The Hidden Compliance Crisis in your CPA Firm
250 IRS data breach reports, so far | 200,000 clients affected
This year alone, the IRS received more than 250 reports of data breaches from tax professionals—affecting approximately 200,000 clients. These are not isolated incidents at large firms.
Small to medium-sized accounting firms face relentless targeting because cybercriminals know they handle valuable financial data but often lack robust security measures.
The stakes have never been higher: the FTC Safeguards Rule now carries penalties of $100,000 per violation and $43,000 per day for consent violations.
CPA firms with 10-25 employees,
a single compliance failure could mean
devastating financial consequences and
unrepairable client relationships.
The landscape has fundamentally shifted. Financial institutions, including CPA firms, reported that 46% experienced a data breach in the past 24 months, with average breach costs exceeding $6 million. Your firm isn't just managing spreadsheets and tax returns anymore—you're safeguarding highly sensitive financial data that makes you a prime target.
Understanding IT compliance isn't just good practice;
it's essential for survival.
Read to the end.
5 Things Every CPA Must Know About IT Compliance
ONE: Federal Regulations Apply Directly to Your Firm
The Gramm-Leach-Bliley Act (GLBA) Safeguards Rule: effective date May 2024
For: CPA firms, tax professionals, and anyone handling financial data.
The FTC amended the Rule to require covered entities to report certain data breaches. This means your firm must maintain a Written Information Security Plan (WISP) that documents exactly how you protect client information.
Many CPA firms are still scrambling to implement or update these requirements because they didn't realize financial regulations requirement.
TWO: Employee Training Is Your Weakest Link
Technology alone can't protect your firm.
The AICPA recognizes cybersecurity is so critical that the CPA exam now includes a dedicated section, with 70-90% focusing on security, data management, and privacy.
Quarterly security training keeps security top of mind for each employee.
Cybersecurity Training should include:
● Recognizing phishing attempts
● Using secure passwords
● Following proper data handling procedures
● Mandatory testing with simulated phishing campaigns
● And documentation all training activities
Regulators will REQUIRE proof that your team understands compliance requirements.
Nerdworks Services, LLC helps develop comprehensive training programs and provides training for CPA and tax advisor staff.
THREE: Access Control Policies Prevent Internal Threats
Not every team member needs access to all client files or financial systems. Organizations should prioritize role-based, limited access control to prevent breach.Create an SOP to add and remove access as each employee moves from role to role or exits the firm.
Secondly, implement multi-factor authentication (MFA) across all systems, require strong password policies, and conduct regular access reviews. These cloud solutions and cybersecurity measures protect against both external threats and internal risks.
FOUR: Regular IT Audits and Risk Assessments Are Required
Compliance isn't a one-time checklist. Your firm needs quarterly vulnerability assessments, annual penetration testing, and ongoing monitoring of your IT infrastructure. Professional MSP partners can provide continuous security monitoring and help you maintain audit-ready documentation.
Regular assessments identify weaknesses before attackers exploit them. They also demonstrate to regulators that you're actively managing cybersecurity risks—a critical factor during an audit or investigation.
FIVE: Taking Action on IT Compliance – Don’t navigate it alone
6 out of 10 small businesses do not survive one year after a cyber-attack.
The complexity of IT compliance requirements can feel overwhelming for a small business. The consequence of non-compliance—financial penalties, reputational damage, and loss of client trust—far outweighs the investment in IT support and managed services.
DOES YOUR FIRM MEETS ALL COMPLIANCE REQUIREMENTS?
Don’t guess – Know.
DOWNLOAD the " IT Compliance Checklist for CPAs" to:
Assess your current security posture
Identify gaps before regulators do
Make a FREE Compliance review appointment
Implement solutions and security that reduces the risk to your clients and your firm.
Know the risks and what it will take to Remain IN COMPLIANCE.
Nerdworks Services, LLC specializes in helping CPA firms, tax advisors and financial professionals build compliant, secure IT environments that protect today and help you scale tomorrow.
Nerdworks Services, LLC
682-324-9360
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