Is your sensitive business data being managed correctly? Here are key data management practices & the right questions to ask your CPA & MSP!

Are You Sure Your Data is Being Managed Correctly?

In our increasingly digital world, data has become the lifeblood of businesses and organizations. Whether you’re an accounting firm handling financial and tax data or you rely on a managed service provider (MSP/MSSP) to safeguard your sensitive information, data security is paramount. A single data breach can lead to severe consequences, including financial losses and damage to your reputation. In this blog, we’ll explore the critical aspects of data management for both accounting firms and managed service providers, helping you assess if your data is being managed correctly.

Assessing Your CPA’s Data Management

Compliance Regulations

One of the first considerations when evaluating your accounting firm’s data management solutions & practices is compliance with relevant regulations. Depending on your location and the nature of your business, several regulations may apply. For instance, the System and Organization Controls (SOC) for Accounting firms, the General Data Protection Regulation (GDPR) in Europe, and the Health Insurance Portability and Accountability Act (HIPAA) for healthcare data impose strict requirements on data handling.

It’s essential to ask your accounting firm the following questions:

  • Does your firm actively maintain compliance with these regulations?
  • Can they provide documentation of their compliance efforts?

Ensuring that your accounting firm adheres to these regulations, including when they’re changed, is critical because compliance helps protect your data from unauthorized access and ensures that it’s handled with care.

Data Security Practices

Data security measures are the backbone of data management. Accounting firms must employ robust security practices to safeguard sensitive financial and tax information. Here are some key aspects to consider:

  • Access Control: Inquire about the measures in place to control access to your data. Are access rights granted on a need-to-know basis? How is access monitored and audited? Is data involved in any management tools using artificial intelligence? Are you utilizing passwordless authentication solutions?
  • Encryption: Ensure that data is encrypted during transmission and storage. Encryption adds an extra layer of protection to your sensitive information.
  • Incident Response Plans: Ask about the firm’s incident response plan. How do they handle data breaches or security incidents? A well-defined plan can mitigate the impact of a breach and protect your data.

Asking these questions will help you gain insight into the security protocols your accounting firm has in place and their commitment to protecting your data.

Data Storage and Backup

Where and how your data is stored is another critical aspect of data management. Secure data storage and regular backups are essential to ensure data availability and recovery in case of unexpected incidents.

  • Storage Location: Find out where your data is stored. Is it on-premises or in the cloud? Each option comes with its own set of security considerations.
  • Security Measures: Inquire about the security measures in place at the storage location. Robust security protocols should be implemented to protect your data.
  • Backup Frequency: Understand how often backups are performed and where backup data is stored. Regular backups are crucial to prevent data loss.

By asking these questions, you’ll have a clearer picture of how your accounting firm manages data storage and backup, ensuring the availability and integrity of your information.

Evaluating Your MSP/MSSP’s Data Management

Compliance Requirements

For businesses relying on MSPs to handle sensitive data, compliance with relevant regulations is just as important. Depending on your industry, standards like the Payment Card Industry Data Security Standard (PCI DSS), HIPAA, and the NIST Cybersecurity Framework may apply.

To assess your MSP/MSSP’s data management platform practices, ask the following questions:

  • Which compliance standards does your MSP/MSSP adhere to?
  • How do they demonstrate their compliance?

Ensuring that your MSP/MSSP meets these standards is vital for protecting your sensitive data from breaches and maintaining trust with your customers. You can visit another one of our blogs if you’re thinking about switching MSP’s to one that fits you better.

Cybersecurity Infrastructure

The cybersecurity infrastructure of your MSP/MSSP plays a crucial role in data protection. Here are some key aspects to consider:

  • Firewalls: Inquire about the type of firewalls in place and how they are configured to protect your data from external threats.
  • Intrusion Detection Systems: Does your provider have intrusion detection systems to monitor for unauthorized access and unusual activities?
  • Endpoint Protection: How are endpoints, such as devices and servers, secured against malware and other threats?

Understanding the cybersecurity tools and technologies employed by your MSP/MSSP is essential for assessing their ability to protect your sensitive data, and not settle on using legacy systems.

Threat Detection and Response

Proactive threat detection and incident response capabilities are essential for any MSP/MSSP. Effective threat detection can prevent security breaches, while a well-defined incident response plan can mitigate the impact when a breach occurs.

Ask your MSP/MSSP the following questions:

  • Do they have a dedicated security team responsible for monitoring threats?
  • What is their process for identifying and responding to security threats?
  • How are you notified in the event of a potential security incident?

Having clarity on these aspects will help you gauge the readiness of your MSP/MSSP to handle security threats and protect your data. We at Nerds Support always stay up to date with the latest technologies and hacking strategies. Here’s a short video about a new strategy cyber-criminals are partaking in.

Data Breach Incidents: Lessons in Risk

To underscore the gravity of the risks associated with inadequate data management, let’s delve into four recent data breach incidents, each shedding light on different aspects of data security lapses.

DarkBeam: A Dark Omen

In the realm of data security, even well-intentioned efforts can go awry, as exemplified by the DarkBeam incident. DarkBeam, a digital risk protection firm, found itself in an ironic twist when it accidentally exposed a significant database. While the exposed data mainly consisted of records compiled by DarkBeam to alert customers about security incidents affecting their personal information, it underscored the vulnerability of data even in the hands of those dedicated to safeguarding it. The incident serves as a stark reminder that even the most diligent organizations can inadvertently contribute to data exposure, emphasizing the need for stringent security practices and regular audits.

ICMR: Medical Data Under Siege

The Indian Council of Medical Research (ICMR) data breach serves as a stark reminder of the vulnerability of medical and personal data. In this incident, personal data of 815 million Indian residents, including sensitive information like names, addresses, passport numbers, and Aadhaar numbers, was reportedly exfiltrated from the ICMR’s Covid-testing database. The breach not only exposed a vast amount of personal information but also raised concerns about the security of medical data. It underscores the critical need for stringent data protection measures, especially in healthcare organizations handling sensitive patient information and adhering to HIPAA.

Harding, Shymanski & Company: Taxing Consequences

Accounting firms hold a wealth of financial and tax data, making them appealing targets for cybercriminals. The Harding, Shymanski & Company data breach exemplifies the potential consequences of lax data management. The breach occurred when an employee’s credentials were compromised, leading to fraudulent tax returns being filed on behalf of certain clients. Sensitive information, including names, Social Security numbers, and bank account details, was exposed. This incident underscores the importance of stringent data security practices and the need for proactive measures to prevent unauthorized access to financial and tax data.

Whether it’s unintentional data exposure, exposure of property ownership data, medical data breaches, or financial data compromises, the common thread is the critical importance of robust data security practices, compliance with regulations, and proactive measures to protect sensitive information. The consequences of inadequate data management can be severe, impacting individuals, businesses, and organizations alike.

Don’t Settle for Less with Your Data!

Data is the lifeblood of modern business processes, and its security should be a top priority. Whether you entrust your sensitive information to an accounting firm or rely on an MSP or MSSP, assessing how your data is being managed is crucial. From regulatory compliance to data security practices and backup strategies, understanding these aspects is essential for safeguarding your data and making smart business decisions, especially going into tax season.

Remember, data security is a shared responsibility. While your service providers play a crucial role in protecting your information, you also have a role to play. Here are some key takeaways:

  • Ask Questions: Don’t hesitate to ask your service providers about their data management practices, security measures, and compliance efforts. Transparency is key to building trust.
  • Stay Informed: Keep yourself informed about relevant data protection regulations and standards that apply to your industry. This knowledge will help you hold your service providers accountable.
  • Be Proactive: Data breaches can happen to anyone, but being proactive can help minimize the risks. Regularly assess your service providers’ data security practices and, if necessary, seek professional guidance.
  • Seek Professional Guidance: If you have concerns or doubts about your data management providers’ practices, consider seeking guidance from cybersecurity professionals or legal experts who specialize in data privacy.

In a world where data breaches are a constant threat, taking these steps can make the difference between secure data management and the potential fallout from a breach. Remember, your data’s confidentiality, integrity, and availability are at stake, and it’s essential to ensure that it’s being managed correctly.

Protecting your data isn’t just about compliance; it’s about safeguarding your business’s future and maintaining the trust of your clients and customers. Stay vigilant, ask the right questions, and take the necessary actions to secure your valuable data.

In the end, your commitment to data security will not only protect your organization but also demonstrate your dedication to responsible data management, which is a cornerstone of trust in today’s digital age. If you’re ready to take the next step in securing your data and ensuring it’s managed correctly, contact Nerds Support, your trusted partner in data management excellence.

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