How to Conduct a Cybersecurity Audit for Your Accounting Firm

According to a report from the Association of International Certified Professional Accountants, 60% of accounting firms have experienced some form of cyber attack. Accounting firms are prime targets for cyberattacks – they deal in finances and personal information, a cybercriminal’s jackpot.

Cybersecurity for your accounting firm matters – you need to take it seriously and have a clear plan. A critical component of a robust cybersecurity plan must be regular cybersecurity audits. These are essential to safeguard your firm’s data, maintain client trust, and comply with regulatory requirements.

This guide will detail how to conduct an effective cybersecurity audit for your accounting firm.

1. Understand the Importance of a Cybersecurity Audit

Before diving into the audit process, it's crucial to grasp why cybersecurity is vital for your firm. Data breaches can lead to significant financial loss, reputational damage, and legal consequences. Regular audits help identify vulnerabilities, enhance security posture, and help comply with industry standards such as the Gramm-Leach-Bliley Act (GLBA) and FTC Safeguards Rule.

2. Assemble Your Audit Team

Gather a team of individuals with diverse expertise, including IT professionals, compliance officers, and accounting staff. This interdisciplinary approach ensures a comprehensive review of both technical and procedural aspects of your cybersecurity measures. If you are not already working with one, enlist the help of a managed IT service provider with a focus on accounting firms.

3. Define the Scope of the Audit

Determine which systems, processes, and data will be included in the audit. Consider focusing on:

• Network Infrastructure: Firewalls, routers, and other hardware.
• Data Storage and Management: Cloud services, databases, and file storage.
• Software and Applications: Accounting software, CRM systems, and any third-party applications.
• Policies and Procedures: Internal policies related to data protection, incident response, and user access.

4. Identify Relevant Regulations and Standards

Familiarize yourself with the regulatory frameworks that apply to your firm, such as:

• Gramm-Leach-Bliley Act (GLBA): a U.S. law that allows financial institutions to consolidate and provide a wider range of financial services. Key provisions include: financial privacy, safeguarding customer information, and affiliation and mergers. Overall, the GLBA aims to enhance consumer protection while promoting the integration of financial services, balancing innovation with privacy and security concerns.
• FTC Safeguards Rule: the goal is to protect consumer information held by financial institutions, emphasizing a proactive approach to data security. Key components of the Safeguards rule include: risk assessment, security program, employee training, monitoring and testing, and third-party oversight. 
• IRS Publication 4557: provides guidelines for tax professionals and businesses on how to protect sensitive taxpayer information. This publication is part of the IRS's efforts to combat identity theft and ensure the security of personal data. Key points include: data security basics, best practices, employee training, incident response, and compliance requirements. 
• Payment Card Industry Data Security Standard (PCI DSS): For firms handling credit card transactions.

Understanding these requirements will guide your audit process and help identify areas needing attention.

5. Conduct a Risk Assessment

Evaluate potential threats to your firm’s data and systems. Consider factors like:

• Threats: Malware, phishing, insider threats, and physical breaches.
• Vulnerabilities: Outdated software, weak passwords, and insufficient training.
• Impact and Likelihood: Assess the potential impact of each threat and its likelihood of occurrence.

This assessment will help prioritize your findings and next steps.

6. Review Existing Security Policies and Procedures

Examine your current cybersecurity policies, procedures, and practices. Key areas to review include:

• Access Control: How user access is managed and monitored.
• Data Encryption: Methods used to protect sensitive information at rest and in transit.
• Incident Response Plan: Procedures for responding to and recovering from a data breach.

Ensure that these documents are up-to-date and align with best practices.

7. Perform Technical Assessments

Conduct technical assessments to identify vulnerabilities within your IT infrastructure. This may include:

• Vulnerability Scanning: Use automated tools to identify weaknesses in your systems.
• Penetration Testing: Simulate cyberattacks to test your defenses and identify potential breaches.
• Network Analysis: Evaluate your network architecture for security gaps.

Engage with third-party experts if necessary to ensure an objective evaluation.

8. Employee Training and Awareness

Your staff is often the first line of defense against cyber threats. Assess the effectiveness of your training programs on cybersecurity awareness. Ensure that employees are knowledgeable about:

• Identifying Phishing Attacks: Recognizing suspicious emails and links.
• Password Management: Best practices for creating and managing strong passwords.
• Reporting Incidents: How to report potential security breaches.

Consider implementing regular training sessions to keep security awareness fresh.

9. Analyze Findings and Develop an Action Plan

After completing the audit, analyze your findings and create a prioritized action plan. Address high-risk vulnerabilities first, and set clear timelines and responsibilities for implementing necessary changes. This plan should include:

• Remediation Steps: Specific actions to address identified issues.
• Resources Needed: Budget considerations and any tools or training required.
• Monitoring and Review: Establishing a schedule for regular audits and updates.

10. Document Everything

Maintain thorough documentation of your audit process, findings, and action plans. This documentation is not only crucial for internal purposes but can also serve as evidence of due diligence in the event of a breach or compliance audit.

The Importance of Cybersecurity Audits

Cybersecurity is not a one-time task but an ongoing process. Regularly revisit your audit process, update policies, and adapt to emerging threats. Stay informed about the latest cybersecurity trends and technologies to keep your firm resilient against attacks.

Conducting a cybersecurity audit for your accounting firm is an essential step in protecting sensitive client data and ensuring compliance with regulatory standards. By following these steps and fostering a culture of cybersecurity awareness, you can significantly enhance your firm’s security posture and build trust with your clients. 

Remember, in the world of cybersecurity, proactive measures today can prevent significant problems tomorrow. 

As a managed IT service provider, PK Tech is proud to offer 15 years of experience with a focus on accounting firms. We boast AICPAs SOC 2 Type II attestation, proving via third-party audit by an independent CPA firm that we passed a rigorous and comprehensive assessment of our security and privacy controls. With dedicated experience working with many accounting firms in the Greater Phoenix Area, we have the knowledge and strategy to craft a proactive security structure to defend against your vulnerabilities. 

Ready to chat with PK Tech about building a personalized and proactive cybersecurity plan for your firm? Schedule a time to chat with our team here.