Accounting Service
A Common Sense Approach to Data Security as Applied to Offshore Accounting Service
When we talk about any “increase” we have to say compared to what. In this case the CPA has to assess the data security for on-shore operations before he can assess the increased risk posed by offshoring.
What is the typical level of data security in a small business or a CPA office?
Since there are few staff members, there is little separation of duties. Such lack of separation encourages internal security problems.
The data resides in paper files. Paper files are vulnerable to fire and water damage.
The office is not physically secure. Staff members, leasing office personnel, and janitors have keys to the office. Any of them can copy confidential data.
Paper records are not shredded before being discarded.
The computers have no protection from unauthorized users or have relatively weak password control. Often the password is taped to the workstation.
Any email communication is done in the clear.
Workstations have recording devices which makes it easy to copy data.
Usually all workstations have email and internet access. It makes unauthorized transmission of data easy.
Let us look at how these factors change when accounting is sent offshore.
Internal control improves because the people who are authorizing the transactions are separated from the people doing the record-keeping.
All files are maintained electronically. Such data is backed up to an off-premises secure server. So threats from fire, water, and copying are significantly reduced.
Offshore contractors restrict physical access to keep unauthorized people out.
Workstations have access to only the data that is processed on that workstation.
Email communications are encrypted.
All recording devices on the workstations are disabled.
Only supervisors have access to email and internet.
We believe that best security practices can be installed when the client, the CPA, and the offshore contractor work together.
The first line of responsibility lies with the client. The Better Business Bureau has an excellent pamphlet on how to protect data theft. http://www.bbb.org/securityandprivacy/SecurityPrivacyMadeSimpler.pdf As the pamphlet points out technical solutions are not enough. They must be combined with good practices in everyday management of the company.
The CPA should advise the client to implement the common sense measures advocated in this pamphlet.
The offshore contractor must apply the same real world as well as technical solutions to security. The offshore contractor must consider the sensitivity of the data being entrusted to them and take appropriate measures to safeguard the information. A responsible contractor would only accept data than is essential to the task.
Let us now look at whether popular offshore destinations like India are more vulnerable to data theft. According to a March 2007 Symantec report entitled “Symantec Internet Security Threat Report Trends for July- December 2006”, US was the country with highest level of malicious activity. China was next and India did not make it into the top ten. http://eval.symantec.com/mktginfo/enterprise/white_papers/ent-whitepaper_internet_security_threat_report_xi_keyfindings_03_2007.en-us.pdf
Another common sense conclusion one can draw is that the thieves concentrate on high value targets. You can look at the data compiled by the Privacy Rights Clearinghouse. http://www.privacyrights.org/ar/ChronDataBreaches.htm#CP. During 2005, 2006, through June 20, 2007 they reported 155 million records having been compromised. Out of that less than 1000 records were compromised in attacks that netted 100 records or less. Thus records from an offshore contractor serving small businesses are less likely to be a target of identity thieves.
The CPA needs to assess the sensitivity of the data and put a value on it. The CPA can have the contractor include a liquidated damages clause if the said data is compromised. If the contractor is not willing to agree to a reasonable liquidated damage figure, find another contractor.
Data security is a complex issue. However, we can enunciate certain principles that can be applied by a small business:
Collect the least amount of data needed to serve the customer.
Since a large proportion of data theft involves the employees, screen them carefully.
In addition, the employees need to be trained to recognize various strategies used by criminals to facilitate data theft.
Take security measures in the office; for example use a locked mailbox, lock the office when it is empty even for a short period of time, shred any paper records before disposal, reformat hard drives before donating, selling, or returning a computer etc.
Take common sense precautions against cyber attacks. Encrypt the sensitive data, use firewalls, and keep your internet security software updated.
Comply with any specific security standards that are applicable to your business. For instance credit card information needs to be secured to a specific standard.
Providing security costs time and money. In a competitive world no business can spend more on security than what the market would pay for. Ultimately security is determined by the customers’ willingness to pay.
While more money can buy more security, one must remember that no security is absolute. Just think about how many times classified information has been stolen from the US government.
Eventually there will be a security breach. How do you deal with such a breach? It seems that the best approach is to inform the individuals or businesses whose data have been compromised, notify the law enforcement authorities, and support the affected parties to monitor their credit reports.
Security is a multi-faceted problem. The key to success is co-operation between the client, the CPA, and the offshore contractor. No one party can be effective without the others.
Accounting Services New York – The Best Way to Combat Cumbersome Accounting Data
Accounting services are one of the most outsourced services in the market. The reason behind this is very evident. Regardless of the size or status, all financial institutions need some extra financial accounting done for sailing smooth.
If you are about to start a new business, the accounting services New York have utmost importance in your proceedings. These will form the back bone of your business assisting it sound and efficient data records from time to time. The advices on accounting protocols can be given by professionals only. The finance structure and the account management are crucial things in a developing organization and that is the need of professional accounting services there.
There are many hi-tech accounting services New York available all over the city. Accounts receivable outsourcing management, accounts payable management, cash flow statement preparations, cash management services, inventory reconciliation management etc are some of the important services they provide. Tax accounting, business accounting, payroll accounting etc are also done by accounting service firms.
The accounts receivable financing portfolio is one of the largest assets of the companies, particularly when the company sells on credit. This is one of the most useful services provided by accounting services New York firms. Like this accounts payable function is also performed by these kinds of firms. Forecasting future profitability for effective business is very important in case of budding companies. For this the cash flow statement preparation is utmost important. This function is done in a very careful manner by the servicing firms. Inventory reconciliation services, inventory reporting, fixed assets inventory and inventory management solutions etc are also included in the accounting services.
Nowadays most of the companies outsource their accounting works. The accounting service firms acts as a virtual accounting department for the business. They will develop the financial structure, policies and procedures for your company to streamline the process. The productivity of the company will be increased by making it in a system. The quality practices adopted by these accounting services New York firms can help your company grow at a faster pace.
Some of the processes that make accounting services distinct can be enumerated as:
• An internal client procedure manual is kept to document all the processes of your company
• Consistency in practices followed
• Proper and timely delivery of monthly financial packages
• A separate book keeper and controller for each account
• Lastly, the work at real time
These services can provide increased efficiency as well as productivity for your organization.
Some of the firms provide online accounting and book keeping services also. These services use modern technology to communicate with the client. They are very careful about the security of data and internet frauds. These firms are secure and fast. Thus accounting is an efficient online procedure too to handle your accounting effectively. With the evolution of online accounting services, the job can be done from any corner of the world. Thus the accounting services have become global and it make the world a very reachable one.
Why Outsource Accounting and Tax Preparation Services?
Outsourcing accounting and tax preparation services not only saves time and energy for individuals and business houses but also ensures accuracy in the accounts and resulting in compliance with all governmental and other rules and regulations. Online accounting services eliminate the need to have dedicated full time accounting personnel. The outsourcing of these accounting services cost much lesser than the amount spent on dedicated accounting staff. Outsourcing tax preparation ensures error free tax accounting and timely tax payments.
Outsourcing accounting services
Accounting services like financial statements, reports, cash flow and budgeting, financial analysis, management reporting, monthly, quarterly, and annual reviews, as well as books cleaning up could be easily outsourced. This is one sure process for affordable accounting. The accounting services provider would be able to leverage the benefits of economies of scale, by utilizing the services of the same set of staff to serve more than one client.
Further, a dedicated accounting service outsource provider would be able to operate the most modern systems and procedures that individuals and business houses would not be able to afford. Employee turnover problems are also avoided by outsourcing accounting services.
Outsourcing bookkeeping services
Bookkeeping services like the maintenance of general ledger, accounts payable and accounts receivable, inventory, payroll, maintenance and estimation of fixed assets, reconciliation of bank accounts and credit cards, etc. could be outsourced. They also result in the same benefits of affordable bookkeeping enumerated above for outsourcing accounting services.
Outsourcing tax preparation
Outsourcing tax preparation ensures that the tax returns like 1040 for individuals and 1065, 1120, 1120S, 1041, etc. are prepared without errors or omissions. Outsourcing tax returns guarantees their timely filing with the concerned authorities, thus avoiding penalties and legal consequences.