According to the UK Accountancy Sector Outlook Report 2024-2025, over 75% of firms increased their technology spending over the year, demonstrating the steady shift towards digital-first operations. Many firms now balance legacy ways of working with modern software in order to deliver the best services to their clients.
In this insight we will explore why data security matters in modern accounting, practical ways to protect client information, and how the right hosting partner can support you.
The evolution of accounting systems: From paper to digital
Historically, accountants exclusively used physical paper documentation and files, with the adoption of digital methods being a relatively recent transformation. Technological advances have meant that many systems have migrated to digital, initially through the use of local file servers, spreadsheets, and desktop-based software, and over the last few decades, through cloud systems.
Many long-established practices still utilise physical and digital legacy systems for aspects of their workflows. This can be due to a variety of reasons, including a resistance to change among staff or clients, budget constraints, or concerns around migration.
However, changes in client expectations, a drive for efficiency, and regulations such as Making Tax Digital in the UK mean the use of these legacy systems is decreasing, and digital transformation is accelerating.
Cloud-based digital systems allow data and applications to be accessed rapidly and securely, streamlining internal processes and reducing manual work. Documents can be managed digitally and accessed online by staff and clients, allowing for faster communication and remote working. A digital transformation can also offer cost savings through increased efficiency, reduced admin, and reduced physical storage.
Why data security is critical for accounting firms
A digital transformation can bring vast benefits for accounting firms, but it is vital to consider data security as you undertake the process.
The data you handle as an accounting firm is particularly sensitive compared to other industries, including financial records, payroll data, tax information, and personal identifiers. The stakes are therefore high when it comes to data protection.
Legal and regulatory obligations
Personal data is protected under a number of laws and regulations. The General Data Protection Regulation (GDPR) governs how organisations collect and use personal data in the UK and the EU. It gives individuals the right to access, correct, and delete their personal data held by businesses, and mandates strict principles which businesses must comply with. The UK Data Protection Act 2018 (DPA 2018) works alongside the GDPR, overseeing its implementation into UK law, and is also applicable to accounting firms.
If your firm is found to be in breach of the GDPR or the DPA 2018, the Information Commissioner’s Office (ICO) can issue fines of up to £17.5 million or 4% of global turnover.
Industry standards
There are various industry standards and frameworks which inform how data security must be handled within an accounting firm. As an example, all Institute of Chartered Accountants in England and Wales (ICAEW) Chartered Accountants are bound by the Code of Ethics, which is based on five fundamental principles: integrity, objectivity, professional competence and due care, confidentially and professional behaviour.
In order to comply with this Code of Ethics, and other industry standards, your firm must ensure your client’s data is adequately protected. Non-compliance can lead to exclusion from professional bodies, and prevent you from practicing.
Trust and reputation
In addition to the legal and compliance risks of mishandling client data, your firm’s reputation is also on the line. When working with an accountancy firm, clients are placing significant trust in the business. Any breach of this trust has the potential to seriously damage your relationship with the client directly involved, and your wider reputation.
Practical ways to keep client data secure
Secure hosting environments
Hosting your applications and data in secure infrastructure avoids reliance on local servers or unsecured office networks. For the sensitive data handled by accounting firms, a single-tenant solution such as private cloud gives you the highest levels of privacy and protection. A managed service provider (MSP) can offer full management and security services to ensure your hosting environment is optimised, and your data protected.
Virtual desktop services
Virtual desktop infrastructure supports secure remote and online access by offering an on-demand office environment, allowing staff to access systems securely, without data leaving the hosted environment. Virtual desktop services streamline desktop management, providing centralised control over updates, permissions, and access. There are various options for different needs, depending on the size of your accounting firm, number of virtual desktops needed, and whether you are running Windows, Mac, or Linux applications. Our virtual desktop services include Microsoft Remote Desktop Service (RDS), Omnissa Horizon, Citrix Virtual Apps, and Azure Virtual Desktop.
Backups and disaster recovery
To prevent data loss, backups and disaster recovery are essential. Keeping regular, automated backups separate from live systems ensures that if data is deleted, or live systems are not accessible for any reason, your client data is still safe and can be restored.
Similarly, a disaster recovery plan means that in the event of a disaster, such as a cyber attack, outage, or natural disaster impacting your primary data centre, you can restore services quickly. Impacted systems can fail over to a secondary site, meaning your business operations can resume, with your staff retaining full access to data.
Secure file transfer protocol (SFTP)
Transferring data is an everyday requirement within an accounting firm, but if it is not managed securely, it can be a vulnerability that attackers can exploit to steal your data. SFTP is a reliable method for the secure transfer of data, using an SFTP server to securely upload, store and retrieve files, with encryption to protect your data. Using SFTP instead of sending files as email attachments or other unsecured file transfer methods minimises the risk of interception or accidental data exposure.
Access controls
The weakest point in an IT security strategy is often your users. A user-based data breach could happen if an employee intentionally shares sensitive data, but more often occurs when they fall victim to a phishing attack, allowing an attacker to access your systems. One way to minimise this risk is role-based access control, which limits who can see and edit sensitive data. Each user of your systems only has access to view and edit the minimum amount of data they need, based on their role. This limits the data they have access to, and the scale of a breach they can cause, whether intentionally or unintentionally.
Monitoring
Monitoring tools are vital in detecting and preventing unusual or unauthorised behavior on your systems. Endpoint detection tools can be configured to automatically identify, mitigate and neutralise threats across your network, ensuring real-time protection and security. Detecting potential vulnerabilities early helps prevent a data breach before it happens. With a managed solution, experts can configure and run your monitoring tools on your behalf, keeping your sensitive data secure.
Supporting secure growth through your digital transformation
Introducing cloud systems, enabling remote working, and expanding client services all increase the volume of data being processed and the number of access points that need to be protected. Without a security strategy that evolves with these changes, your firm risks vulnerabilities that can expose sensitive client information.
A centralised approach to hosting, access management, and monitoring reduces complexity and helps maintain compliance across the entire IT environment.
Expert support also plays an important role in this process. Infrastructure designed and managed by specialists allows your firm to take a proactive approach to security, reducing operational burden while ensuring data protection, resilience, and regulatory requirements are met.
How Hyve can help your accounting firm protect client data
We work with accounting firms to provide secure hosting solutions designed for the regulated industry. Our infrastructure is built to protect sensitive data, support compliance requirements, and deliver the reliability your firm needs to operate confidently in a digital environment.
We support both legacy accounting applications and modern cloud tools, allowing your firm to modernise at your own pace without disrupting critical workflows. Our managed virtual desktop services enable secure, flexible working while keeping client data contained within a protected environment.
Enterprise-level backup and disaster recovery options ensure business continuity, safeguarding client data against loss, outages, or cyber incidents. With Hyve, you also benefit from direct access to experienced engineers who understand security, compliance, and the realities of accounting systems, rather than navigating tiered support models.
We work closely with firms to design solutions that support long-term growth, improve resilience, and maintain the trust your clients place in you.
To find out how we can work with your firm to put client data security at the centre of your digital transformation, fill out our form and one of our experts will be in touch.