Offshoring 101: Secure your data from unexpected World Tour


In the First Blog of the “Offshoring 101” series “Factors to Weigh before the Big Move”, we explored the important factors to consider before embarking on offshore Journey for Accounting/CPA and Bookkeeping firms in Australia, particularly focusing on the legal obligations and implications involved.

In this blog post, we will delve into valuable tips for effectively managing data risks and ensuring that your data remains secure and prevent it from going on an unexpected world tour.

Blog 2: Secure your data from Unexpected World Tour

Why is Data Security so important.?

The increasing trend of Offshoring among Australian Accounting/CPA and Bookkeeping firms highlights the importance of being vigilant about Data Security. The “Notifiable Data Breaches Report: July to December 2022” published by the Office of the Australian Information Commissioner (OAIC) reveals concerning statistics such as a notifiable increase of 26% in the breaches than last Financial Year and The Accounting Sector being the 4th of the Top 5 Most targeted sector encountering Data Breaches.

Such figures emphasize the criticality of managing data risks effectively and implementing robust security measures by Offshore service provider to protect sensitive information from unauthorized access or exposure.

Recommended Practices for Accounting/CPA and Bookkeeping firms before Offshoring.

  • Australian Data protection laws: To ensure data security while Offshoring, it is crucial to have a strong understanding of Australian data protection laws. Familiarize yourself with important guidelines which have been discussed in our First Blog. It will help in gaining insights on best practices for handling data on behalf of your clients. By adhering to these guidelines, you can minimize the risk of data leaks and avoid potential scrutiny from local authorities.
  • Choosing a trusted Offshore service provider: When considering an Offshore Service Provider, conducting thorough research is crucial to select a reputable company that consistently emphasizes data security and compliance. The Offshore Service provider should be capable of substantiating their claims by openly discussing their internal practices and procedures in their day-to-day operations. This transparency will serve as evidence that the Offshore provider has actually implemented robust security measures to effectively safeguard your data.
  • Implementing strong Data protection and Encryption Platforms: Using Software and Platforms that utilize strong encryption algorithm can help protect your data from being intercepted and read by unauthorized parties, It will also make sure that all data sent offshore is encrypted both in transit and at rest. Things like Access controls (Devices, Locations and Controls), Two Factor Authentications, Multiple Cloud backups etc. makes sure the data is further protected and backed up on regular intervals.
  • Physical Infrastructure and Network Security: Evaluating the Physical Infrastructure of the Offshore provider’s facilities, including office access controls and surveillance systems, as well as assessing the work environment of their employees, provides valuable insights into the standard upheld by the provider. Furthermore, it is essential to inquire about their Network Security Measures, such as firewalls, intrusion detection systems, and regular security audits, to ensure utmost safety and protection of your data.
  • Access controls and monitoring software: Evaluating this is crucial to restrict access to sensitive data only to employees who require it for their job responsibilities. Through such systems, you can track and monitor data access, ensuring that you have visibility into who accesses what data and when. It is very important that the Offshore Service Provider conducts regular audits of access controls and permissions to verify that only authorized personnel have the appropriate level of access to your data.
  • Employee Training and Background Checks: Ensure that the Offshore provider conducts thorough background checks on their employees and provides regular trainings not only for Australian taxation and software but also on Data security and Data hygiene. This minimizes the risk of insider threats and unwanted security incidents.
  • Secure Communication Channels: It is important to ensure that both the Onshore Firm and Offshore Service Provider uses secure communication channels and platforms that utilize encryption so that it cannot be intercepted, maintaining confidentiality. which also includes secure communication practices for data transfer. By doing so, you can ensure that the confidentiality and integrity of your data is maintained throughout.
  • Data breach response plan: Despite the best efforts, there is a probability that data breach can still occur. Ensure that the Offshore Service provider has a well-defined breach response plan that outlines the steps to take in the event of a breach, this includes notifying affected parties and taking immediate remedial action to prevent further breaches.
  • Service Level Agreements (SLAs): When reviewing SLAs, it is crucial to verify that they contain explicit provisions regarding data security and confidentiality. These provisions should clearly outline the responsibilities of both the parties involved: Yourself and The Offshore Service Provider. It is also important to make sure that the SLAs are legally valid in Australian Jurisdiction, providing you with the ability to hold the Offshore Service provider accountable in case of any data loss and breaches.

By following these tips, you can help minimize the risks associated with offshoring sensitive data and ensure that your data doesn’t take an unplanned trip around the world. Remember, data security should always be a top priority, no matter if you are an Onshore Firm or an Offshore service provider.

Stay tuned for more such informative blogs in our “Offshoring 101: Demystifying your path to a successful Offshoring” series.

Are you an Accounting/CPA/Bookkeeping Firm seeking to Offshore your Accounting and Taxation while prioritizing data security? Contact us Now.!

For further Information and References, kindly visit our First Blog.

Jaymeet Soni

Jaymeet Soni (Jay)

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