Collaborating with external auditors on financial data security. How do you ensure it stays protected?

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When it comes to financial data security, collaborating with external auditors is a critical process. As someone responsible for your company's financial integrity, you need to ensure that the data shared with auditors remains secure. External auditors, often from accounting firms, play a vital role in the validation of financial statements. Their independent assessment helps maintain trust among investors, creditors, and other stakeholders. However, this process involves sharing sensitive financial information, which raises concerns about data security. To protect this data, you must understand the risks and implement robust security measures.

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1 Understanding Risks

Understanding the risks associated with data sharing is the first step to securing financial information. When external auditors access your systems, they potentially expose your data to new vulnerabilities. These could include unauthorized access, data breaches, or accidental leaks. To mitigate these risks, you must thoroughly assess the auditors' data handling practices. Ensure they have strong security protocols in place and that their staff is trained in data protection. By identifying potential threats, you can establish a framework for secure collaboration.

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Ahmed Zaky

IT Auditor & Advisor at KPMG EG / Junior cloud infrastructure / Cyber Security consultant | CC Certified | Views expressed are personal
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-External auditors always work in compliance with international standards when performing testing procedures. -Always be aware that external auditors are allowed to ask for an extraction of specific data from the client's systems, in some cases will require access to the system but never by their own hands, they will ask the IT personnel for accessing their own systems in existence of the it Audit team in a series of onsite meetings and this is called walkthroughs. - Auditors always sign an independence contract which ensures that auditors are always independent and will never make a biased decision, auditors handling client's data without care will face serious governmental charges for compromising the confidentiality of clients data.

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2 Secure Sharing

Securely sharing financial data with external auditors requires careful planning and the right tools. Use encrypted channels for transmitting sensitive information to prevent interception by unauthorized parties. Consider employing secure file-sharing platforms that offer end-to-end encryption and require two-factor authentication for access. Additionally, limit the scope of data shared to what is necessary for the audit. By controlling the flow of information and using secure methods of communication, you can significantly reduce the risk of a data breach.

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Ahmed Zaky

IT Auditor & Advisor at KPMG EG / Junior cloud infrastructure / Cyber Security consultant | CC Certified | Views expressed are personal
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- Always ensure using the correct tools when sharing the required evidence and data by the audit team, these tools include ( Microsoft Outlook , Microsoft teams, Cloud storages ) and never share share over compromised websites that offer free data transfer as these websites always keep logs of shared data. - If needed encrypt the sensitive data being shared or lock these data and share the key with the audit team leaders to ensure maximum protection of the shared data.

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3 Access Control

Implementing strict access control is crucial in protecting financial data during an audit. This means granting auditors access only to the information they need to perform their work, and nothing beyond that. Use role-based access controls (RBAC) and ensure that permissions are carefully managed and documented. Regularly review who has access to what data and adjust permissions as the audit progresses and needs change. By maintaining tight control over access, you can minimize the risk of unauthorized data exposure.

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4 Continuous Monitoring

Continuous monitoring of the data and systems accessed by external auditors can help detect any unusual activity or potential breaches. Set up alerts for any unauthorized access attempts or suspicious data transfers. Keep an audit trail of all interactions with your financial data, so you can trace any issues back to their source. This proactive approach not only helps in early detection of security incidents but also serves as a deterrent against mishandling of data.

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5 Training & Protocols

Training your staff on data security protocols is essential when working with external auditors. Ensure that everyone involved understands the importance of safeguarding financial information and is aware of the procedures to follow when sharing data. Regularly update your team on new threats and best practices in data security. Also, verify that the auditors' team receives similar training. Collaborative efforts in education and adherence to protocols can strengthen overall data protection.

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6 Legal Agreements

Lastly, legal agreements between your company and the external auditors can provide an additional layer of protection for your financial data. These agreements should outline the confidentiality requirements, data handling procedures, and the consequences of data breaches. It's wise to involve legal counsel in drafting these documents to ensure they are comprehensive and enforceable. By having a solid legal framework, both parties are held accountable for maintaining the integrity and security of the financial data.

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Collaborating with external auditors on financial data security. How do you ensure it stays protected?

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1 Understanding Risks

2 Secure Sharing

3 Access Control

4 Continuous Monitoring

5 Training & Protocols

6 Legal Agreements

Accounting

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