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Data Security

Understanding President Biden’s Executive Order on data protection

Thomson Reuters Tax & Accounting  

· 5 minute read

Thomson Reuters Tax & Accounting  

· 5 minute read

In a world where data breaches are becoming all too common, President Biden's recent Executive Order to protect Americans' sensitive personal data marks a pivotal moment for tax and accounting professionals.

In a world where data breaches are becoming all too common, President Biden’s recent Executive Order to protect Americans’ sensitive personal data marks a pivotal moment for tax and accounting professionals.

With the proliferation of cyber threats, the role of accountants to serve as protectors of clients’ most confidential financial information has become more significant than ever.

This blog post aims to dissect the impact of this Executive Order and emphasize the critical nature of implementing and maintaining strong data protection strategies within the tax and accounting profession.

Jump to:

Understanding the Executive Order

The importance of protecting your clients’ data

Compliance and risk management

The role of technology in protecting data

Prioritizing data security and protecting sensitive information

Understanding the Executive Order

On February 28, 2024,¬† President Joe Biden issued an Executive Order aimed at enhancing the protection of sensitive personal data. The order addresses the rising concerns of cyber threats and data privacy, laying out a framework for preventing the misuse of Americans’ personal information. Tax and accounting professionals must pay close attention to these developments, as compliance and risk management are integral to our practices.

Key elements of the Executive Order are:

    1. Data Privacy Regulation Enhancement: The order calls for stronger data privacy laws, giving people more control over their data, and setting up a clear federal privacy framework to protect personal information handled by government and private sectors.
    2. Sensitive Data Protection: It highlights the need to guard against data breaches and cyberattacks, instructing agencies to bolster security and urging private companies to improve data protection.
    3. Cybersecurity Improvement: The order demands better cybersecurity, including multi-factor authentication and encryption, and stresses the importance of collaboration in defending against cyber threats.
    4. Data Breach Notifications: Federal agencies and companies must promptly inform individuals about data breaches, enabling them to protect themselves and promoting transparency.
    5. Oversight and Enforcement: The executive order proposes a new agency to enforce data privacy laws, with powers to investigate and penalize non-compliance to prevent breaches.
    6. Global Data Privacy Collaboration: It encourages international partnerships to create shared data protection standards, enabling safer cross-border data movement while upholding privacy rights.

The importance of protecting your clients’ data

As trusted advisors, clients entrust you with their most confidential financial details. A breach of this data can lead to serious consequences, including identity theft, financial loss, and damage to professional reputation. In the spirit of the Executive Order,  consider a re-commitment to data privacy and ensure that your practices reflect the highest standards of security.

Compliance and risk management

Compliance with federal and state regulations is a non-negotiable aspect of the tax and accounting profession. The Executive Order will likely lead to new compliance requirements that must be integrated into daily operations. This means staying informed about legislative changes, investing in ongoing education, and adjusting your protocols to meet the latest standards.

Risk management is equally crucial. By identifying potential vulnerabilities in systems and processes, you can proactively address them, minimizing the likelihood of a data breach. Regular risk assessments, coupled with the implementation of advanced security measures, form the backbone of an effective risk management strategy.

The role of technology in protecting data

Embracing technology is key to enhancing data security. From secure cloud storage solutions to encryption and multifactor authentication, the tools at your disposal are powerful allies in the fight against cyber threats. However, technology is only as effective as the practices surrounding its use. Regular updates, strong password policies, and employee training are essential components of a comprehensive data protection strategy.

Best Practices for Tax and Accounting Professionals:

To align with the spirit of the Executive Order and reinforce the commitment to data protection, consider the following best practices:

    1. Stay informed: Keep abreast of regulatory changes and understand their impact on your practice.
    2. Invest in security: Allocate resources to upgrade your cybersecurity infrastructure.
    3. Educate your team: Conduct regular training sessions to ensure that your staff understands the importance of data security and knows how to maintain it.
    4. Develop a response plan: Have a clear action plan in case of a data breach, including notification procedures and remediation steps.
    5. Foster a culture of privacy: Make data protection a core value within your organization.

Prioritizing data security and protecting sensitive information

President Biden’s Executive Order on data protection marks a significant step toward safeguarding Americans’ personal information. It arrives at a time when the digital landscape is filled with ever-evolving threats, making the protection of client information a paramount concern.

As tax and accounting professionals, you have a critical role to play in upholding data privacy standards. Compliance, risk management, and the adoption of technology are essential components of a robust data protection strategy.

The Executive Order from President Biden underscores the critical importance of safeguarding personal data, and it serves as a call to action to remain vigilant in efforts to protect sensitive information. By adhering to these best practices and staying abreast of evolving threats, tax, and accounting professionals can continue to uphold the trust placed in them by clients and contribute to a safer digital environment.

 

 


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