The pressure to protect client data has never been stronger for CPAs, Enrolled Agents and Tax Preparers. We have seen small accounting firms with PII (social security numbers, banking account details, etc) of more than 8,000 people. Literally, the motherload for a cybercriminal.

Over the last few years as we have met with hundreds of small CPA offices there is one key area that has jumped out at us a huge risk factor. The use of part-time and contract workers to get through tax season. Often there are not background checks run, they are using personal equipment, not to mention no conversation regarding the cyber security practices of that worker. All it takes is the wrong person to connect to your systems on the right day, and you have a huge headache to deal with.

This is among the reasons why the IRS has put out specific requirements regarding data security. As a Certified Public Accountant (CPA), you are required to follow strict guidelines for protecting client data by the Internal Revenue Service (IRS). The IRS has established several requirements that CPAs must adhere to in order to safeguard their clients’ sensitive information.

Here are some key IRS requirements for protecting client data for CPAs:

Safeguarding electronic data: CPAs must ensure that all electronic data containing client information is encrypted and password-protected. This includes sensitive financial information, tax returns, and other confidential documents.

Secure storage of physical documents: CPAs must maintain a secure storage environment for physical documents containing sensitive client information. This includes storing documents in locked filing cabinets or other secure locations with limited access.

Limiting access to client data: CPAs must ensure that only authorized personnel have access to client data. This includes implementing access controls such as password protection, role-based permissions, and regular access audits.

Training staff on data security: CPAs must provide training to their staff on data security best practices and ensure that they understand the importance of protecting client data.

Secure transmission of client data: CPAs must use secure methods to transmit client data, such as encrypted email or secure file transfer protocols.

Regular security assessments: CPAs must conduct regular security assessments of their systems and processes to identify potential vulnerabilities and address them promptly.

Incident response plan: CPAs must have an incident response plan in place to quickly respond to any security breaches or data loss incidents.

Data Breach Response: You must have a plan in place to respond to a data breach, including notification of affected clients and authorities as required by law.

Failure to comply with these requirements can result in serious consequences, including penalties, fines, and reputational damage. Therefore, it is important for CPAs to take these requirements seriously and implement appropriate security measures to protect their clients’ sensitive information.

The best place to start the process for most firms is to get a full Cyber Security Risk Assessment. We cannot improve that which we do not know about. If you would like to chat about what this might look like for your organization, give us a call at 720-746-9763.