Top Challenges Accounting Firms Face – Blog Series Part 4 – How Safe is IT?

In the third blog of the series “Top Challenges Accounting Firms Face,” Ace Cloud covered why accounting firms should move towards advisory and how they can tackle it.

In Part 4 of our series, “Top Challenges Accounting Firms Face,” we will explore the critical issues related to IT & cybersecurity, revealing key threats and offering strategies to safeguard your firm’s integrity.

Cybercrime is projected to cost businesses over $10.5 trillion annually by 2025, significantly impacting accounting sectors. Cybercriminals continuously refine their tactics, targeting new vulnerabilities, technologies, and attack methods to impact the security of various firms.

This poses a growing threat to accounting, financial, and other businesses, requiring robust strategies to safeguard sensitive data, systems, and operations.

Let’s gain crucial insights into the cybersecurity challenges encountered by accounting firms and explore detailed strategies for mitigating these threats.

Top Security Challenges Accounting Firms Face and Their Solutions

In 2024, accounting and CPA firms are facing a myriad of security challenges, such as –

Resistance to Technological Advancement

In a recent survey, 60% of AAT members said they believe basic accountancy processes will be fully automated within five years. However, 89% view technological advancements positively, seeing them as opportunities. Three-quarters also reported that technology has already eased their workload to provide more valuable client services, like analyzing accounts and offering business advice.

Many employees, particularly older accountants, may resist adopting new technologies, preferring traditional methods they’re comfortable with. However, without implementing modern technologies and security measures, businesses may expose themselves to various cyber threats, including hacking attempts, data breaches, and malware attacks.

These security risks can result in the compromise of sensitive information, such as client data, financial records, and proprietary business information.

Therefore, organizations and accountants must prioritize cybersecurity and leverage advanced technologies to safeguard their assets and maintain trust with clients and stakeholders. By promoting security training, open communication, and highlighting the benefits of new technologies, accounting firms can help their teams overcome resistance challenges.

Outdated Software

Some outdated software systems no longer receive official support and updates from the developer, making them more vulnerable to malware and ransomware attacks.

Accounting firms using traditional accounting software are more likely to be targeted by attacks as they include highly sensitive data, which can be of great value.

Hence, to secure accounting firms from such attacks, always use up-to-date software (OS, business software, browsers, and others). Also, choose reliable software and apps to store sensitive financial information. As we all know, accounting firms communicate and share data over secured networks, so always install trustworthy anti-malware software at each endpoint.

Moreover, managed security services can be helpful for accountants as they keep your software updated with the latest security patches. Research and look for a recognized service provider that can take care of your infrastructure technically and securely.

No Protection Against Security Threats

Data Breaches Due to BYOD

Data breaches, where hackers get unauthorized access and steal client data like personal information and financial records, are among the most ordinary hacks accounting firms deal with.

Most accounting firms think they’re too small to be subject to a cyberattack, so they don’t focus on security measures. However, it’s reported that 46% of all cyberattacks are more focused on small to mid-level businesses (businesses with less than 1,000 employees) just because they lack cybersecurity measures.

Moreover, during the COVID-19 pandemic, the implementation of a bring-your-own-device (BYOD) policy increased due to the mandatory remote working environment. Employees started using their devices for business purposes, and most did not include essential security features and updates, posing potential risks to data safety. It ultimately increased the rate of data breaches in all sectors, including accounting, manufacturing, and more.

To mitigate such risks, accounting firms should take necessary security measures, and the firms implementing BYOD strategies should mandate the use of specific software for sharing and accessing sensitive client data. Additionally, employees should regularly delete client data from their devices and install robust antivirus software.

Phishing Attacks

Phishing attacks involve hackers who aim to steal personal financial information through deceptive means like fraudulent emails, calls, or text messages. These scams are customized to match the needs or key areas of targeted businesses, making them appear legitimate to unsuspecting recipients.

For example, if phishing scams, especially targeting accounting firms, an email will be written more sophisticatedly to draw people to open emails or messages like social engineering techniques.

Moreover, accounting firms will receive “Outstanding Invoice” related emails, which can even include your colleague’s names to grab the target audience’s attention. Once a person opens or clicks the link present in the phishing email, the attacker will get access to install malware on your computer or access sensitive information easily.

To combat such phishing scams, accounting firms must promote cybersecurity education and follow email filtering systems and approaches to ensure robust defense against such threats. You can also opt for managed email security services that protect your firm against both known and emerging threats with signature-based detection and multi-layered content analysis.

Ransomware

Ransomware is a type of malware that encrypts data and files and demands payment for its release. It mainly targets accounting firms. There are many variations of ransomware, and email is one of the most popular methods cybercriminals use to spread it.

Accounting businesses use email in their day—to—day operations, which is why the risk of ransomware is particularly high for accountants. A successful ransomware attack hinders the average company with almost 3 weeks of downtime (Statista).

According to the 2024 Thales Data Threat Report, numerous businesses impacted by ransomware attacks increased by more than 27% in the last year. Malware is the fastest-growing threat of 2024, with 41% of enterprises experiencing an attack in the past year. It is closely followed by phishing and ransomware. Moreover, cloud assets, including cloud-based storage, SaaS apps, and cloud infrastructure management, are the primary targets for such attacks.

Accounting firms must take robust cybersecurity measures against ransomware attacks. These measures can include regular data backups and employee training.

Social Engineering

Social engineering attacks involve psychological manipulation, fooling users or employees into revealing or sharing sensitive and confidential data. This cyber threat also involves email or other communication that invokes fear or urgency, leading the victim to click malicious links or files or disclose sensitive information.

Moreover, social engineering emerges as one of the potent threats to accounting firms. This is because accounting and finance firms include more sensitive data, such as invoices, transactional history, and more.

Statistics reveal that 76% of social engineering attacks resulted in the loss of credentials, with financial and insurance companies experiencing the highest number of breached credentials.

Safeguarding financial data is paramount to decreasing the incidence of social engineering in accounting firms and securing sensitive information. Accounting firms can prioritize employee awareness training to do this.

Weak Passwords

Weak passwords in accounting firms can come up with a significant security risk, as cyber attackers can effortlessly guess them. Most people prefer using simple and easily guessable passwords, making them vulnerable to brute-force attacks. It ultimately leads to unauthorized access to financial data.

Following strong password policies, such as a combination of characters, including uppercase and lowercase letters, numbers, and special symbols, and timely password updates is crucial to mitigate the risk of unauthorized access. Additionally, you can implement multi-factor authentication to boost defense against potential breaches.

Lack of Encryption

In accounting firms, the lack of encryption may lead to a significant threat to data security. Without encryption, sensitive financial information shared over networks or stored on devices is vulnerable to interception by unauthorized parties. Resulting in exposing client data to potential breaches, leading to financial loss, reputational damage, and regulatory penalties.

Implementing robust encryption protocols is essential to secure sensitive financial data and reduce the risk of data breaches or unauthorized access.

IT Security Measures to Keep Accounting Business Safe

Below are the best tips to protect and secure your accounting business from cybersecurity threats.

• Enforce complex passwords
• Get a password manager
• Use a VPN in public Wi-Fi areas
• Backup your cloud accounting data
• Implement multi-factor authentication
• Install malware scanners
• Install antivirus software
• Provide team training on IT and Cyber Security
• Limit app permissions
• Develop security practices & policies
• Consider regular team security testing
• Enable secure file sharing with clients
• Encrypt your hard drive
• Opt for Managed Security Services

Ending Words

In the IT landscape 2024, cybersecurity remains a critical concern for accounting firms and other businesses. With cyber threats evolving and becoming increasingly sophisticated, we must stay attentive and proactive in safeguarding our digital assets and sensitive data.

By prioritizing robust cybersecurity measures, staying updated about emerging threats, and promoting a security awareness culture among employees, we can mitigate risks and protect our firms from potential cyberattacks.

Remember, in the digital world, IT security is everyone’s responsibility, and by working together, we can create a safer and more secure environment for our accounting businesses to thrive.

In the upcoming article in our series, we’ll explore the problems accounting firms face while maintaining profitability and discuss effective strategies to overcome these obstacles.