that came with it, including a flash flood of Covid-related frauds, practices with the nature of the statement data they hold, need to be more on-the-hand than ever to steer clear of the risk of a financial data contravention.
The position of the accounting practice is at stake
It is known that professional position of an accounting firm plays a very crucial role in its continued success, that attracts client for long term and recurring relationships. And long term relationships with the clients are the life blood for any accounting firm. Any kind of data violation leaves the repute of accounting firms open to vulnerability, and potential legal consequences, in the name of stolen or fraudulent financial data.
Different Types of Cyber Threats
Understanding the various outlook of cyber threats is critical for building and maintaining a vigorous security position. In the accounting world, where sensitive financial and sensitive information is the constituent part of your business, you must be ready for a variety of risks that come along.
Phishing Attacks
A phishing attack happens when a hacker pretends to be someone else in an attempt to get valuable information from you, using various different detail mapping techniques. An example of a phishing, within accounting can be could be an email that seems to have been sent to you by the IRS, questioning you to click a given link and provide personal information. Phishing can also be done in the form of text message or even direct mail, and it’s very important to closely analyse any message you receive from un known sources, before clicking any links or providing any sensitive information.
Malware and Viruses
Malware is an infected malicious software developed by hackers to steal data and and take control of a computer system. There are many ways to infect your computer with malware, and one of the main ways is phishing.
Insider Threats
An insider threat is a kind of cyber strike that derives from within your company. In these cases, an employee, regular business contractor, or other individual with access to company data either knowingly or unknowingly involves in activities that compromise private information of the company. These kinds of threats happen all the time. Sometimes they can be nothing more than just a mistake and sometimes it is done intentionally.
Understanding the different types of cyber threats is the first step in creating a powerful cybersecurity plan for your accounting agency. From malware and phishing to these insider threats, each approach requires a unique set of protective measures. By staying up to date and keen-eyed, accounting firms can protect themselves and their clients from the ever-evolving outlook of cyber threats.
How to ensure cybersecurity within the firms
1. Access and specify management
One of the major ways you can in-script risk is by installing technology that adds a layer of indispensable security over all your accounting and digital operations. Accessing and managing the operations mean taking control over all the pathways through which company’s private data is suppose to run through, and look after for the involved parties who can access this data.
For accounting firms, this may involves the user account management, roles, and permissions, as well as imposing safety measures and procedures to ensure that sensitive financial information is only reachable to authorized individuals.
2. Giving your employees proper cyber education
While there are so many technical and theoretical measures you can take to improve your company’s cyber health, it’s widely known that humans are one of the fragile and unreliable links in the chain. Humans are endangered to a variety of social engineering hacking tactics (like phishing emails and scam messages) that are designed to take advantage of their trust and ignorance both. This human flaw is just as threatening as any other cybersecurity threat.
To reduce the risk of human error or conscious disruption, it is essential that you invest in awareness and educational programs for your employees. So even if they are deliberately sabotaging the company’s information, they will know that the company is completely aware of the cyber threats and is ready to take any actions that may be required if something happens.
Training courses are outlined in such a way that they raise awareness about the importance of cybersecurity and the kind of threats their employees may face. This may include topics like how to recognize common phishing attacks and how to report suspicious activity just on time.
It’s also worth looking at how to diminish specific types of alarming signs, such as ransomware or malware attacks. By providing employees with this knowledge, they are better provisioned to defend themselves and your firm from cyber attacks.
3. Compliance documentation
Compliance is also a crucial piece of interlinked cybersecurity. Depending on which country you work in, there are constitutional requirements of compliance, such as the Written Information and Security Plan sanctioned under IRS 4557 in the US. So it is important to look what’s required in your country to meet the lawful standard.
In addition to that, there are several more internal policies that can help your contractors and employees safely access and handle data routes, such as:
- An internet policy
- Data usage policy
- Third-party access agreement and permission
You might also want to consider a cyber attack response plan, to make sure a well thought out process is in place in the unfortunate event of a infringement.
4. Make cyber security a big concern
If it is not a pressing matter to you already, it should be. There is always something more important and urgent that require both your time and attention. But no accounting practice should detain this measure a moment longer. We encourage you to put cyber security at the foremost position of developing your accounting firm’s digital footmark rather than authorise it to be something that can be dealt with later. Because it cannot be!!
5. Use Strong Passwords, and Never Share Them
In 2024, there is no excuse of not using strong passwords. All the web browsers have built-in password generators and password savers, and there are various more paid options for password managers as well. Most importantly, ensure you change the passwords for your digital devices, including your mobile phones, computer systems and other devices, too–not just for your online company accounts. Also, use two-factor authentication whenever possible to prevent any unwanted access in the occurrence that your password ends up in the wrong hands.
6. Implement Regular Software Updates
Always enable automatic regular updates for all your softwares and devices to ensure you’re completely protected against known attacking. Regular updates not only fix security defects but can also add new attributes and improve overall performance.
7. Establish a secure Data Backup Protocol
We all know that in accounting, there is no place for mistakes when it comes to maintaining firm’s records. Cyber attacks and other tragedies can cause data loss and hacking attempts, and it is really important to be mentally prepared at all times. No doubt external hard drives can provide data saving solutions, but do consider a cloud-based service as well, that will regularly and automatically back up your data, to make sure you have the paper stream and backups you may require to stay operational and defended against any cyber threats.
8. Secure Your Vendor Relationships
Regularly evaluate the primary security measures of your software and devices providers to ensure they maintain suitable levels of shielding for your client’s data.
Never Forget a Disaster Recovery Plan
While the word “disaster” may sounds like more of a once in an year weather situation and other natural freaking scenarios like earthquakes and floods, only the most heedful worry about, it could be caused by something much more prevalent: a power outage, for instance. Regardless of the cause, a disaster is a significant intervention and often takes substantial money and time restoring everything back.
And you’re most likely to experience at least one major disaster during the life of your accounting business. While exact estimates may vary, most researchers and analysts agree that the majority of companies – between 70% and 96% – were affected by a cybercrime that resulted in data loss in the last three years.
This is why it is crucial for every firm to keep a disaster recovery plan (DRP). A DRP is your roadmap as a response to unplanned events. Accounting practices without disaster recovery plan most likely waste time trying to figure out the best way forward.
FAQS
Cybersecurity is like a digital shield that protects sensitive information from being accessed or stolen by hackers. For accounting firms, it’s super important because they deal with people’s financial data, like taxes and payroll, which could be very valuable to cybercriminals.
There are sneaky cyber threats out there, like phishing emails pretending to be from a client or a colleague, viruses that can infect computers and steal data, and even ransomware that locks up files until a ransom is paid.
They can use strong passwords, update their software regularly to fix any security holes, and train their staff to recognize suspicious emails or websites. It’s also smart to encrypt sensitive files, like encrypting a secret message so only the right person can read it.
If they suspect a cyber attack, they should act fast! They should disconnect any infected computers from the internet, report the attack to their IT team or a cybersecurity expert, and change all passwords to stop the hackers from getting further into their systems.