Cyber Security for Accountants

In recent years, the UK financial sector has faced an alarming increase in cyber threats.

New data has revealed that 67% of UK accounting firms reported experiencing at least one cyber attack in the past year, with 40% encountering multiple incidents.

While advancements in cyber security for accountants have made it harder for criminals to breach financial networks, cyber threats are constantly evolving, meaning firms must continuously implement new measures to stay protected.

Why are accounting firms prime targets for cyber attacks?

Accounting firms handle a large amount of sensitive financial data, making them a prime target for cyber criminals. This is why professional accountants must maintain strict confidentiality at all times, as is outlined in ICAEW’s Code of Ethics.

As one of the five fundamental principles, confidentiality must be maintained as sensitive client information is collected, stored, used, disseminated and destroyed.

From payroll records and tax returns to personal identification details, the information accountants manage is highly valuable. If compromised, cyber criminals can exploit this data in several ways. This includes:

Filing fraudulent tax returns

If cyber criminals gain access to an accountant’s tax software or client records, they can file fraudulent tax returns by altering refund amounts and redirecting pay-outs to their personal accounts.

This is particularly dangerous because tax returns often include sensitive personal and financial information, such as National Insurance numbers, bank account information, and company revenue data.

Once a fraudulent return has been processed, it may take months for the affected business or individual to detect the fraud and resolve the issue with HRMC.

Manipulating payroll systems

Many accountants manage salaries for businesses, making payroll systems a popular target for cyber criminals.

Attackers can infiltrate these systems and add ‘ghost employees’, fictitious workers whose salaries are paid into fraudulent bank accounts.

Alternatively, hackers can alter legitimate employees’ bank details, redirecting wages to criminal-controlled accounts.

These fraudulent transactions often go undetected for multiple pay cycles, particularly in larger businesses with many employees, resulting in significant financial losses before the problem is discovered.

Selling your firms confidential data for financial gain

Cyber criminals don’t always keep stolen financial data for themselves; they also sell it on the dark web.

Tax records, and bank account information are highly valuable commodities in underground markets. Once sold, criminals can complete fraudulent transactions, or even corporate espionage, putting businesses at serious risk.

Conducting large-scale breaches that affect multiple businesses

Accountants often manage financial data for multiple clients, so a single breach can have widespread consequences.

By infiltrating an accountant’s system, cyber criminals can gain access to a large network of financial records and exploitable data, putting multiple businesses and individuals at risk.

As many accountants have access to their clients’ banking platforms, tax portals, and corporate accounts, attackers use their data to initiate fraudulent transactions, file fake tax returns, and even compromise business partners and clients.

The financial impact of cyber attacks

Accounting firms that fall victim to a breach often experience serious financial consequences. These include:

Regulatory fines and legal action

Strict GDPR regulations and standards for cyber security in the financial sector mean that firms which fail to protect client data face significant penalties.

Regulatory bodies have the authority to impose significant sanctions, and noncompliance may lead to costly legal battles.

Beyond immediate fines, the financial impact can extend to lost business and potential compensation claims from affected clients.

Loss of client trust

A security breach can jeopardise client relationships, diminishing trust and confidence in your firm.

Customers may lose faith in your ability to protect their sensitive information, resulting in contract cancellations, and difficulty attracting new clients.

This long-term reputational harm can make it difficult to rebuild credibility in the marketplace.

Operational disruption

Cyber attacks can bring key processes to a standstill, halting critical operations such as payroll processing, invoicing, and supply chain management.

System outages and data inaccessibility can disrupt daily workflows, resulting in delays in service delivery, missed deadlines, and reduced productivity.

The longer the disruption persists, the greater the strain on internal resources and overall business continuity.

Rising insurance costs

Firms that suffer a breach may face higher cyber liability insurance premiums as insurers perceive an increased risk profile.

In some cases, repeated incidents or inadequate security measures can make it difficult to renew existing policies or secure new coverage.

Insurers may also impose stricter terms, higher deductibles, or additional security requirements, increasing the financial and operational strain on the firm.

Common cyber threats facing accountancy firms

As attackers continually refine their tactics to exploit vulnerabilities, staying aware of risks and implementing strict measures for cyber security in the financial sector is crucial.

Key security issues currently faced by financial institutions include:

Phishing and Business Email Compromise (BEC)

Phishing remains one of the most prevalent cyber threats that impacts accountancy firms.

This is where cyber criminals create highly convincing emails that look like legitimate communications from banks, clients, or colleagues, tricking recipients into clicking malicious links, downloading malware, or disclosing sensitive login information.

Business Email Compromise (BEC) attacks pose an even greater threat to firms. This is where fraudsters gain access to or spoof trusted client or partner email accounts in order to manipulate financial transactions.

By impersonating key individuals, cyber criminals trick employees into redirecting payments, authorising fraudulent invoice settlements, or disclosing confidential financial data.

Ransomware attacks

Ransomware is another disruptive and financially damaging cyber threat for accounting firms.

This is where cyber criminals infiltrate systems using phishing emails, malicious downloads, or unpatched vulnerabilities before encrypting critical financial records and demanding payment for their release.

These attacks can bring business operations to a halt, preventing access to essential client data, payroll information, and financial records.

Even after paying the ransom, there is no guarantee that the data will be fully restored or that attackers won’t strike again.

Data breaches and insider threats

Data breaches, whether caused by external cyber attacks or internal employee negligence, pose a significant risk to accounting firms.

Unauthorised access to confidential data can lead to serious compliance violations, regulatory fines, and legal consequences.

Whether from disgruntled employees, inadvertent data mishandling, or compromised employee accounts, these data breaches can all be extremely damaging.

A lack of strict access controls, poor cyber security awareness, or weak password management can make it easier for sensitive financial data to be exposed, stolen, or misused.

Supply chain attacks

Many accountants rely on cloud-based financial software and third-party providers for payroll and tax services as they streamline operations and improve efficiency.

However, if these external suppliers do not implement strong cyber security measures, they may become weak links in the security chain.

Cybercriminals often exploit vulnerabilities in third-party systems to gain unauthorised access to sensitive client and financial data.

A single breach can have a cascading effect, leading to operational disruptions, financial losses, and significant reputational damage for the firm.

How Net-Defence can help

At Net-Defence, we provide tailored cyber security for financial institutions to protect them from evolving risks. Our services include:

Comprehensive cyber risk assessments

Understanding your firm’s vulnerabilities is the first step towards developing a robust cyber security strategy.

As part of our ISO 27001 certification process, we conduct thorough risk assessments to identify potential weaknesses in your IT infrastructure, cloud systems, and software applications.

We will then make clear, actionable recommendations to improve security and ensure compliance with industry regulations and best practices.

Advanced threat detection & monitoring

Cyber threats can emerge at any time, making early detection critical to preventing breaches.

Our Security Operations Centre (SOC) provides advanced monitoring solutions, including real-time, 24/7 network surveillance that detects suspicious activity before it escalates into a serious incident.

By leveraging innovative threat intelligence, we help you stay ahead of cyber criminals and ensure business continuity.

Help you achieve recognised cyber security standards

Obtaining recognised cyber security certifications increases your company’s resilience and demonstrates a commitment to protecting client data.

We guide accounting firms through the Cyber Essentials and Cyber Essentials Plus certification processes, which are designed to ensure that businesses are protected against common cyber threats.

Certification not only improves security, but it also increases client trust and ensures compliance with industry standards. Ensuring your employees have a complete and thorough understanding of cyber threats also complies with ICAEW’s third fundamental principle of accounting concerning professional competency and due care.

Developing your team’s knowledge and skills ultimately empowers them to do their jobs more effectively while keeping sensitive client data safe and secure.

Incident response & recovery planning

A well-planned response strategy can mean the difference between a minor disruption and a major crisis.

In the event of a cyber attack, our incident response and recovery services enable businesses to act quickly to contain the threat.

We collaborate closely with your team to create robust contingency plans, ensuring that your company can recover efficiently and with minimal financial impact.

Investing in cyber security for financial institutions can ensure long-term stability. Don’t wait for a cyber attack to put your firm at risk; instead, take action now to protect it.