Accounting Firms & Cybersecurity: Why Your Clients’ Financial Data Is at Risk

Accounting firms manage some of the most valuable and sensitive data in the business world. Tax filings, payroll records, bank account details, social security numbers, and full financial statements all pass through your systems on a regular basis.

This makes accounting firms prime targets for cyberattacks—yet many still operate with basic or outdated cybersecurity protections. If you're a CPA, partner, or IT manager at an accounting firm, now is the time to take cybersecurity seriously—not just for compliance, but for client trust and business survival.

Why Cybersecurity for Accounting Firms Is Critical

Accounting firms serve as trusted financial advisors for individuals, businesses, and nonprofits alike. From tax returns to payroll processing and financial planning, these firms handle highly sensitive and high-value data—the kind cybercriminals are actively hunting.

The risk isn’t theoretical:

• In 2023, over 1,800 data breaches were reported in the U.S., exposing more than 422 million records, according to the Identity Theft Resource Center.

• The financial services industry, including accounting, consistently ranks among the top three most targeted sectors for cyberattacks.

• In Ohio alone, over 35% of small businesses reported being impacted by cyber incidents last year (Ohio Chamber of Commerce, 2023).

Yet despite the stakes, many accounting firms—particularly small and mid-sized practices—lack the infrastructure and policies needed to safeguard client financial data. In an environment where digital tax filing, cloud-based accounting platforms, and remote client access are the norm, this is a growing liability.

Top Cybersecurity Risks Facing Accounting Firms

1. Email Compromise and Phishing Scams

Email remains the most common and effective way for attackers to infiltrate accounting firms. Criminals use phishing techniques to trick accountants into clicking malicious links, downloading infected files, or sharing login credentials. These emails are often sophisticated, imitating clients, banks, or government agencies like the IRS.

In 2023, a Toledo-based tax advisory firm unknowingly sent client W-2 data to a fraudulent IRS lookalike domain, resulting in compromised identities and months of damage control. The firm faced both legal exposure and reputational loss.

Why accounting firms are vulnerable:

• Routine handling of sensitive data via email

• Regular correspondence with government agencies during tax season

• Pressure to respond quickly to time-sensitive client requests

What to do:

• Deploy advanced email filtering that detects spoofed senders and malicious attachments

• Require Multi-Factor Authentication (MFA) for all email accounts and portals

• Provide quarterly training to staff on how to recognize phishing attempts

• Use secure client portals instead of email for document exchange

According to the FBI, Business Email Compromise (BEC) caused over $2.7 billion in losses in 2022 alone—more than any other cybercrime.

2. Weak Access Controls and Password Hygiene

Many small firms still rely on shared passwords, basic user accounts, or single-device access with no additional security layers. This creates a scenario where one compromised password can unlock vast amounts of financial data.

Inadequate controls can lead to:

• Unauthorized access to tax filings, payroll data, and financial reports

• Compromised credentials reused across multiple platforms

• Inability to trace activity back to specific users

A recent cybersecurity audit by the Ohio Department of Administrative Services found that many small professional services firms—including accountants—lack proper role-based access controls, especially when using desktop-based accounting software like QuickBooks or Sage.

What to do:

• Implement role-based access controls: limit access to sensitive files based on job responsibilities

• Enforce strong password policies: minimum length, complexity, and expiration requirements

• Enable MFA across all systems, not just email

• Use centralized identity management tools for login tracking and user provisioning

Avoid password reuse by integrating a business-grade password manager like LastPass or 1Password Teams.

3. Insecure File Sharing and Data Transfers

Accounting firms frequently exchange documents with clients, banks, and tax authorities—often using email, USB drives, or unsecured public cloud platforms. These methods are inherently risky and can result in accidental data exposure or interception.

Risks include:

• Files being sent to the wrong recipient

• Lack of encryption in transit

• Documents stored in unauthorized locations (e.g., personal Dropbox accounts)

The Ohio Data Protection Act encourages businesses to adopt cybersecurity frameworks (like NIST or ISO 27001) and offers affirmative defense in legal cases if best practices are followed. Using secure file-sharing is one of those recommended practices.

What to do:

• Use a secure client portal designed for financial services (e.g., SmartVault, Liscio, or ShareFile)

• Encrypt all data in transit and at rest

• Disable file sharing via email, especially for W-2s, 1099s, or full tax returns

• Monitor file access logs for unauthorized activity

A Ponemon Institute study found that 62% of data breaches are due to insider negligence or accidental exposure—often related to poor file handling.

4. Outdated Accounting Software or Unpatched Systems

Legacy software and unpatched systems create vulnerabilities attackers actively search for. Many accounting firms, especially those that only upgrade every few years, rely on outdated systems like:

• Unsupported QuickBooks desktop versions

• Windows 10 machines without critical updates

• Legacy email servers or FTP tools

These systems often lack encryption, logging, and access management, making them easy targets.

In rural parts of Ohio—especially in counties where broadband adoption is lower—many firms continue to use outdated desktop software simply because they operate offline. While that may reduce some risks, it increases others, like ransomware via USB, or failure to back up to the cloud.

What to do:

• Inventory all applications used across your firm and check for vendor support status

• Prioritize upgrading to cloud-based, secure platforms (e.g., Xero, QuickBooks Online, Thomson Reuters CS Suite)

• Automate patching for operating systems and business-critical applications

• Partner with a cybersecurity provider who can monitor endpoints and detect vulnerabilities in real time

The Center for Internet Security reports that over 60% of data breaches exploited known but unpatched vulnerabilities.

5. No Formal Incident Response Plan

Without a tested incident response plan (IRP), even a small breach can spiral into a major operational crisis. Many accounting firms have no idea who to call, what data to isolate, or how to notify affected clients or authorities.

Consequences include:

• Extended downtime during tax season

• Failure to meet regulatory breach notification timelines

• Permanent loss of client trust

Under Ohio’s data breach notification law (ORC 1349.19), businesses that experience a data breach affecting Ohio residents must notify affected individuals “without unreasonable delay.” Failing to do so can result in fines and civil liability.

What to do:

• Draft an IRP that outlines roles, procedures, and escalation paths

• Define what constitutes a reportable incident (e.g., ransomware, unauthorized access, credential theft)

• Include contact information for external partners (IT, legal, cyber insurance)

• Conduct tabletop exercises twice per year to validate the plan

Even a simple one-page plan is better than none—and most cyber insurance providers require one for coverage eligibility.

The Real Cost of Inaction

Cyberattacks on accounting firms don't just threaten client data—they can result in:

• Fines and penalties from regulatory bodies (IRS, FTC, state boards)

• Loss of professional licenses or credentials

• Civil lawsuits from clients whose data was compromised

• Long-term damage to firm reputation and client retention

According to CPA.com, 66% of firms that experience a major cyberattack report losing clients or failing to recover within a year.

How Ohio Accounting Firms Can Strengthen Cybersecurity Today

You don’t need an enterprise IT budget to reduce cyber risk. Even small firms can take meaningful action:

1. Perform a cybersecurity risk assessment specific to financial data exposure

2. Replace email-based document sharing with encrypted client portals

3. Enforce MFA and strong access controls across all systems

4. Update or replace unsupported software used for accounting and tax prep

5. Train your staff to recognize phishing, spoofed bank emails, and client impersonation

6. Back up all financial data offsite or to a secure cloud storage location

7. Develop and test an incident response plan before you need it

These steps can help protect your firm from breach, legal exposure, and the reputational fallout that comes from losing client trust.

Cybersecurity Is an Extension of Your Fiduciary Dut

As financial professionals, CPAs and accounting firms are held to the highest standards of integrity and confidentiality. That responsibility extends to how you protect the digital records entrusted to you.

Cybersecurity is not just an IT function—it’s a core part of ethical client service, professional liability management, and business continuity.

Firms that invest in secure systems, training, and proactive protection are better positioned to win high-value clients, pass compliance audits, and thrive in an increasingly digital and regulated world.

Partner with Securafy to Secure Your Firm

At Securafy, we specialize in cybersecurity for accounting firms and financial professionals across Ohio and the Midwest. Whether you need a full risk assessment, a secure document exchange system, or help meeting IRS and state data protection guidelines, we’ve got your back.

Protect your clients. Protect your data. Protect your firm.

Contact us today to schedule a free cybersecurity readiness assessment.