Security and privacy in cloud based accounting services

Security and privacy in cloud based accounting are hot topics. This rise of cloud based accounting services highlights the importance of robust data security and safeguarding sensitive financial data.

These services are gaining in popularity, as they enable businesses to streamline financial processes and collaborate in real-time from anywhere worldwide. They offer many benefits, such as cost-effectiveness, automatic updates and enhanced collaboration among team members. Despite these advantages, the transition to cloud-based accounting introduces new challenges, particularly for data security and privacy.

Financial data is an attractive target for cybercriminals. In the cloud, where remote servers store data, concerns about unauthorised access, data breaches and privacy violations are commonplace, and we have seen a number of large corporations suffer from data hacks in 2023.

The implications of a security lapse can be severe, ranging from financial losses and reputational damage to legal repercussions.

So what can help mitigate the risk of an unauthorised breach of financial data stored in the cloud?

Mitigating cyber risk

Mitigating cyber risk

Encryption protocols to protect financial data during transmission and storage are commonplace. Xero accounting software, for example, has certification of its compliance with ISO/IEC 27001:2013, the premier global information security management system (ISMS) standard ISO2700. Encryption ensures that even if unauthorised access occurs, the data remains unreadable without the appropriate decryption key.

In some instances, enforcing multi-factor authentication can strengthen access controls. This adds an extra layer of security, requiring users to verify their identity through multiple means, such as passwords, biometrics or authentication codes.

It is essential to keep accounting software and systems up-to-date with the latest security patches. Regular updates help address vulnerabilities and protect against emerging threats, ensuring that the cloud-based accounting platform remains resilient to potential cyberattacks.

User permissions and access controls

User permissions and access controls

While most cloud based accounting software programs, such as Xero, have excellent encryption protection built in, there is an onus on the user to safeguard their data.

By implementing granular user permissions and access controls, you restrict access to sensitive financial data. Only authorised personnel should have the necessary privileges, reducing the risk of accidental or intentional data exposure.

Conducting regular IT audits and monitoring unusual activities allows for early detection of suspicious behaviour and enables a response to mitigate any potential risks.

Ensure your business has robust data backup procedures. In the event of a data breach or system failure, having up-to-date backups ensures that you can promptly restore critical financial information, minimising downtime and potential losses.

Training and awareness

Training and awareness

As part of any new hire induction and the business’s ongoing professional development plan, educating employees about the importance of data security and privacy should be a priority. Training programs should cover best practices for creating strong passwords, recognising phishing attempts and adhering to security policies.

The team at North Advisory can set up the entire accounting service for your business by registering the business Xero file, creating an invoice template, setting up a relevant chart of accounts, activating relevant bank feeds and integrating any necessary external software.

We get you set up on HubDoc and establish payroll, leave and superannuation as required. We also provide a 2.5-hour in-person session that will give you all the information you need to run Xero with confidence.

You’ll also get one month’s worth of access to unlimited email, phone, and online meeting support after your training session, as well as our cheat sheet video resource.

North Advisory helps business owners achieve financial stability and growth. We aim to provide business owners with answers and advice supporting their long-term objectives, including keeping their cloud based accounting platform secure and private.

Contact us if you ever need clarification or assistance. We offer professional qualified business tax services and individual wealth management advice to our clients.

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