Knowledge base

Compliance glossary.

Plain-language definitions of the FTC, IRS, and cybersecurity terms every CPA firm needs to understand. No jargon, no legalese.

Access Controls

Technical and administrative measures that limit who can access which systems and data, based on the principle of least privilege.

16 CFR 314.4(c)(1)IRS Publication 4557

Backup and Restore

The combination of regular data backups and tested restoration procedures that protect against data loss from any cause.

IRS Publication 4557FTC Safeguards Rule (implied)

Board / QI Reporting

The annual written report the Qualified Individual must deliver to firm leadership on the status of the information security program.

16 CFR 314.4(i)

Business Continuity Plan (BCP)

A documented plan for keeping the firm operating through disruptions such as outages, natural disasters, or extended staff absences.

FTC Safeguards Rule (implied)AICPA SSAE 18

Change Management

A documented process for evaluating, approving, and tracking modifications to systems, applications, and security configurations.

16 CFR 314.4(h)NIST SP 800-128

CMMC for Accountants

The Cybersecurity Maturity Model Certification, required for firms in the Department of Defense supply chain that handle Controlled Unclassified Information.

32 CFR Part 170NIST SP 800-171

Continuous Monitoring

Ongoing automated monitoring of systems for security threats, misconfigurations, and policy violations, as an alternative to periodic testing.

16 CFR 314.4(d)NIST SP 800-137

Control Register

A structured list of all security controls your firm should have in place, mapped to regulatory requirements, with testing status and evidence.

FTC Safeguards Rule (16 CFR 314.4(d))IRS Publication 4557

Customer Information (FTC Definition)

Any record about a consumer that is held by a financial institution, including tax returns, Social Security numbers, and financial account data.

16 CFR 314.2(d)Gramm-Leach-Bliley Act (GLBA)

Cyber Insurance Compliance

Meeting the documented security requirements that cyber insurance carriers mandate as a condition of coverage and claims payment.

FTC Safeguards RuleState Insurance Regulations

Data Breach Notification

The legal requirement to notify affected individuals, regulators, and sometimes law enforcement when personal data is exposed in a security incident.

State Breach Notification Laws (all 50 states)FTC Safeguards Rule

Data Classification

A system for labeling data by sensitivity (e.g., public, internal, confidential, restricted) so that appropriate controls can be applied.

16 CFR 314.4(b)(1)IRS Publication 4557

Data Inventory

A comprehensive record of all systems, applications, and locations where your firm stores, processes, or transmits client data.

FTC Safeguards Rule (16 CFR 314.4(b)(1))IRS Publication 4557

Disaster Recovery Plan (DRP)

A technical plan that restores systems and data after an incident such as ransomware, hardware failure, or cloud outage.

FTC Safeguards Rule (implied)NIST SP 800-34

EFIN Security Requirements

The IRS Electronic Filing Identification Number can be suspended or revoked for data security failures, taxpayer data breaches, or pattern-of-noncompliance.

IRS Publication 3112IRS Publication 4557

Encryption at Rest

Protecting stored data with cryptographic controls so that it cannot be read by anyone without the decryption key.

16 CFR 314.4(c)(3)IRS Publication 4557

Encryption in Transit

Protecting data with cryptographic controls while it moves between systems, typically using TLS 1.2 or higher.

16 CFR 314.4(c)(3)IRS Publication 4557

Financial Institution (FTC Definition)

Any business significantly engaged in providing financial products or services to consumers, which includes CPA firms, tax preparers, and bookkeepers.

16 CFR 314.2(h)Gramm-Leach-Bliley Act (GLBA)

FTC Safeguards Rule

A federal regulation requiring financial institutions, including tax preparers, to develop and maintain a comprehensive information security program.

16 CFR Part 314Gramm-Leach-Bliley Act (GLBA)

FTC Safeguards Rule Penalties

The civil monetary penalties the FTC can assess against financial institutions that fail to maintain a compliant information security program.

16 CFR Part 314FTC Act Section 5

Gramm-Leach-Bliley Act (GLBA)

The federal law that requires financial institutions, including CPA firms, to protect consumers' nonpublic personal information.

Gramm-Leach-Bliley Act (15 USC 6801-6809)16 CFR Part 313 (Privacy Rule)

Incident Response Plan (IRP)

A documented set of procedures your firm follows when a data breach or security incident occurs.

FTC Safeguards Rule (16 CFR 314.4(h))State Breach Notification Laws (all 50 states)

IRC Section 7216

The Internal Revenue Code provision that criminalizes a tax preparer's unauthorized disclosure or use of taxpayer return information.

IRC Section 7216Treasury Regulations 301.7216-1 to -3

IRS Publication 4557

IRS guidelines outlining data security requirements and best practices for tax professionals handling taxpayer information.

IRS Publication 4557IRC Section 7216

ISO 27001 vs WISP

ISO 27001 is an international, certifiable security management standard; a WISP is the US-required information security program for financial institutions.

ISO/IEC 27001:202216 CFR Part 314

Logging and Monitoring

The capture and review of security-relevant events from systems, applications, and devices to detect anomalies and support incident investigation.

16 CFR 314.4(c)(8)IRS Publication 4557

Multi-Factor Authentication (MFA)

A login mechanism that requires two or more independent factors, such as a password plus a code from an authenticator app or hardware key.

16 CFR 314.4(c)(5)NIST SP 800-63B

NIST CSF for Small CPA Firms

A practical framework that organizes security activities into six functions, useful as a structure for your WISP and risk assessment.

NIST Cybersecurity Framework 2.0FTC Safeguards Rule (alignment)

Penetration Testing

An authorized, simulated attack against your systems to identify exploitable vulnerabilities before real attackers do.

16 CFR 314.4(d)(2)NIST SP 800-115

PTIN and WISP Attestation

The IRS requirement that tax professionals attest to having a Written Information Security Plan when renewing their Preparer Tax Identification Number.

IRS Publication 4557IRS Publication 5708

Qualified Individual (QI)

The person designated to oversee and be accountable for your firm's information security program, as required by the FTC Safeguards Rule.

FTC Safeguards Rule (16 CFR 314.4(a))

Retention and Disposal

Policies that govern how long client data is kept and how it is securely destroyed when it is no longer needed.

16 CFR 314.4(c)(6)16 CFR Part 682 (FTC Disposal Rule)

Risk Assessment

A systematic process of identifying threats to your firm's data and evaluating the effectiveness of your security controls.

FTC Safeguards Rule (16 CFR 314.4(b))IRS Publication 4557

Security Awareness Training

Regular training for all employees on recognizing phishing, handling client data safely, and following the firm's security policies.

16 CFR 314.4(e)IRS Publication 4557

Service Provider Oversight

The FTC Safeguards Rule requirement to select, contract with, and monitor vendors that handle your client data.

16 CFR 314.4(f)Gramm-Leach-Bliley Act (GLBA)

SOC 2 vs WISP

SOC 2 is a third-party audit of service organizations; a WISP is an internal security program required of financial institutions.

AICPA Trust Services Criteria (TSP 100)16 CFR Part 314

Tax Software Security

The combined responsibilities of the tax software vendor and the firm for protecting taxpayer data inside tax preparation software.

16 CFR 314.4(f)IRS Publication 4557

Vulnerability Assessment

Automated scanning of systems to identify known software vulnerabilities, misconfigurations, and missing patches.

16 CFR 314.4(d)(2)NIST SP 800-53 RA-5

WISP Template

A starting-point document for a Written Information Security Plan, useful as a structural outline but never sufficient as a finished WISP.

IRS Publication 455716 CFR Part 314

Written Information Security Program (WISP)

A documented set of policies and procedures describing how your firm protects sensitive client data.

FTC Safeguards Rule (16 CFR 314.4(b))IRS Publication 4557
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