Gone are the days when cybersecurity was merely a matter of internal risk management for firms and businesses. In an era of rapid digitalization and the growing capabilities of artificial intelligence and machine learning, client data held by firms and financial entities is as valuable as currency. And a single data breach can bring an accounting firm to its knees.  

As technology progresses, the stakes for cybersecurity have soared. It’s no longer a “nice-to-have” but a prerequisite for business continuity. More than just a precaution, cybersecurity is now a mandated responsibility.  

The Australian Federal Government has made this clear with legislative reforms proving it stays ahead with global best practices in cybersecurity following the newly passed Cyber Security Act 2024, which isn’t just another piece of legislation.  

On November 25, 2024, the Australian Federal Parliament introduced a comprehensive Cyber Security Legislative Package 2024 to implement stronger laws and better safeguard Australia’s critical infrastructure and digital environment across all sectors. 

This isn’t just about government systems, it directly impacts businesses, particularly those in the professional services sector, like accountants with critical financial data. This landmark move is a wake-up call, collectively setting unprecedented standards for how firms, businesses, and financial service providers safeguard their clients’ sensitive information. 

The Impact of Legislative Reforms on Accounting Firms 

For accountants, these legislative shifts have profound implications. Historically, cybersecurity might have been something delegated to IT, but with accounting firms increasingly targeted by cyber-attacks and the invaluable nature of client data, new legislation requires action. 

These reforms aim to close critical gaps, including mandatory ransomware reporting, updated device cybersecurity standards, and enhanced protections for business-critical systems. 

Whether you’re a solo practitioner handling SME bookkeeping, a growing firm managing business advisory services, or a mid-sized practice juggling multiple service lines, this legislation changes how you approach data protection. 

For firms like yours, this means practical changes to how you handle everything from BAS lodgments to financial statements, and client communications to data storage. The good news? You don’t have to figure this out alone.   

Ransomware Reporting: A New Obligation 

Imagine a typical workday disrupted by a locked system, followed by a ransomware demand that freezes your firm’s operations. Now, your clients’ tax records are inaccessible, and you’re faced with a stark reality: under the Cyber Security Act 2024, your firm’s response can no longer remain internal, as accounting and bookkeeping firms are now classified as critical infrastructure. 

What’s Changed: 

For accounting firms with annual revenues exceeding $3 million, any ransomware payments must be reported to the Australian Signals Directorate (ASD) via an online portal managed by the Department of Home Affairs within 72 hours of the payment or when the business becomes aware of the payment. The reporting timeframe commences either from the moment payment being made or when the business or organization becomes aware that a ransomware payment occurred.  

This reporting requirement is designed to provide timely visibility and facilitate the tracking of cybersecurity threats across the country. 

The ransomware payment report must include: 

• Incident Details: A description of the cyber incident and its impact on business operations. 
• Payment Information: The ransom demand and the payment sum 
• Business Details: The reporting entity’s contact information, or if a third party is involved in payment transactions,   
• Communication Logs: Documentation of all interactions with the threat actor, from initial contact to payment. 

Producing a ransomware payment may seem like a pain and hassle of its own, but failure to comply with this mandate could result in civil penalties and regulatory scrutiny.   While the law does not prohibit ransomware payments, the reporting requirements are designed to influence decision-making processes within your firm and ensure transparency. 

Beyond Reporting: A Framework for Better Protection 

The Cyber Security Act 2024 is not just about flagging bad news but more about preventing it. Here’s what you need to know about the new cybersecurity environment: 

1. Security Standards for Smart Devices

The Act establishes new security standards for devices such as smartphones, tablets, and other internet-connected products. This is particularly relevant for remote work setups and any office equipment that handles sensitive data. Devices sold in Australia must meet these standards, ensuring that everything from client data storage to communications complies with the necessary security protocols.

2. Voluntary Reporting with Protection

The government has introduced a carrot-and-stick approach with voluntary reporting channels. If your firm faces a significant cybersecurity incident, you can report it to the National Cyber Security Coordinator (NCSC) under a protected disclosure framework. This offers: 

• Limited Use: Protection of shared information from being used outside the NCSC and government agencies. 
• Reduced Risk: Lower chances of regulatory penalties when reporting incidents voluntarily. 

3. Cyber Incident Review Board (CIRB)

A new Cyber Incident Review Board (CIRB) has been established to review major cyber incidents. Think of it as a post-incident audit that focuses on: 

• Incident Reviews: Detailed analysis of significant breaches and their causes. 
• Industry-Wide Learning: Identifying lessons and recommending best practices for improving prevention and response. 
• Government Coordination: Offering actionable recommendations to improve future incident management and reduce the impacts of similar breaches. 

4. Enhanced Reporting Requirements

Accountants now face stringent reporting obligations: 

• 72-Hour Reporting: Firms must report ransomware payments to the Australian Signals Directorate within 72 hours of payment 
• Documentation: Detailed records, including incident descriptions, threat actor communications, and payment information. 
• Financial Penalties: Non-compliance could result in fines up to $19,800. 

This quick reporting ensures authorities can track cyber threats and protect other businesses from similar attacks, keeping both your firm and your clients secure. 

Key Implications for Accountants: Addressing New Cybersecurity Legislation 

For accountants managing sensitive data, the recent cybersecurity reforms bring both new responsibilities and opportunities for better protection.  Here’s what it means for your firm: 

• Enhanced Reporting Requirements: Firms must report ransomware payments to the Australian Signals Directorate within 72 hours of payment, facing penalties of up to $19,800 for non-compliance. Quick reporting ensures authorities can track cyber threats and protect other firms from similar attacks.  
• Updated Incident Response Plans: Accounting practices should refresh their cyber incident response plans to integrate the latest reporting requirements and account for potential ransomware scenarios like documentation protocols, communication strategies, recovery plans, and role assignments. Quick, organized responses to cyber incidents can minimize damage and maintain client trust.  
• Stronger Focus on Cybersecurity: With enhanced legislation, protecting client data is more crucial than ever. Accountants should reassess their cybersecurity measures and take steps to reinforce them. 
• Opportunities for Information Sharing: The protections around limited-use data sharing may encourage greater communication about cyber threats, leading to stronger defenses across the industry. 
• Client Data Protection Standards: Accountants hold sensitive data including tax file numbers, banking details, and business strategies. New requirements for handling client information cover the following: Data Classification, Storage and Backup Requirements, Access Protocols, and Audit Trails for detailed tracking of all data access and modifications 
• Preparation for Reviews: Firms should be ready for potential Cyber Incident Response Board (CIRB) investigations, such as record-keeping, cooperation procedures, information access, impact assessment, etc. if they experience a significant cyber event like a security breach. CIRB reviews can lead to industry-wide improvements in cybersecurity practices and help prevent future incidents. 

Understanding these implications is crucial for accounting firms to maintain compliance with the new legislation, protect client data effectively, avoid potential penalties, and contribute to industry-wide security improvements.

Navigating Compliance with Confidence 

While these changes introduce new obligations, they also provide a critical framework for better protecting sensitive data and improving response to cyber threats. The success of these legislative reforms will largely depend on how well firms integrate these new requirements into their existing operations.  

For accounting practices, this isn’t just about compliance, it’s about building trust and demonstrating your commitment to protecting your clients’ financial data and your firm’s future. 

With the right tools and expert guidance, accountants can confidently navigate these legislative requirements while maintaining operational efficiency. 

Book a free security consultation with Practice Protect today to make compliance simple and seamlessly implement these new cybersecurity measures to your firm, so you can focus on what you do best.