In recent years, cyberattacks have increased across many industries, but accounting firms have become prime targets. Since the start of the COVID-19 pandemic, cyberattacks on accounting firms have surged by 300%, according to Accounting Today. These firms face unique risks because of the sensitive financial information they handle, and the penalties for a data breach can be severe. Understanding these risks, the associated penalties, and regulations—such as the requirement for a Written Information Security Plan (WISP)—is crucial for accounting firms to protect themselves and their clients.
Why Are Accounting Firms Targets?
Accounting firms are appealing targets for cybercriminals due to the vast amount of sensitive data they handle. This data includes personal information like names, addresses, Social Security numbers, and bank account details. Criminals can use this information to commit fraud or sell it on the black market. Furthermore, accounting firms often work with businesses, giving hackers access to data from multiple companies in a single attack.
While large firms are obvious targets because of their extensive client bases, smaller firms are often more vulnerable. Many smaller firms lack the resources to invest in strong cybersecurity systems, making them easy prey for cybercriminals. The sudden shift to remote work has further increased vulnerabilities. Firms were forced to adopt new software and systems quickly, and many have not yet secured these tools, leaving their data exposed.
Common Cybersecurity Threats for Accounting Firms
Ransomware Attacks
Ransomware is a type of malware that locks users out of their systems or encrypts their files until a ransom is paid. Even after paying the ransom, there’s no guarantee that the attackers will restore access to the files. Earlier this year, three contractor-focused accounting firms were hit by ransomware, affecting their ability to pay contractors and forcing some systems offline. In addition to operational disruptions, a data breach leaked over 400,000 files from the affected firms.
Ransomware attacks can be devastating for accounting firms. Beyond the potential data loss, firms may face significant fines if they haven’t taken the proper precautions to protect client data. Fines can average around £15,000, and firms are also required to report significant breaches within 72 hours.
Phishing Scams
Phishing is another major threat to accounting firms. In a phishing attack, cybercriminals send emails or messages that appear to be from trusted sources to trick recipients into revealing sensitive information. These scams often use familiar terms like “Outstanding Invoice” or reference real colleagues or events to make the emails seem legitimate.
Once a phishing email is opened, attackers can install malware or steal sensitive data. Preventing phishing attacks requires thorough staff training. Employees need to recognize suspicious emails and avoid sharing sensitive information through unsecured channels. Regular testing and ongoing education are essential to reduce the risk of phishing.
The Importance of a Written Information Security Plan (WISP)
To combat these risks, accounting firms must develop a Written Information Security Plan (WISP). A WISP outlines how a firm will protect personal information and ensure compliance with data protection laws. It includes security protocols, staff training, and response plans in case of a data breach. Without a WISP, firms not only put their data at risk but also face potential legal penalties for failing to protect client information adequately.
In the U.S., accounting firms are required to comply with regulations such as the Gramm-Leach-Bliley Act (GLBA), which mandates that firms protect sensitive client data. A WISP helps firms stay compliant with these regulations and demonstrates that they are taking steps to protect client information.
Remote Work and Its Cybersecurity Risks
With many accounting firms adopting remote work, new cybersecurity challenges have emerged. Employees using personal devices for work or connecting through insecure Wi-Fi networks increase the risk of data breaches. Personal devices often lack the necessary security measures, making them easier targets for cybercriminals. In fact, 43% of employees use personal devices without approval from their IT departments, which can lead to significant security vulnerabilities.
To mitigate these risks, firms should enforce strict guidelines for remote work, such as requiring the use of VPNs and secure, password-protected devices. Employees should also be educated about the dangers of insecure Wi-Fi networks and the importance of safeguarding sensitive information.
Penalties for Data Breaches
The financial and legal penalties for data breaches can be steep. Firms that fail to protect client data may face regulatory fines, lawsuits, and damage to their reputation. In addition to direct financial losses, firms may suffer long-term consequences as clients lose trust and take their business elsewhere.
In many jurisdictions, firms must report data breaches to authorities within a specific time frame. Failure to do so can result in additional penalties. For example, firms that handle personal data must report breaches to regulatory bodies like the Information Commissioner’s Office (ICO) within 72 hours. Delays in reporting or failure to take preventive measures can result in heavy fines and further damage a firm’s reputation.
Conclusion
Data breaches are a serious threat to accounting firms, and the risks will only continue to grow as cybercriminals become more sophisticated. Accounting firms must be proactive in protecting their clients’ data by investing in strong cybersecurity measures, educating their staff, and developing a Written Information Security Plan (WISP). By taking these steps, firms can reduce the risk of a breach, avoid penalties, and safeguard their reputation. Prevention is always better than facing the costly consequences of a cyberattack.
