For accountants, data security is often the most pressing concern (and please, yes, thank you for making it a top concern).
It makes sense—firms want to prevent data breaches and theft of their clients’ sensitive financial data. They also want to protect their business and professional reputation.
Here’s the thing. Data privacy and data security are complementary fields, and need each other to achieve a well-rounded data protection program. Not to mention, consumer data privacy regulations are always expanding, and may soon expand to your jurisdiction if they aren’t already there.
But we’re still in the accounting busy season here, so let’s get to the point.
Here are seven central concerns that accounting firms should address in their data privacy program, as well as actionable steps you can take to safeguard your business, your employees, and your customers.
1. Assess your obligations
Privacy programs aren’t one-size-fits-all—not even close. What works for your accounting firm will depend on several different factors, including:
- Where your business—and your clients—are located
- What type of customers do you work with (i.e., B2B, individuals, etc.)
- What type of data do you collect?
- What kind of marketing activities do you engage in?
- What resources you have to build your privacy program
- What privacy regulations apply to your business
Many regulations, such as the Gramm-Leach-Bliley Act, the FTC Safeguards Rule, and IRS data protection requirements, provide some guidance, but may focus on data security over data privacy.
Even smaller accounting firms may fall under the jurisdiction of privacy laws such as the EU’s General Data Protection Regulation (GDPR) or California’s Consumer Privacy Act. (Keep in mind, state privacy laws aren’t only applicable when your business is based there—if you have clients in other states, you may need to comply with those regulations.)
2. Invest in a data inventory
Once you’ve answered those questions, conducting a data inventory is next. If you’re working with GDPR- or Minnesota-covered clients, this isn’t optional—but also know that a data inventory is widely considered to be the foundation of a strong privacy program.
A thorough data inventory should help you identify:
- What types of personal data you collect across all platforms
- Where the collected data is stored
- Who has access to the data
- How data is used
- If you share that data with any outside vendors or third parties
- What security measures you have in place to protect that data
- Whether you collect more data than you need
This last part is important! As an accountant, you likely have hefty stores of client data, but even in a data-heavy industry, you only want to collect what you have a business purpose for using. So while your firm might routinely collect income information from clients, you would limit your business use of that information (for example, you wouldn’t want to use that in marketing.)
Your data inventory should also help you understand who has access to what information within your business. You don’t want different groups—e.g., your audit and advisory departments—comparing data notes with one another.
What about a WISP?
Although you can conduct an independent data inventory, if you’ve already completed an IRS Written Information Security Plan (WISP), you can start there. Just keep in mind that while a WISP is a valuable foundation for understanding data security practices, it doesn’t fully address the broader scope of data privacy.
3. Prepare your employees
Once you have a comprehensive compliance strategy, it’s time to make sure all your employees understand their role in protecting data privacy and how they can work within this framework.
Employee training aims to develop employees who can identify privacy issues and know when to engage with privacy champions at their firm.
The key to effective employee training? Engaging, role-based training.
Role-based training tailors training materials to ensure they are relevant to an individual’s role within a business. What an office administrator needs to know about data privacy differs from what a marketer or customer service specialist requires.
Don’t skimp on the practical elements in your training. Build real-world examples based on client interactions—for instance, how to respond to a data deletion request, or what not to say in an email when handling sensitive documents.
Taking this extra step and adding in helpful training scenarios and storytelling will make training more effective and relatable to the employee.
4. Manage third-party risks
Even if your firm has its practices locked down, third-party vendors can expose you to liability, especially if they mishandle your shared data.
To minimize risks, prepare a vendor assessment to send and review. Carefully evaluate vendor contracts; they should include privacy-specific clauses, particularly those required under the GDPR or relevant U.S. state privacy laws. Ask for documentation like SOC 2 reports or ISO 27001 certifications, and confirm whether vendors use sub-processors or store data across borders.
Even after they are onboarded, continue the diligence! Add vendor audits into your workflow—annually at minimum, or whenever you onboard a new tool. Smaller SaaS providers often come with less mature privacy practices, so don’t assume risk scales with size.
And make sure your employee training includes guidance on evaluating and using third-party tools. That includes large language models like ChatGPT and any AI-driven platform your team might bring into client-facing or internal workflows. (Similarly, make sure vendors aren’t entering your data into AI!)
5. Ensure accountability and transparency
Ensure accountability—see what we did there?
Puns aside, transparency is a major focus in consumer data privacy; people want to understand what you do with their information, how you protect it, and how your website or services impact their data privacy.
Depending on the size of your accounting firm, you may want to appoint a data protection officer or someone in a similar position to carry out data privacy practices and ensure your firm is complying with privacy laws.
One key way to ensure accountability and transparency is with a (PIA). PIAs are often required by law when a business releases a new feature or product that uses certain types of sensitive data or processes data that could be risky to an individual—conditions that could apply to accounting firms.
Triggers for PIAs can include onboarding a new payroll provider, rolling out a new digital product for clients, or changing how you collect and store financial documentation.
Privacy impact assessments can help your business understand any risks associated with new privacy policies or business practices, and how to mitigate those risks.
Because accounting firms interact with personal financial data, representing high-risk data, PIAs are essential to demonstrate that you are protecting your customers’ interests and sensitive data.
Privacy Risk Assessments: PIA/DPIA Business Guide
Our Privacy Risk Assessment Guide breaks down the privacy review process with clear, straightforward language.
6. Have a plan for your website cookies
Website cookies aren’t static, and neither are the rules that govern them. They’re subject to evolving privacy laws. (And scrutiny. Lots of scrutiny.)
To keep your cookie practices in check, start with an audit. Know what cookies are in use on your site and separate them by type (e.g., strictly necessary, analytics, marketing). How you label them matters. Misclassifying cookies—especially lumping everything under “necessary”—can get your firm into regulatory trouble.
Once that’s in place, get your cookie banner in place and/or updated. Depending on your client base, you may need strategies for supporting opt-in consent, opt-out mechanisms, or both. And if your marketing team uses tracking pixels (like Meta or Google), double-check whether those tools are collecting personal data and how they’re disclosed.
As with all things privacy, make time for a recurring cookie review. New tools get added, website settings change, and laws continue to evolve. Build cookies into your privacy program calendar so compliance stays on track.
7. Build trust with clients
Data privacy programs are great for business—they demonstrate that you care about operating in your clients’ best interest, and prioritize their privacy.
It also provides an opportunity to build trust with clients on multiple fronts:
- Marketing: Client data protection is a key consideration for many looking to work with accounting firms. A comprehensive data privacy program is a demonstrable example of your firm’s dedication to protecting client privacy.
- Client onboarding: Discuss your business’s data privacy practices during the client onboarding, including how you protect their data.
- Demonstrate due diligence on due services or products: Conduct PIAs on any new service or product to show clients that you are taking their privacy into account through every avenue in your business.
- Ensure your privacy notice is easy to read: No one likes reading dense legalese. Tailor your privacy notice to your client base, from the language you use to how you structure the privacy notice on your website.
If you work with clients in multiple jurisdictions, consider segmenting your privacy notice to account for region-specific rights and obligations.
Clients come to you to handle their most sensitive information; building trust with data privacy can deepen existing client relationships and attract new clients who appreciate your dedication to privacy and discretion.
How Red Clover Advisors can help
Whether in a busy season or not, you don’t have to navigate data privacy alone.
- Learn year-round with articles, podcasts, and free guides on data privacy, from PIAs to new state AI laws.
- Conduct a privacy program assessment to review your existing practices and develop a prioritized roadmap to mitigate privacy risks.
- Build an effective privacy training program with engaging, role-based employee training.
Contact us to schedule a free consultation and learn how a data privacy program can take your business to the next level.