On the W-12 , the IRS requires a written information security plan for accountants to protect clients’ data. Having a written information security plan is required because once implemented properly it helps you take the right steps to practice good security.
Our free information security plan template, which you can download for free by filling out the form, covers topics that range from:
- Antivirus protections
- Two-factor authentication
- Employee training
- Steps to take in the case of a data breach.
What Exactly Is A WISP?
A Written Information Security Plan is the formal document in which an accounting firm describes the technical, physical, and administrative safeguards which ensure information privacy.
A WISP requires an accounting firm to be well prepared for any cyber threat which is posed to the sensitive data held in a firm’s possession – physically or electronically. The goal of the IRS requiring this document is to keep individual firms accountable for the security of breaches in customer data. Those who choose to neglect these stringent guidelines may incur a heavy fine from the federal government.
Does YOUR Accounting Firm Need WISP?
Certified Public Accounting firms are some of the most vulnerable to security breaches since they contain a customers’ sensitive data. The financial data of different businesses and their owners can offer a huge payday for those intent to exploit your system. Recognizing this ever-growing problem, the different levels of government put these legal responsibilities on these firms to encourage compliance.
What If Your Firm Has No WISP?
The fifth Title of the Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley Act, states that all financial institutions working under the Federal Trade Commission are required to take necessary steps to ensure the protection of customers’ sensitive data as stated in the Safeguard Rule. The Federal Trade Commission has implemented this rule through different regulatory sectors. Violation of this rule results in a heavy penalty, the details of which are:
- The firm violating the law would have to pay a fine of $100,000 each time it violates it
- The individual members of the firm are personally accountable to pay a fine of $10,000 for each violation.
- Title 18 of the United States Code also declares violating individuals may face imprisonment for five years for each violation.
- Also both the fine and imprisonment can be imposed on the violating party.
- Depending on the severity of the violations the prosecuting institutions can seek a higher fine or jail term. The scope and number of customers who are impacted dictate the severity of punishment.