Stay Compliant, Protect Client Data, and Avoid Regulatory Fines
If you’re leading an accounting firm with six or more employees, chances are you’re handling sensitive financial data daily—client tax records, Social Security numbers, banking details, and more. That makes your firm a prime target for cybercriminals—and puts you squarely in the crosshairs of the FTC Safeguards Rule.
In this article, we’ll break down what the rule means, how it applies to accounting firms, and the 9 essential steps to stay compliant, secure, and audit-ready.
What Is the FTC Safeguards Rule?
The FTC Safeguards Rule, introduced by the Federal Trade Commission, requires businesses classified as "financial institutions" to create and maintain a comprehensive written information security program.
It was updated in 2021 to reflect today’s modern cyber threats—and yes, CPA firms and accounting professionals are included in this requirement.
Does the Safeguards Rule Apply to Accounting Firms?
Yes. Accounting and tax firms are officially considered “financial institutions” under the rule because of the financial services they offer.
The rule applies if you:
- Handle tax preparation or payroll
- Maintain client banking information
- Provide investment, credit, or advisory services
- Store client data digitally or on paper
💡 Even if your firm only accesses this data occasionally or through third parties, the Safeguards Rule still applies.
Learn more from the FTC
9 Safeguards Every Accounting Firm Must Have
Here’s a breakdown of the key components the FTC now expects your firm to implement:
- ✅ Appoint a Qualified Individual
Assign someone—internal or outsourced—who oversees your information security program and reports directly to ownership or senior leadership.
- ✅ Perform a Risk Assessment
Identify the types of customer data you store, how it’s accessed, and where vulnerabilities exist.
- ✅ Maintain a Written Information Security Program (WISP)
You must have formal documentation outlining your safeguards, training, response plan, and review schedule. We help clients build audit-ready WISPs.
- ✅ Limit and Manage Access
Access to client data must be role-based and regularly reviewed. No more open-shared drives with sensitive files.
- ✅ Encrypt Client Data
Whether data is in storage or in transit, it must be encrypted and protected from unauthorized access.
- ✅ Implement Multi-Factor Authentication (MFA)
MFA is mandatory for system access—it prevents unauthorized entry even if a password is compromised.
- ✅ Train Employees Regularly
Phishing emails, ransomware links, and unsafe habits are top breach causes. Your team needs ongoing security training.
- ✅ Monitor Vendors & Third-Party Access
Any third-party who touches client data must comply with the same standards. Vendor oversight and documentation are required.
- ✅ Develop an Incident Response Plan
If a breach happens, your firm must have a documented plan outlining how to respond, contain, notify, and recover.
What Happens If You Don’t Comply?
Non-compliance puts you at risk for:
- Regulatory fines (often $100,000+)
- Data breach exposure
- Client trust loss and damaged reputation
- Audit failure and forced shutdowns
Accounting firms are increasingly targeted for ransomware attacks, and the FTC has increased enforcement with sharper penalties for firms that don’t follow the rule.
How CD Technology Helps CPA Firms Stay Compliant
At CD Technology, we specialize in helping accounting firms across Tennessee navigate the FTC Safeguards Rule without disrupting daily operations.
Our services include:
- Custom Written Information Security Programs (WISPs)
- Full network and risk assessments
- Data encryption and secure backup systems
- Multi-factor authentication (MFA) implementation
- Staff training and phishing simulations
- Vendor oversight policies
- 24/7 monitoring and response
- Compliance reporting and audit documentation
Don’t Wait for an FTC Audit or Breach
If you’re unsure whether your current IT partner has you covered, don’t gamble your firm’s future. Let’s review your current setup and help you close the compliance gaps.
📞 Schedule a free discovery call now
We’ll show you exactly what’s missing—and how to fix it without stress.
