As an accountant, you're probably working with tons of data daily, be that client financial data or tax information. And what makes the process even harder is dealing with it across various platforms.
As cyber threats toward financial information only grow, accounting firms stand at a higher risk of being attacked by hackers. According to data that Deloitte shared with The Wall Street Journal, cyberattacks on accounting and financial data are becoming a significant concern for businesses. In 2023, 34.5% of over 1,100 C-suite executives surveyed revealed their organizations had been targeted by cyber adversaries.
So that's where the main question arises: How can you protect valuable data while keeping operational efficiency? This article will discuss the red flags of data security risks in accounting and offer best practices for mitigating and avoiding these threats.
Why financial data is so vulnerable
It's no surprise that financial data is just a gold mine in the eyes of hackers. A recent
The reasons behind these threats are crystal clear. According to a Cofense report, finance is among the top targeted industries due to its vast amounts of sensitive information, including details such as account numbers, personal details, transaction records, etc.
This data is a prime target for attracting unwanted attention from hackers and malicious insiders.
Today's financial systems are incredibly complex, and this will only add to the challenge. The more integrated your systems, the greater the risk of a breach, especially if you're missing some key controls such as encryption or real-time monitoring.
Even though software solutions keep growing, not all providers prioritize
So, how can you ensure your financial data doesn't become the next target?
As we've already mentioned, one of the greatest difficulties of practicing accountants is working with financial data in transition between different systems. Whether your client is managing their sales through various channels of sale, or accepting payment through various gateways, all this information has to be channeled to one system. If it isn't, you risk missing data, which can lead to discrepancies in the future.
But when data is passed through multiple platforms, how do you ensure its safety? Let's dive into the major challenges and see how to overcome them.
Challenge No. 1: Data silos and fragmentation. Financial data is often scattered across isolated systems — payroll on one platform, client financials on another, and tax information elsewhere, creating a maze of tools. When these systems don't communicate smoothly, operations slow down, and the risk increases. Why? Each platform may have different security standards, leaving financial data exposed during transfers.
Solution: Self-service integration tools will ease data management.
Challenge No. 2: Compliance with regulations. Data security regulations, like GDPR and HIPAA, demand tight controls when handling sensitive financial information. But here's the kicker: Different platforms often come with their own security protocols, and ensuring that every one of them meets these strict regulations across multiple jurisdictions is a serious challenge.
Solution: Equip your integration platforms with strong security features like encryption, audit trails, and role-based access controls that meet regulatory standards. That'll be your golden ticket.
Fortunately, most software solutions make it easy to verify their security credentials directly on their websites. So, if you're looking for a tool to streamline workflows between PayPal and QuickBooks Online, or want to integrate an additional platform for one of your clients, the first thing you'll be looking for is whether or not the software provides top-tier
Challenge No. 3: Compliance with regulations. The biggest risk occurs during the data transfer. When data moves between systems, if not properly encrypted, it's vulnerable to interception. Weak access controls only make matters worse, as unauthorized personnel can gain access to sensitive financial data.
Solution: Encryption should be used with strong mechanisms, such as AES-256 or RSA, to protect your data. Securing the communication of systems via SSL/TLS will ensure that even if your data gets intercepted, they won't be able to read it. This can be complemented with multifactor authentication, which requires users to verify their identity with more than just a password.
Challenge No. 4: Integrating hybrid systems. Many accountants rely on a mix of cloud-based solutions and legacy on-premise systems, which can be unsafe from a security point of view. These systems often operate with vastly different architectures, data standards, and security protocols, which makes integration difficult and leaves gaps for attackers.
Cloud platforms, while being flexible, tend to be more vulnerable due to their openness, whereas on-premise systems may rely on outdated security measures.
Solution: To close these gaps, accountants should adopt modern integration platforms that support both cloud and on-premise systems. To reduce the attack surface, use secure APIs for communication between systems, with strict authentication protocols like OAuth in place to ensure that only authorized users can access sensitive data. APIs should also be limited to specific functions to minimize exposure.
Conclusion
There are numerous challenges associated with data security in integrated accounting, and finding an effective control solution is paramount both internally and externally. Overlooking these issues or making hasty decisions, especially when handling sensitive financial information, can lead to serious and costly consequences.
To prevent this, accountants must be proactive: Regularly update your security measures, and select reliable solutions that safeguard financial data, both now and in the future.
