By Vicky Ingale, Assistant Vice President, Accounting To Taxes
Ever since the digital revolution has taken the world by storm, it seems everything has become interconnected. Cybersecurity and accounting are no exception. The evolution of complex and more intelligent threats in cyberspace has created a need for a holistic approach to secure sensitive financial information.
Traditional measures, such as the use of antivirus and firewalls, remain a fundamental approach to cybersecurity, but they are inadequate for today’s dynamic risks, particularly with the emergence of AI.
Cybersecurity expert Roland Costea, CISO at SAP, states, “The intersection of AI and cybersecurity is complex…But one thing is certain: AI is now a reality and will only grow in importance in the cyber defense space.” So, businesses have to prioritize cybersecurity and accounting to protect the business and its financial data from risks.
The Intersection of Cybersecurity and Accounting
While cybersecurity is a conventionally different domain from accounting, the two coincide when it comes to the management and protection of financial information.
Accounting firms are vulnerable to cybercriminals due to the large amount of data that they deal with. Cybersecurity is all about protecting computers, networks, and information and data. On the other hand, accounting is the process of recording, evaluating, summarizing and communicating financial transactions. Together, they provide two elements of financial information: reliability and protection.
Moreover, accounting firms are always on the radar of hackers. An example is the 2017 Deloitte cyber-attack that saw the hacking of email addresses, sensitive documents and login details that hampered clients’ trust in the brand.
What is the Duty of an Accounting Professional in Cybersecurity?
Your in-house accountants or outsourced accounting services partner handle highly sensitive data, from payrolls to tax filings, and their responsibility extends beyond traditional tasks. They must implement robust cybersecurity measures like two-factor authentication, encryption, and strict access controls to mitigate risks and uphold client trust. Without such protections, a data breach could lead to severe financial loss, damaged reputation and client attrition.
What are the Common Security Challenges in the Accounting Industry?
Transitioning to the year 2025, accounting firms will encounter numerous technological risks:
- Phishing Attacks and Fraudulent Activities – These attacks intend to deceive the employee into releasing personal information to an impersonator to carry out fraud.
- Threats to Financial Systems – Ransomware involves encrypting a client’s or company’s financial data. The attacker demands payment before providing the decryption key.
- Malware – The primary purpose of malware is to skim for or contaminate data. This risk is especially high for accounting firms because they deal with large amounts of sensitive financial data.
- Spam – Most spam mail is infected with malware or phishing schemes sent by persons masquerading as clients or even vendors.
- Insider Threats – Any company employee handling sensitive financial data is a threat.
Cybersecurity Best Practices in Accounting Firms
Every accounting firm must grapple with the challenges of establishing and enforcing cybersecurity best practices, such as:
- Learning About New Threats and Security Solutions – It is imperative that you update your knowledge on new threats, which are usually highlighted by the IRS Dirty Dozen. Be aware of ways to stop a security threat before it intrudes and learn about new compliance regulations.
- Setting up Security Standards – A vulnerability scan of the company’s operations will reveal weaknesses such as poor password usage, non-encrypted information or old software. The use of MFA, spam filters and secure firewalls are ideal measures for improving your firm’s security system.
- Training Your Staff – People make mistakes. Simple measures such as training employees on possible risks and how to avoid them can go a long way to avoiding breaches. An incident response plan to help employees navigate through security incidents can minimize the impact.
- Considering Cyber Insurance – Cybersecurity insurance is a defense against unfair losses in the event of cyber violations by covering costs of data retrieval, legal bills and tarnished image. Some also offer risk assessments so that you can guard your firm against certain exposures. Cybersecurity insurance is also becoming essential as the global climate for cybercrime increases and is expected to generate $9.5 trillion in damages by 2024.
- Choosing Software that Protects You from Malicious Activities – Use software that has a high level of security standards. For example, TaxDome, TurboTax, H&R Block ensure data encryption, two-factor identification and other rules of access to the data. Make sure that your firm uses software that complies with standards such as PCI DSS, GLBA, SOC 2, etc.
The Future of Cybersecurity in Accounting Seems to be Growing
As the accounting profession evolves, so must cybersecurity. One major trend is the increasing use of top technologies like blockchain and behavioral biometrics. Blockchain reduces the likelihood of fake account records due to its distributed and immutable records. Behavioral biometrics, which deals with the behavior of the user, provides an extra measurement of safety by classifying the actual user.
A strong, continuous working partnership of the accounting and cybersecurity departments will drive technological advancement and create a united front to fight the cyber challenges ahead.
Vicky Ingale is the assistant vice president at Accounting To Taxes, with over 15 years of experience in finance and accounting. He specializes in financial strategy, process improvement and system implementation.
