Why Accounting Firms are at Higher Risk for Cyberattacks Than Other Businesses

All businesses are susceptible to attacks, but accountants are at higher risk simply because of what they do and the clients they serve.  

Cyberattacks, tax fraud, and scams are rampant; each year, criminals only get bolder and cleverer. Unfortunately, accounting and tax professionals fall into the high-risk category – simply because of the information they handle. And, if you’re a smaller firm, you’re at an even greater risk of being targeted by a cyber thief. 

Hackers Think Small Firms Are the Best Targets 

“It may seem counterintuitive, but the risk of cyberattacks is disproportionately higher for smaller and medium-sized organizations, which tend to be much more reactive than proactive,” says Vijay Rathour, partner in the Digital Forensic Group.  

Cybercriminals think that small and medium-sized firms are easier to hack since they often lack the sophisticated cybersecurity programs larger businesses have, like virus detection software and dedicated IT teams.  

It can be easy to overlook cybersecurity and think you’ll never be a victim of an attack. Don’t make that mistake at your firm. “Identity thieves always seem to find a hook to lure victims, and we increasingly see tax professionals as a target given the sensitive client data they handle,” warns IRS Commissioner Chuck Rettig.  

Regardless of Firm Size, Your Risks of a Breach Are Increasing 

The costs of cybercrime to accountants and taxpayers are enormous. Here’s an example to put “enormous” into perspective: The government estimates billions of dollars were stolen by fraudsters from programs meant to help taxpayers during the pandemic. In fact, they’re calling the massive amount of theft “the biggest fraud in a generation.”  

Worse still, reports have shown that scams are rising: there were eight million reports of tax scams and fraud, according to the 2022 Annual Report of the Identity Theft Tax Refund Fraud Information Sharing Mission and Analysis center.  

This number is four times greater than the number of reports in 2021, and it’s not expected to drop anytime soon. “The number of attacks is large and increasing, both in volume and sophistication, and has expanded to…more complex tax scams,” the report claims. 

One of the most sophisticated schemes is recent: In March 2023, a federal grand jury indicted a group of seven individuals who allegedly filed over 370 false tax returns and attempted to claim over $110 million in tax refunds using stolen identities. The criminals used their victims’ information to register with the IRS and change their victims’ mailing addresses. They then accessed their tax information, like tax transcripts and wage records, and used the information to electronically file tax returns and claim fraudulent refunds. 

Accounting Firms Can Protect Data with a Document Management System 

A document management system (DMS) that’s built with security and compliance in mind will ensure your firm can confidently protect its data, which in turn helps you retain client trust and adhere to data security compliance needs. SmartVault is the easiest and most secure way to gather, store, share, and eSign documents in the cloud. Learn more today.