As custodians of sensitive information—like bank details and Social Security numbers—your firm holds significant trust from clients. However, with that responsibility comes risk: a rogue click, a departing staff member, or a hacked account can expose valuable client data.

That’s where employee activity monitoring comes in. By tracking system access and employee actions, firms can enhance security measures. But successful implementation hinges on creating a transparent written policy, rather than simply installing under-the-radar software on employee devices.

So, how should firm owners approach this essential task?

Practical Steps to Take This Quarter

• **Draft Your Policy**: Begin with a well-defined document that enumerates what activities will be monitored (think client file access, email interactions, and login patterns), the rationale, and who within the firm will have access to these monitoring reports. This foundation is not only good practice but also aligns with requirements under the FTC Safeguards Rule.
• **Know Your State Regulations**: Each state has its own laws regarding employee monitoring. States like New York and Illinois mandate written notices or employee acknowledgment before monitoring can occur. Consult with legal counsel to ensure compliance.
• **Secure Employee Acknowledgment**: Obtain written consent from every staff member, including temporary workers and contractors with access to the system. This transparency fosters trust while fulfilling legal obligations.
• **Scope Monitoring Appropriately**: Keep your monitoring focused on firm-owned systems. Avoid delving into personal devices or accounts unless your Bring Your Own Device (BYOD) policy explicitly permits it.
• **Enable Audit Logging**: Beyond network-level tracking, activate logging within tax and accounting software to monitor specific file interactions by staff logins.
• **Restrict Access to Monitoring Data**: Limit visibility to a select group—usually firm leadership and IT support—to minimize risk exposure from the reports themselves.
• **Establish a Data Retention Policy**: Don’t keep logs indefinitely. Define a retention schedule and ensure secure storage to uphold confidentiality.
• **Regularly Review Reports**: Schedule consistent evaluations of monitoring reports. Focus on identifying genuine issues, like suspicious access patterns, instead of micromanaging day-to-day tasks.

Questions Clients May Ask Firm Owners

As monitoring practices become more visible to your clients—perhaps through engagement letters or a data breach news cycle—be prepared to address common concerns.

How will you ensure my tax preparer isn’t accessing my data elsewhere?
Access to client records should be strictly role-based and monitored. Only designated staff should be able to access information specific to their accounts, with any unusual activity flagged for review.

If we experience a data breach, how will your firm catch it?
By utilizing monitoring and audit logging, firms can quickly identify unusual access patterns, such as unauthorized logins or excessive file downloads, rather than becoming aware weeks or months later.

Do your employees know they’re under observation? Isn’t that an invasion of privacy?
Indeed, employees are informed and required to acknowledge the policy. This isn’t about mistrust but mimics industry standards at banks and legal firms, fostering a secure environment for everyone.

Why This Matters Beyond Compliance

Often perceived as a mere compliance measure, employee activity monitoring is fundamentally about trust. Clients share sensitive financial data and deserve assurance that their information is secure. Firms that can articulate their protective measures and demonstrate who has access to data gain a competitive edge over those who merely cite vague policies.

Creating a solid written policy, coupled with technical measures and an annual review as regulations evolve, transforms monitoring from a potential liability into a genuine competitive advantage. Clients increasingly demanding transparency will discern between firms that prioritize security and those that don’t.

===

Scott Carr, owner of Farmhouse Networking in Grants Pass, Oregon, brings over three decades of IT experience to the table. His firm, recognized for its proactive and secure IT services, has partnered with over 80 businesses, including numerous accounting and finance entities prioritizing data security.

For more on how Farmhouse Networking enhances the security of accounting firms, explore their offerings at Farmhouse Networking.