The Federal Trade Commission (FTC) Safeguards Rule has become a standard for CPA firms nationwide. In 2025, its enforcement is stricter than ever — and for good reason. Data breaches, ransomware, and compliance violations aren’t just risks for Fortune 500 companies. Small and mid-sized accounting firms that handle client financial data are just as vulnerable — and now just as accountable.
This guide walks CPA firm owners, IT managers, and compliance leads through everything they need to know: What the Safeguards Rule is, who it affects, and how to comply using scalable tools and strategies. Whether you’re a 3-person tax office or a 30-person firm, this is your roadmap.
What Is the FTC Safeguards Rule?
The FTC Safeguards Rule, part of the Gramm-Leach-Bliley Act (GLBA), requires that “financial institutions” — including CPA firms — develop, implement, and maintain a written information security program (WISP) to protect customer data.
Key update: As of May 13, 2024, firms must also report certain breaches to the FTC within 30 days. The rule is no longer vague or optional — it’s detailed, deadline-driven, and actively enforced.
Why it matters for CPA firms:
- You handle clients’ Social Security numbers, income details, banking info — this is all “nonpublic personal information” (NPI).
- The FTC now explicitly includes accountants, tax preparers, and financial consultants in its definition of covered entities.
Core Compliance Requirements for CPA Firms
The Rule outlines specific elements your firm must implement. Here’s what that means in practical terms:
1. Appoint a Qualified Individual (QI)
Designate someone responsible for implementing and overseeing your information security program. This can be an internal manager or an outsourced partner like Office Heroes.
2. Conduct a Written Risk Assessment
Document what customer data you collect, where it’s stored, who can access it, and what risks exist (e.g., phishing, weak passwords, poor vendor practices). Update annually.
3. Implement Safeguards Based on the Risks Found
This includes:
- Multi-factor authentication (MFA)
- Access controls
- Encryption
- Secure disposal policies
- Change management for IT systems
4. Monitor and Test Your Systems
Firms must:
- Conduct vulnerability scans every 6 months
- Perform penetration testing annually
- Log user activity and detect unauthorized access
5. Train Employees
All staff must receive regular security training — including how to recognize phishing attempts and protect client data.
6. Oversee Third-Party Vendors
Ensure your IT provider, cloud apps (e.g., tax software), and file-sharing tools meet security standards. Contracts should require data protection.
7. Prepare an Incident Response Plan (IRP)
Have a step-by-step plan to follow if client data is breached. Include FTC notification protocols if 500+ consumers are affected.
8. Report to Leadership Annually
Your QI must deliver an annual written report to ownership or the board outlining risk assessments, security outcomes, and recommendations.
Tools & Templates to Simplify Compliance
If this sounds like a lot, it is — but you’re not alone. Platforms like Office Heroes offer:
- 📄 Co-Built WISP
- 🔐 Azure-based QuickBooks hosting with built-in MFA and encryption
- 📊 Risk assessments and vulnerability testing
- 📁 Policy libraries and IRP frameworks
- 🎓Security training
- ✅ GRC dashboards for audit prep and reporting
You don’t need a CISO to be compliant — you need the right partner.
What Happens If You Don’t Comply?
The FTC has already taken enforcement action against tax firms, software providers, and auto dealers for Safeguards Rule violations. Penalties include:
- Long-term audits
- Mandatory independent security assessments
- Reputational harm
- Potential civil fines ($100K+ per violation in some cases)
It’s cheaper and safer to comply proactively than to fix things after a breach.
Final Word: Treat Compliance Like Client Trust
The FTC Safeguards Rule isn’t just a legal hoop to jump through — it’s a framework for protecting the very thing your clients value most: their trust.
Your CPA firm can get ahead of compliance requirements with the right approach and the right tools. Whether you’re updating your WISP, training staff, or switching to secure QuickBooks hosting, the time to act is now.
Ready to get started?
✅ Book a free FTC compliance Readiness Assessment
✅ Download the CPA Firm Safeguards Checklist
✅ Explore FTC-compliant QuickBooks Hosting Solutions
Protect your firm. Prove your compliance. Earn your clients’ confidence.
Do CPA firms need to comply with the FTC Safeguards Rule?
Yes. If your firm handles client financial data, Social Security numbers, or other personal information, you are considered a “financial institution” under the rule. Compliance is mandatory.
What is a Qualified Individual (QI) in the FTC Safeguards Rule?
A Qualified Individual is someone appointed to oversee and enforce your firm’s information security program. This person is accountable for implementing safeguards, reviewing policies, and reporting to leadership.
What should be included in a CPA firm’s WISP?
Your Written Information Security Program (WISP) should outline:
Administrative, technical, and physical safeguards
Roles and responsibilities
Risk assessment outcomes
Incident response plan
Vendor management practices
How often should CPA firms conduct a risk assessment?
At least annually — or whenever there are major changes to your IT systems, services, or business processes. Regular updates ensure that new threats are accounted for.
What triggers breach notification under the FTC Safeguards Rule?
If unencrypted data of 500+ consumers is acquired by an unauthorized party — and encryption keys are also compromised — you must notify the FTC within 30 days.
How can Office Heroes help CPA firms comply?
Office Heroes offers:
QuickBooks AVD hosting with built-in compliance tools
Security awareness training
Automated risk assessments
Policy management dashboards
FTC-aligned WISP templates and audit readiness reports
Let us help you stay audit-ready and breach-resilient.
