The Hidden Cyber Risks Inside Every Accounting Firm (That Partners Never Hear About)

Why accounting firms face growing cyber risks — and why most partners never see them until it’s too late.

Every accounting firm today – from sole practitioners to multi-office practices – is quietly carrying cyber risks that partners rarely see, and often don’t even know exist.

These risks don’t come from Hollywood-style hackers in hoodies. The truth is much simpler – and far more uncomfortable: most accounting cyber incidents stem from ordinary mistakes, unnoticed gaps, misconfigurations and oversights inside the firm’s everyday systems.

And because accountants handle some of the most sensitive information a business can produce – payroll, bank statements, tax returns, personal ID, corporation tax workings, cashflow projections – even small failures can have major consequences.

This article is designed to help accountants protect themselves. It highlights the hidden cyber risks that exist inside almost every firm today – and explains, in plain language, how to reduce them without needing to become a technology expert.

No jargon. No scare tactics. Just reality – and practical steps you can take.

1. The Most Common Risk Accountants Overlook: Microsoft 365 Misconfiguration

Almost every modern accounting firm relies on Microsoft 365. It powers:

  • Outlook email
  • Teams
  • OneDrive and SharePoint
  • Excel and Word
  • Client file sharing
  • Autosave, co-authoring and remote work

Microsoft 365 is incredibly powerful and secure – if it is configured properly. Unfortunately, in most firms it has quietly grown over time, with settings changed by different people, and no-one regularly checking whether it still meets best practice.

In many Cyber Essentials assessments for professional services firms, Microsoft 365 misconfiguration is the single biggest reason for failure.

Common Microsoft 365 issues we see in accounting firms

  • Multi-Factor Authentication (MFA) not enforced for everyone
    If even one user does not have MFA enabled, that account becomes an easy target for attackers. They only need one weak login to get into email and files.
  • Old staff accounts still active
    Bookkeepers, trainees and temporary staff who left years ago often still have live accounts sitting in the system with access to client data.
  • Anyone can share files externally
    SharePoint or OneDrive links set to “Anyone with the link” mean confidential documents can potentially be accessed by people outside the firm, not just the intended client.
  • Admin-level access for staff who don’t need it
    If an account with high-level permissions is compromised, attackers can change settings, create new users and download large volumes of data.
  • Limited or no use of audit logs
    When clients ask, “Who accessed this file and when?”, many firms discover they don’t have the logging they need to answer confidently.

None of this is about blame. These issues arise because firms focus on client work first, and assume that when Microsoft 365 is “working”, it must also be secure.

2. Email: Still the Weakest Point in Every Accounting Firm

Email is central to accounting – and it remains the single biggest source of cyber and data protection risk. Almost every day, accountants receive:

  • Bank statements and transaction exports
  • Personal ID documents (passports, driving licences, utility bills)
  • Tax returns and supporting schedules
  • Payroll reports and P60s
  • CIS and VAT documentation
  • Confidential forecasts and management accounts

The problem is not accountants – it’s the medium

  • PDF passwords are not strong protection.
    Password-protected PDFs can often be cracked with relative ease compared to modern encryption standards.
  • Email is easily forwarded.
    A client might forward a sensitive document chain to a personal email address, a colleague, or even the wrong recipient by mistake – and the firm often never finds out.
  • Attachments can be accessed on compromised devices.
    Even if your systems are secure, a client’s computer or phone might not be.
  • Phishing emails are getting more convincing.
    Attackers now impersonate HMRC, Companies House, accounting software platforms and even your own firm with logos and language that look almost identical to the real thing.

In many incidents, there is no dramatic “hack” – just a single convincing email that leads to credentials being entered on a fake page, or an attachment opened on a vulnerable device.

3. The Silent Threat: Unmanaged Home Devices and Remote Work

Remote and hybrid working is now normal in accountancy. That brings huge flexibility – but also risks that are easy to miss from a partner’s perspective.

In practice, we often see situations like:

  • Bookkeepers using their own home PCs for client work
  • Juniors working on older family laptops
  • Shared household computers with multiple user profiles
  • Phones automatically syncing work email and files to personal clouds
  • Contractors using personal devices with unknown security posture

Again, this is not malicious – people are simply trying to get their work done. But from a cyber risk and GDPR perspective, it matters a great deal.

Why unmanaged devices create real risk

  • No central control over antivirus, patching and updates
  • No guarantee of full-disk encryption if the device is lost or stolen
  • Potentially out-of-date operating systems and web browsers
  • Weak or reused passwords, sometimes shared with family members
  • Work data being backed up into personal cloud services outside firm control

If even one unmanaged device is compromised, an attacker may be able to reach email, client portals, work documents and cloud accounting systems.

4. Forgotten Accounts and Excess Permissions: A Quiet Compliance Timebomb

Over time, every firm’s structure changes. Staff join, move roles, go part-time, or leave altogether. New tools are added. Old systems are retired – or at least, they’re supposed to be.

What doesn’t always change is who still has access to what.

Real-world patterns we see in accounting practices

  • Former employees retaining logins to cloud systems long after leaving
  • Trainees and interns with broader access than they need “just in case”
  • Partners able to view every client file, including those they don’t act for
  • Contractors whose access was never revoked at the end of a project
  • Old file shares still available with legacy data and no clear ownership

From a GDPR perspective, unnecessary access to personal data is itself a form of non-compliance, even before any breach occurs. From a risk perspective, more access means more chances for mistakes:

  • Files emailed to the wrong person
  • Folders deleted accidentally
  • Confidential information visible to the wrong staff

Good access control is not about mistrusting your team. It is about protecting clients, the firm and the people who work in it from unnecessary risk.

5. Legacy Software and Outdated Operating Systems

Accountancy is built on continuity. If a piece of software works reliably and staff know how to use it, it tends to stay in place – sometimes longer than the vendor intended.

Over time, this can create hidden risk:

  • Applications that only run on unsupported versions of Windows
  • Old servers still running because “they’ve never given us trouble”
  • Databases that haven’t been upgraded for years
  • Desktop software no longer receiving security patches

Once a system is out of support, known vulnerabilities are not patched. Attackers actively look for these weaknesses because they know they will remain open.

For accounting firms processing large volumes of financial and personal data, this becomes more than an IT issue – it becomes a regulatory and continuity concern.

6. Backups That Aren’t Really Backups

Ask most partners if their firm has backups and the answer will understandably be “Yes, IT handle that.” The more important question is:

“When was the last time we tested restoring from those backups?”

Common backup problems inside firms

  • Backups stored on the same network as the live data (so ransomware encrypts both)
  • Backup jobs reporting “success” but skipping critical folders or databases
  • OneDrive or SharePoint assumed to be a complete backup solution
  • No offsite or immutable backup copy
  • No clear, documented process for restoring systems
  • Backups not tested under realistic scenarios

The painful reality is this: some firms only discover that their backups are incomplete after a server failure, ransomware incident or accidental deletion. At that point, options can be very limited.

7. Outsourced Bookkeepers and Third Parties: Risks You Don’t Always See

Most firms rely on an ecosystem of external providers:

  • Outsourced bookkeepers and payroll bureaux
  • Freelance or part-time accountants
  • Cloud accounting add-ons and integrations
  • Scanning, printing and document management services
  • Offshore support teams or admin services

These relationships are often essential to how firms operate. But they also introduce risk.

Examples of third-party risks

  • Contractors storing client data on personal devices
  • External bookkeepers using unencrypted laptops at home
  • Client files synced into personal Dropbox/Google Drive/iCloud accounts
  • Former suppliers still having access to shared file areas
  • Cloud apps with access to your data that have never had a security review

Under GDPR, the firm remains responsible for how its suppliers handle personal data. Even if the mistake happens outside your office, the regulatory and reputational impact will land on you.

8. AI Tools in Accounting: A New Category of Risk

AI is increasingly used in the profession for:

  • Transaction categorisation
  • Data extraction and OCR
  • Forecasting and scenario analysis
  • Drafting client communications
  • Summarising long reports

These tools can be extremely helpful. However, they introduce new kinds of risk that traditional controls do not fully address.

Key AI-related risks for accounting firms

  • Incorrect or “hallucinated” outputs
    AI systems sometimes produce information that looks plausible but is wrong. If that flows into client work, it becomes a compliance and quality issue.
  • Sensitive data in prompts
    Staff may paste real client information into AI tools without understanding where that data is stored or how it may be used.
  • Unclear data location
    Some tools process and store information outside the UK or EU, raising data protection questions.
  • Lack of auditability
    If a regulator or client asks “Why did the system make this recommendation?”, it may be difficult to give a clear answer.

ISO 42001, the emerging AI management standard, is being developed to provide a framework for governing AI use in organisations – much like ISO 27001 does for information security. For firms planning to rely more heavily on AI, this area will only grow in importance.

9. Incident Response: The Missing Safety Net

If a cyber incident happened at 3pm tomorrow – a compromised email account, a ransomware alert, or accidental disclosure of client data – could your firm answer, quickly and calmly:

  • Who do we call first?
  • How do we isolate the problem?
  • What do we say to affected clients?
  • Do we need to notify the ICO?
  • How do we restore systems safely?
  • Does our cyber insurance cover this incident?

Many firms either do not have a clearly documented incident response plan, or if they do, staff are not familiar with it.

In a genuine incident, the firms that respond well are usually those that have rehearsed what to do. Those that have not often lose valuable time working out roles and responsibilities on the fly.

What Can Accounting Firms Do? (Practical, Realistic Steps)

The good news is you do not need to become a cyber security expert to protect your practice. What you need are the right foundations, the right frameworks, and the right support.

1. Start with Cyber Essentials

Cyber Essentials is a UK government-backed scheme that sets out a clear baseline of technical controls:

  • Secure configuration of devices and systems
  • Use of firewalls and internet gateways
  • Access controls and user management
  • Protection against malware
  • Patch management and updates

For many firms, achieving Cyber Essentials is the single most effective first step in reducing their cyber risk significantly.

2. Build long-term governance with ISO 27001

For practices looking to move beyond the basics, ISO 27001-aligned information security management helps put security and data protection on a formal, repeatable footing.

It supports firms to:

  • Identify and assess information risks systematically
  • Align controls with business priorities
  • Manage access and permissions more effectively
  • Improve supplier due diligence and contracts
  • Document and test incident response and business continuity

Larger clients increasingly expect their professional advisers to demonstrate structured security and governance. ISO 27001 provides a recognised way to do that.

3. Begin preparing for AI governance (ISO 42001)

If your firm is already experimenting with AI tools – or planning to – it is sensible to think ahead. Understanding where AI is used, what data it touches and how outputs are checked will become a normal part of risk management.

4. Secure Microsoft 365 properly

A focused Microsoft 365 security review can surface misconfigurations that have built up over years. Often, a small number of changes (for example, enforcing MFA, tightening sharing settings, reviewing admin roles) can have a major impact on your risk profile.

5. Improve how you share documents

Where possible, move away from emailing sensitive attachments. Consider:

  • Client portals
  • Secure SharePoint links with expiry dates and limited access
  • Encrypted file-sharing platforms with clear audit trails

6. Review third-party risks

Build a simple, repeatable way to assess the security of:

  • Outsourced bookkeepers and payroll providers
  • Cloud software and add-ons
  • Document scanning and storage providers
  • Offshore services

Even a short questionnaire and updated contract clauses can significantly reduce exposure.

7. Test backups and incident response regularly

Schedule realistic restore tests and simple “tabletop exercises” where key people walk through what they would do in different incident scenarios. This builds confidence and reveals gaps that can be addressed calmly, rather than in a crisis.

Final Thoughts: Cyber Security Isn’t Just an IT Issue – It’s a Practice Issue

The biggest risks in accounting today don’t come from mysterious external attackers. They come from the everyday tools that firms rely on:

  • Email and attachments
  • Microsoft 365 and cloud storage
  • Home and remote devices
  • Legacy systems and old servers
  • Outsourced bookkeepers and third parties
  • AI tools and automation
  • Backups and response plans that haven’t been tested

Partners may not see these risks directly, but they are there – quietly shaping the firm’s exposure to data loss, regulatory scrutiny and reputational damage.

Cyber security is no longer a purely technical topic. It is about protecting client trust, safeguarding the firm’s reputation and ensuring that critical services remain available when clients need them most.

The firms that act early – tightening their foundations, adopting sensible frameworks and seeking the right support – will be stronger, safer and more resilient in the years ahead.

If you’d like a confidential conversation about your firm’s cyber posture, or to explore Cyber Essentials, ISO-aligned governance or practical security improvements tailored to accountants, you can get in touch here: