Oct 2023

Cybersecurity Guide for Small Accounting Businesses

Cybersecurity Guide for Small Accounting Businesses in Australia

By: Odyssey General
Tags: Cyber Security

In the wake of rising cyber-attacks, especially within Australia, no accounting firm is safe. In light of this, your firm’s use of AI and technology can attract cybercriminals, eager to exploit perceived weaknesses.

Although Australian laws have been made against cyber criminals, the responsibility to safeguard your data lies with you. Even small firms are at risk, often targeted due to assumed weaker security measures.

Eager to learn how to secure your firm’s sensitive data effectively? With 25 years in accounting and hands-on experience, we bring you the top 20 essential cybersecurity practices to enhance your firm’s defence, ensuring the safety of both client and internal data.

Let’s dive into the cybersecurity guide for small Australian accounting businesses!

Why are accountants and accounting firms a big target for cybercriminals?

Accountants often find themselves in the crosshairs of cyber threats due to the nature of the work. As serving in accounting businesses, you manage confidential client data for tax compliance and advisory services.

Typically, accountants collect the following types of information:

  • Personal identification information (full name, date of birth, social security number or Tax File number, address and contact information such as phone number and email)
  • Financial information (bank account numbers, income, investment and debt details)
  • Employment information (employer name and address, employment duration, occupation)
  • Business information, investment details, retirement and estate information

In the 2023 OAIC report, accounting services persist as one of the top 5 sectors reporting data breaches. The three most common types of personal information compromised are as follows:

  • 87% of data breaches were contact information
  • 64% of breaches exposed to identity information
  • 40% of data breaches involved financial details

As a result of COVID-19, working from home has become a normal practice for accounting firms. However, outside the secured boundaries of the office, confidential client information becomes more vulnerable to unauthorised access and cyberattacks. The use of personal devices or unsecured networks for accessing and sharing sensitive data can create loopholes for cybercriminals to exploit.

What are the common types of cyber-attacks facing accountants?

Getting to know the threats out there is a key step in boosting your defences and knowing how to respond to cybersecurity risks. Below, we’ve highlighted the typical data threats that malicious cyber actors are using right now.

1. Phishing attacks

Phishing is a sneaky tactic cyber friends (but really, foes) use to trick individuals into sharing confidential information like passwords or credit card details.

They send emails or messages that look like they’re from trusted sources such as a bank or a reputable company. They kindly ask you to click on a link and share your personal info. But watch out, it’s a trap!

2. Email attacks

Email attacks involve the unauthorised access to or hacking of email accounts to steal sensitive information or distribute malware.

Hackers might use various tactics such as guessing passwords or exploiting software vulnerabilities to break into email accounts.

3. Malware

Malware, or malicious software, is a program intended to damage or disable computers and computer systems.

Malware can sneak into a system through email attachments, software downloads, or operating system vulnerabilities, among other ways. It’s like a bug finding its way into your home through a tiny crack.

4. Ransomware

Ransomware is malicious software that locks access to a computer system or files until a ransom is paid. It holds data hostage, demanding payment for decryption.

Ransomware usually gets into computers through phishing emails or harmful websites. Accountants might accidentally open an email attachment that releases the ransomware. Or, the ransomware can sneak in by finding and using weaknesses in the computer’s security.

5. Business Email Compromise (BEC)

BEC is a clever scam targeting businesses that regularly conduct wire transfers and have suppliers.

Cybercriminals pretend to be executives or employees in emails, kindly requesting payments or sensitive info from unsuspecting staff or business partners.

Cybersecurity guide for small Australian accounting businesses: 20 best practices

The optimal strategy is prevention. Delve into our top 20 indispensable tips for establishing a robust data security and privacy system, significantly mitigating security risks.

1. Update your systems

Make sure all your software is up to date. These important updates often fix security issues, offering protection against new threats from malware and cybercriminal technologies.

Below are easy steps to follow:

  • Choose automatic updates whenever you can.
  • Regularly check all your software and systems to make sure they’re using the latest versions.
  • Put updates for crucial software, like your operating system and antivirus programs, at the top of your to-do list.

2. Install and update anti-virus software

New threats emerge daily. Anti-virus software is your first line of defence against many common types of cyberattacks, helping to automatically detect, quarantine, and eliminate threats.

Opt for reputable and robust anti-virus software and conduct regular scans of your systems to ensure no malware or viruses have infiltrated your protection. Remember to update the software regularly.

3. Use a password manager

Creating a strong password is an effective way to prevent cyber-attacks. Still, it’s challenging to manage and remember a myriad of complex passwords. Moreover, utilizing the same password across various platforms poses a significant security risk.

A password manager is a software that securely creates, stores and manages your passwords for various accounts, ensuring that each one is unique and robust. It can also prevent unauthorised access to your accounts, save time and free the hassle of retrieving forgotten passwords.

You only need to remember one strong master password. The password manager takes care of the rest, auto-filling your login details for different sites and ensuring optimal security.

4. Enable Multi-Factor Authentication (MFA)

MFA provides more secure layers to protect your accounts. It’s a security process that requires users to verify their identities by providing two or more pieces of evidence (or factors) before gaining access to an account, alongside your regular password.

For example, when logging into an account, you’ll enter your password (factor one) and then verify your identity again – perhaps with a unique code sent to your phone (factor two).
Incorporate MFA wherever possible, especially for access to sensitive data or systems. The additional step may seem like a minor inconvenience, but it plays a crucial role in protecting your digital assets.

5. Limit confidential data in AI

In today’s fast-paced digital world, using Artificial Intelligence (AI) is becoming more and more common. But, it’s important not to expose too much confidential data to AI systems.

Even the smartest AI can be at risk from cyberattacks. By limiting access to sensitive data, you help to keep your firm’s important information safe. Below are the steps to take:

  • Check the data that’s shared with AI systems. Make sure only information that isn’t sensitive is available.
  • Use strong security measures, like encryption and multi-factor authentication, to keep data in AI systems extra safe.
  • Keep checking and updating security rules to stay one step ahead of cyber threats.

6. Educate and train your staff

One vital practice is to consistently educate your staff about cybersecurity, starting right from the onboarding process. Early awareness helps fortify resilience against potential cyber threats.

Educating and training your staff involves keeping them informed and prepared to handle various cybersecurity threats. It’s not just about having secure systems; it’s about ensuring every team member knows the role they play in maintaining that security.

How does it work?

  • Draft your cyber security training policy
  • Conduct regular training sessions on emerging cyber threats and safety protocols.
  • Use real-life scenarios to explain the consequences of security breaches and the importance of vigilance.
  • Keep the training updated with the latest information and make it an ongoing part of your professional development programs.

Training your staff on cyber threats and responses not only boosts your firm’s reputation and credibility but also empowers your team to effectively tackle cyber threats, promoting a shared security and privacy responsibility.

7. Establish security protocols for staff, clients, and partners

As previously emphasized, it’s essential to integrate cybersecurity awareness and training within staff training materials. This policy outlines protocols, best practices, and procedures for staff to maintain cyber security standards.

If you have accountants who work from home, it’s critically important to set up a secure remote system and protocols to prevent cyber-attacks.

However, safeguarding your firm’s cybersecurity isn’t limited to internal efforts. Your clients and partners also need well-defined security protocols to protect all shared and internal data.

Here are the additional documents you should develop and implement across your clients’ and partners’ networks to bolster the data protection system:

  • Cybersecurity Policy
  • Incident Response Plan
  • Data Protection Policy
  • Client Engagement Letter
  • Third-Party Data Access Agreement

8. Update the latest Australian security tips and policies on your system

Keeping your system updated with the latest Australian security recommendations ensures that you’re not only compliant with local regulations but also fortified against recent threats.

9. Use Virtual Private Network (VPN)

A VPN encrypts your internet connection, masking your online actions. For accounting firms that handle sensitive financial data, this means an added layer of protection against potential eavesdroppers or cyber attackers.

Using a VPN offers enhanced privacy, secure data transmission, and the ability to both enforce access restrictions and bypass geographical limitations.

10. Encrypt any emails that contain confidential information

Email encryption transforms your message into a code, preventing unauthorised access. Only the intended recipient, with the right decryption key, can read the email’s content. This security layer ensures that even if intercepted, your emails remain confidential.

For instance, when you or your client need to share a file with the personal information of the end-clients, via email or other means, ensure it’s encrypted with a strong password.

11. Back up your data

Data loss can occur unexpectedly due to system failures, cyberattacks, or even human error. Regularly backing up your data ensures you have a fallback option.

Here are easy steps to follow:

  • Determine which data needs priority in backups – client information, transaction records, and other essential files.
  • Establish a routine schedule for backups – daily, weekly, or monthly based on the data’s significance and frequency of change.
  • Utilize both on-site and off-site backup solutions. Cloud storage is a popular off-site option,
  • providing access from anywhere.
  • Periodically test your backups to ensure data integrity and that restoration processes work seamlessly.

12. Strengthen use of emails

Differentiating between types of emails ensures you can handle sensitive company information distinct from personal matters. This separation minimizes the chances of security breaches and maintains professionalism.

Our recommendation is to use at least three types of emails: company email, public personal email, and private personal email.

Read more: Australian Accountants, Why You Need At Least 3 Email Addresses

13. Restrict admin and data access

Fewer individuals with administrative access mean reduced chances of inadvertent errors or potential system breaches. In addition, restricting access to sensitive data ensures that only necessary personnel can view or modify critical information, safeguarding client confidentiality.

14. Enable application control

It’s essential to ensure that only trusted applications run within your firm’s network, eliminating potential gateways for malicious actors.

Enabling application control can minimize malware risks, enhance network integrity and help you control over resources.

15. Limit Wi-Fi access

By controlling and limiting access to your Wi-Fi, you can reduce vulnerabilities and ensure that only authorised users connect.

Unauthorised access might lead to data breaches. Limited access ensures data stays within trusted devices. Moreover, fewer devices connected means fewer points of vulnerability.

16. Secure physical spaces

Protecting hardware, access points, and tangible assets against unauthorised physical interference is crucial to an overall cybersecurity strategy.

Computers, servers, and storage devices contain sensitive data. Unauthorised physical access can lead to data breaches. A simple unplugging of essential hardware can disrupt operations. Physical assets, especially portable ones like laptops, are susceptible to theft.

Here are what you can implement to secure the physical spaces of your accounting firm: access control, surveillance systems, lock hardware, secure server rooms, visitor logs, security personnel, safe storage, and disposal protocol.

17. Employ IT resources

It’s advised by the Tax Practitioners Board (TBP) that you should have sufficient IT controls. While you and your team excel in accounting, in-depth IT expertise might not be your forte.

To ensure optimal cybersecurity, consider hiring dedicated IT personnel or partnering with a reputable IT service provider.

18. Opt for outsourcing partners with strong cybersecurity measures

Amidst accountant shortage, many small to medium-sized accounting firms are turning to outsourcing accounting services. Offshore outsourcing has widely been adopted and stands as one of the key drivers for Australian accounting firms.

An outsourcing partner has direct or indirect access to your clients’ sensitive data. A breach in their system could compromise the trust your clients place in you and might have legal and financial repercussions.

Before finalizing a partnership, inquire about their cybersecurity protocols. Do they have a dedicated IT security team? Are they compliant with international cybersecurity standards?

A trusted outsourcing partner should be transparent about their IT and data security protocol.

19. Comply with GDPR standards for businesses that are involved in the EU market

EU establishes stringent protocols for data collection, storage, and sharing that are set out in the General Data Protection Regulation (GDPR).

Whether you’re directly involved in the EU market or occasionally handle EU client data, GDPR compliance isn’t optional.

20. Obtain cyber security insurance

Cybersecurity insurance, often referred to as cyber liability insurance, is designed to help businesses mitigate the financial risks associated with cyber-related incidents. It typically covers expenses related to breach notifications, data recovery, legal consultations, and, in some cases, ransom payments.

While cybersecurity insurance isn’t a substitute for strong security measures, it provides a financial safety net if breaches occur.

How to respond to a data breach?

Prevention is your best approach, but if you become the victim of a cybercriminal, here are 3 ways to solve the problem:

  • Restore your data from a recent, clean backup.
  • Explore decryption tools or information from relevant websites.
  • Consider paying the ransom, though this isn’t always recommended.

In response to the rising challenges posed by cyber criminals in Australia, the government has established regulations that local businesses must adhere to prevent or address data breaches.

A crucial component of this regulatory framework is the Notifiable Data Breaches scheme. Under this scheme, Australian firms are obligated to notify both the Government and their clients in the event of a breach that has potential implications for data misuse.

If you are seeking accounting outsourcing advice, then drop Odyssey a line to chat. And don’t hesitate to consult us for any of your concerns.

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