Data has become one of the most valuable assets for accounting firms and businesses in general. Effective data governance lays the foundation for maintaining data integrity, security and accessibility.
While many firm leaders recognize data governance's important role in ensuring success and compliance, they don’t know what they don’t know. Unfortunately, they might not realize where their data governance efforts have fallen short until there’s an issue—either a data breach or a technology implementation project that takes longer and costs more than expected due to the data cleanup efforts required.
Three components of data governance
Three primary considerations of a firm’s data governance efforts are people, processes and technology. Let’s cover why firms need to address all three.
Data governance begins with the people interacting with the data, from employees to clients. A well-rounded data governance strategy involves educating and engaging these stakeholders. Employees should be trained on data handling best practices, security protocols and the importance of data quality. Clients also need to understand their role in data security and compliance.
Accounting firms often underestimate the human element of data governance, but it's crucial. When everyone within the organization understands the value of data and their responsibilities in managing it, the risk of data breaches and errors is significantly reduced. Employees and clients should be encouraged to use secure data transmission channels and report any potential data breaches promptly.
Processes are the workflows and procedures that govern how data is collected, stored, processed and accessed. Effective data governance requires clearly defined processes that align with industry regulations and best practices. This includes creating standards for data entry, enforcing data retention policies and establishing a data governance committee to oversee these processes.
One of the common scenarios where firms realize the importance of robust data governance is during technology transitions. When migrating from one system to another, they often discover duplicated and inconsistent data across multiple systems. This data cleanup becomes a monumental task, highlighting the need for a single source of truth and streamlined processes. Data governance should be proactive, preventing such data discrepancies from occurring in the first place.
Technology is the backbone of modern data governance. It encompasses the tools and platforms that enable secure data handling, automate processes and ensure compliance. To maintain data integrity, firms should invest in data management solutions that facilitate efficient data entry, workflow management and data protection.
One crucial aspect of data technology is the implementation of tools that can detect and prevent the entry of sensitive information such as social security numbers, credit card details or bank account numbers. Automated checks and alerts help mitigate the risk of accidental data leaks or breaches.
The lifecycle of a client engagement
To understand the data governance needs in your daily operations, let's examine the lifecycle of a typical client engagement.
Getting client documents
At the outset of a client engagement, firms rely on clients to submit sensitive financial documents and tax forms. A secure means for collecting client documents ensures this information is handled with care.
Most accounting professionals recognize this, but some clients might not. For example, how often has a client emailed a copy of a prior year's tax return or payroll records?
Educating clients about secure data transmission methods is crucial, as they’re an integral part of the data security chain. Encourage clients to use secure portals or platforms for document submission rather than unsecured email or text messages.
Moving work within the firm
Once client data is in-house, it must be processed, analyzed and shared among team members. Efficient workflow management tools are invaluable in this phase. These tools should allow for secure data sharing within the organization while maintaining strict access controls to prevent unauthorized access.
Returning deliverables to the client
After completing the engagement, the firm must provide deliverables to the client. Secure methods for data transmission, such as encrypted email or secure client portals, help maintain confidentiality and data integrity.
The weakest link in the workflow
Your firm’s data security is only as strong as the weakest link in the workflow. Firms employ an ever-growing ecosystem of tools and platforms to streamline their operations, from document management systems to collaboration platforms. Each tool must uphold the same level of security and privacy to ensure data integrity throughout the workflow.
How does your firm’s data governance system address people, processes and technology? By educating and engaging employees and clients, establishing robust processes and investing in the right technology, you can build a robust data governance framework that protects sensitive data, streamlines operations and maintains trust with clients.
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As Technology Manager for Boomer Consulting, Inc., Chris Rochford leverages a diverse background in web development and technology consulting. His role involves managing Boomer Consulting, Inc.’s internal technology, as well as researching how new and emerging technologies can be leveraged internally and for our external clients.
Before joining Boomer Consulting, Inc., Chris spent 15 years in tech, doing web development for state and local government agencies and commercial clients.