If you’re running a purely cloud or hybrid accounting firm, you’re living in the Wild West. The regulatory and tax laws that will ultimately govern your business haven’t been written yet.
It’s impossible to prepare for the legal and liability issues you’ll face one, five, or 10 years down the road. And as such, the insurance policies and legal safeguards you have in place may not be sufficient to cover them. Your existing protections may still be operating under the old rules of the brick-and-mortar accounting firm, unprepared for the myriad of concerns that come with working in the cloud, such as security and privacy challenges.
It might be smart to take some time to review your insurance policies and make sure they’re up-to-date with the coverage today’s environment demands. To help you with that process, here are a few insurance and liability concerns unique to cloud accounting firms that you will want to have covered.
1) Increase your moonlighting protections
If you’re running a brick-and-mortar firm with accountants working 40- to 60-hour weeks, moonlighting isn’t a huge concern. It may happen every now and then, but most employees simply won’t have enough time to work for anyone other than you.
Remote accountants are different. Because they aren’t under your watchful eye five days a week, they’re far more likely to take on jobs from other clients.
And that may be OK. Allowing moonlighting will help you attract better talent, though at the risk of diverting your accountants’ attention.
But whether you permit moonlighting or not, you need to confirm that your remote worker and insurance policies provide coverage for the liability issues that pop up when your employees do work for other clients.
This may mean limiting what your accountants share on social media and putting insurance protections in place that insulate you when and if they overshare.
“If someone were to look one of our accountants up on Facebook or LinkedIn, we don’t want them seeing that the employee works for anyone other than us,” Dave Betz, chief success officer, Gineris & Associates, said. “So the very way they handle their social media profile and persona is a concern that would probably be different than at a brick-and-mortar firm.”
If you do permit moonlighting, you may want to establish policies that require remote accountants to be completely logged out of your network, software, and/or portals before engaging in outside work. And speaking of your network …
2) Enforce strict authentication protocols
According to the Verizon 2017 Data Breach Investigation Report, 81% of hacking-related breaches result from stolen, default, or weak passwords.
To protect sensitive firm and client data, cloud accounting firms need to be diligent about enforcing strict authentication protocols and using the latest and greatest credential technology.
“Enforcing two-factor authentication for cloud-based solutions is incredibly important for remote workers,” Melissa Diaz, CFO and shareholder, High Rock Accounting, said. “Requiring unique passwords and educating employees on phishing/hacking scams is also integral to making a remote environment possible.”
But no matter how quickly technology companies release increasingly sophisticated login software, hackers will always be faster in finding ways around it. That means authentication-related breaches are inevitable–they are a “when,” not an “if.”
As such, you need to be sure your insurance policies cover these types of attacks. If a hacker gains access to your system through a remote employee–even if it’s due to gross negligence, like an employee sending his password to himself over email or by other unsecure means–your firm shouldn’t be liable for the resulting damage.
3) Timing is everything
Cloud accountants don’t follow a 9-to-5, Monday-through-Friday schedule. They’ll be logging onto your system on nights, weekends, and holidays. That creates unique security and liability issues traditional accounting firms generally don’t have to worry about.
“At a brick-and-mortar firm, you might have an IT person who can just shut down the system at the drop of a hat,” Betz said. “That’s not true for a remote virtual cloud firm. Accountants have access to the information whenever they want to log in. So when there’s a breach, there may not be anyone available to help.”
You may want to consider hiring a nighttime/weekend remote IT worker or a 24/7 IT security firm to guard against after-hours attacks. But regardless, you’ll want to ensure your insurance policies prevent you from being held liable for data loss, no matter when it happens.
Worry less about liability by recruiting the best remote accountants
While we encourage you to carefully consider the recommendations we’ve outlined in this blog, there’s one tip we’d place above all others: hire productive, honest accountants you can trust. When you do that, you won’t need to worry about insurance and liability nearly as often.
That’s where a partner like Accountingfly comes in. Browse our database of the best remote accountants in the world, and start building your ultimate cloud accounting team today.