Page 34 - CMA Journal (Nov-Dec 2024)

Focus Section

A disgruntled employee with access to sensitive financial barrier between accounting systems and potential online
records can lead to the sharing of confidential information threats, blocking unauthorized access. Up-to-date antivirus
with competitors or cybercriminals. Employees may also software helps identify and eliminate malware that could
inadvertently expose financial data by sharing confidential compromise financial data. Continuous system monitoring
information on unsecured platforms, clicking on phishing is also essential for detecting suspicious activity, such as
emails, or using weak passwords. Since insider threats stem unauthorized login attempts or irregular financial
from individuals who already have authorized access, they transactions. Automated security tools can alert accounting
are often harder to detect. To mitigate these risks, professionals to potential threats, allowing them to take
businesses must enforce strict access controls and monitor swift action before a breach occurs.
financial activities closely.
As cybercriminals become more sophisticated, artificial
The widespread adoption of cloud-based accounting intelligence (AI) and machine learning are playing an
software, such as QuickBooks, Xero, or Sage, highlights the increasingly important role in digital accounting
growing role of cloud computing in modern accounting. cybersecurity. AI-powered fraud detection systems analyze
Despite its benefits—such as cost savings, automated real-time financial transactions, identifying anomalies and
backups, and remote access—cloud accounting introduces suspicious activities that may indicate fraud. Blockchain
security challenges. Hackers can exploit weaknesses in technology is also being explored as a means to enhance
cloud security to gain access to financial data. For instance, if financial security. By creating a decentralized and
an accounting firm lacks strong password policies, attackers immutable ledger, blockchain reduces the risk of fraud and
may use brute-force methods to crack login credentials and data manipulation. Additionally, the Zero Trust security
access sensitive financial documents. To reduce these risks, model, which requires continuous verification of all access
accounting firms must ensure that their cloud service requests, is gaining popularity as a strategy to mitigate
providers implement multi-factor authentication, strong insider threats and unauthorized access.
encryption, and regular security updates.
Equally important is cybersecurity training for employees.
Another significant cybersecurity concern in digital Many successful cyberattacks occur because employees use
accounting is third-party threats. Many accounting firms rely weak passwords, fall for phishing scams, or mishandle
on external vendors for financial services, payment sensitive data. Ongoing cybersecurity awareness training is
processing, and software solutions. However, these vendors essential to ensure that all employees understand the risks
can serve as entry points for cybercriminals if their security and adhere to best practices for data protection. A
measures are inadequate. For example, a payroll processing well-trained team serves as one of the strongest defenses
company with weak cybersecurity safeguards could allow against cyberattacks in accounting. Firms should conduct
hackers to access sensitive employee tax and salary data. To regular security drills and simulated phishing attacks to
mitigate third-party risks, accounting firms must conduct assess staff knowledge and reinforce security protocols.
thorough security audits before partnering with outside In digital accounting, cybersecurity is an essential aspect of
service providers. Vendors must adhere to industry security financial management. As cyber threats continue to evolve,
standards and implement strong data protection accounting firms must implement proactive security
mechanisms to ensure the safety of financial data.
measures, comply with regulations, and leverage
One of the most effective strategies for enhancing cutting-edge technologies to protect financial data. By
cybersecurity in digital accounting is multi-factor adopting robust authentication processes, providing
authentication (MFA). MFA requires users to complete ongoing staff training, utilizing encryption, and maintaining
multiple steps to verify their identity, such as entering a continuous monitoring, accounting professionals can
password and receiving a one-time code sent to their safeguard their clients' financial integrity and preserve trust
mobile device. Even if a hacker gains access to login in the digital age.
credentials, this additional layer of security significantly In addition to protecting financial assets, strong
reduces the chances of unauthorized access. Accounting cybersecurity practices help accounting firms remain
firms should also implement strong password policies, resilient and competitive in an increasingly digital world.
requiring employees to create complex passwords that are Firms that prioritize cybersecurity will be better equipped to
regularly updated. Using password managers can help navigate the challenges of digital finance while ensuring
employees securely store and manage their credentials.
legal compliance and maintaining client confidence. A
Another critical cybersecurity measure is the encryption of proactive, security-focused approach is critical for long-term
financial data. Even if financial records are intercepted, success in the accounting sector, as financial data remains a
encryption ensures that unauthorized users cannot access primary target for cybercriminals.
them. Accounting firms should employ encryption for both
data at rest and data in transit to guarantee that sensitive About the Author: Imtiaz Bashir, a Fellow Member of ICMA
information remains protected. Regular data backups are International, serves as a Senior Instructor at Govt. College of
equally important to prevent data loss from system failures or Commerce, Qasimpur Colony, Multan. With over 20 years of
cyberattacks. Best practices include maintaining offline backups experience in management accounting, corporate finance, and
to safeguard against ransomware attacks, storing backups in business taxation, he has taught at various public and private
multiple secure locations, and frequently testing backup sector universities and professional institutes in Pakistan. He
recovery processes to ensure data can be restored quickly. previously worked as Assistant Manager Accounts at Orient Group
of Companies. Currently, he is a faculty member at ICMA Pakistan's
For accounting firms, firewalls and antivirus software are Multan campus and is pursuing a PhD.
fundamental to maintaining cybersecurity. Firewalls act as a

32 ICMA’s Chartered Management Accountant, Jan-Feb 2025 BACK TO CONTENTS PAGE