How Costly Can Cybersecurity Errors Be For Accountants

How Costly Can Cybersecurity Errors Be For Accountants?

Cybersecurity should be a serious concern for all businesses, but it should be of particular concern for accounting firms. With the increasing reliance on technology and the internet to store and transmit sensitive financial information, accountants need to be diligent about protecting their clients’ data from cyber-attacks. Unfortunately, cyber-attacks on accounting firms are common and cybersecurity errors are also all too common in the accounting industry. The cost of these mistakes can be significant. In this blog, we’ll explore the most common cybersecurity mistakes and the potential costs these errors can have for accountancy firms.

Why Are Accountants At Risk Of Cyber-Attack?
Accounting firms handle customers’ sensitive financial information, making them a prime target for cyberattacks. The cost of a cyberattack can go beyond just the cost of remediation and can include loss of business, potential fines, damage to reputation, and legal costs. 

To protect against these risks, accounting firms need to establish basic cybersecurity guidelines. This should include both technical measures such as firewalls and antivirus software, as well as cultural factors such as employee education and training on how to identify and prevent cyber threats. It is important to note that cybersecurity is a continuous effort, hence it should be addressed regularly by professionals. 

Our team has helped businesses across NYC, including accountants, to better secure themselves against cyber-attacks and data breaches. We’ve seen the effects that cyber-attacks can have on accountancy firms that aren’t properly protected, and they can be devastating. You can speak to our team anytime to book a cybersecurity audit. 

The Cost Of Cybersecurity Errors For Accountants

  • Financial Loss
    Cyber-attacks on accounting firms can result in significant financial losses. This can include the cost of restoring systems and data, as well as potential fines. A study by the ACCA found that the average data breach costs a US business over half a million dollars. 
  • Loss of Reputation
    Accounting firms rely heavily on trust and reputation to attract and retain clients. A cybersecurity incident can lead to a loss of trust and damage to the firm’s reputation, which can be difficult to recover from. A firm’s reputational damage can be extensive if it becomes public knowledge that customer details have been exposed. A poor reputation for data security can cause existing customers to lose confidence and will dissuade potential future customers from choosing your accountancy firm. Even if a cyberattack does not compromise customer data, if it causes a prolonged period of downtime this can cause frustration and concern among your clients. 
  • Loss of Clients
    A loss of reputation can lead to a loss of clients. In addition, clients may take their business elsewhere if they feel their sensitive financial information is not being protected properly. This can have a significant impact on your firm’s revenue and long-term growth. 
  • Legal Expenses
    Cybersecurity incidents can also result in substantial legal expenses. A firm may be held liable for damages resulting from a data breach and may need to defend itself in court. Additionally, if a client’s sensitive information is compromised, the firm may be held liable for any financial losses suffered by the client. 
  • Regulatory Fines
    Accounting firms are subject to various regulatory requirements, including those related to data protection. A cybersecurity incident can result in regulatory fines if the firm is found to have failed to comply with these requirements. For example,  

Accounting Firm Cybersecurity Plan

It is important to have a cybersecurity plan in place for your accounting firm. This includes preparing for potential threats, as well as knowing what steps to take if a cyberattack does occur. Businesses that are prepared for a cyberattack are much more likely to survive one, while those without a plan are much more likely to suffer financial and reputational damage. 

  • Identifying Your Weaknesses
    Conduct regular risk assessments to identify potential vulnerabilities in your systems and networks. This includes evaluating your current security measures and identifying any gaps that could be exploited by cybercriminals. At Carden IT Services, we use experienced penetration testers to test your defenses in a real-world cyberattack scenario. 
  • Keeping Your Cybersecurity Practices Up to Date
    Regularly update your software and systems to ensure they are protected against the latest cybersecurity threats. This includes installing security patches and upgrades as they become available. Implementing Multi-Factor Authentication (MFA) for all staff and clients, using a VPN (Virtual Private Network) for remote access, and regular backups can also help to protect the information from cybercriminals. 
  • Educating Your Team
    Provide ongoing training to your staff on cybersecurity best practices, including how to recognize and report suspicious activity. This will help them to better understand the risks and how to protect themselves and the firm from cyberattacks. 
  • Get Help From The Professionals
    Consider working with a cybersecurity expert like us to help identify vulnerabilities and implement stronger security measures. As well as implementing new technology solutions, a managed cybersecurity provider can also provide guidance on compliance with industry regulations and best practices.
  • Have A Disaster Recovery Plan In Place
    Your accountancy firm should have a disaster recovery plan in place because it ensures that you can continue your operations in the event of a disaster, such as a natural disaster, cyber-attack, or power outage. A disaster recovery plan outlines the procedures and actions that the company will take to minimize disruption and quickly restore operations, which can include backing up data, identifying critical systems, and having both an internal and public-facing communication plan in place.

Book Your Cybersecurity Audit Today

We’ve discussed several tips for improving cybersecurity in an accounting firm. These tips included identifying your weaknesses, keeping your practice up to date, educating your staff, and getting help from professionals. 

It’s crucial to remember that cybercriminals are always looking for new ways to exploit vulnerabilities, so it’s important to stay vigilant and take proactive steps to protect your firm and its clients. 

The world of technology is a minefield for accountants. One wrong step and your firm’s most important financial and client data can be compromised. Taking steps to avoid these errors will save you from headaches and potentially nasty fees. It’s not a question of if, but when a cyberattack will happen, so being prepared is the key to minimizing the impact and continuing business as usual. 

Identifying potential weaknesses is the first step to rectifying them. Speak to our expert team and book your cybersecurity audit today.

Author: Jeremy Huson

Jeremy Huson is the founder and director of Carden IT Services LLC. He has nearly two decades of experience managing businesses’ IT networks and his areas of expertise are IT consultation and cybersecurity.