Your staff has access to bank account numbers, Social Security numbers, and tax records for every client on your roster. That access is what makes your firm valuable to clients, and it’s also what makes a single careless click, a departing employee, or a compromised login dangerous.
Employee activity monitoring, tracking who accessed what system and when, has become a standard part of protecting client financial data. But it only works, and only stays legal, when it’s built on a clear written policy rather than software quietly installed on everyone’s laptop.
Here’s how firm owners can approach it the right way.
Practical Steps to Take This Quarter
- Write the policy first. Define exactly what’s monitored (client file access, email, login activity), why, and who at the firm can see the reports. This document is also part of what the FTC Safeguards Rule expects from an accounting firm’s written information security program.
- Confirm what your state requires, and loop in employment counsel if you’re unsure. A growing number of states, including New York, Delaware, Connecticut, and Illinois, now require written notice or signed acknowledgment before an employer monitors electronic activity, and more states are adopting similar rules.
- Get signed acknowledgment from every employee, including seasonal tax-season staff and contractors with system access.
- Scope monitoring to firm-owned systems and accounts. Personal devices and personal email should stay out of it unless the firm’s BYOD policy says otherwise.
- Turn on audit logging inside tax and accounting software, not just at the network level, so the firm can see which client files a specific login touched.
- Limit who can view monitoring data to a small group, typically firm leadership and IT support, so the reports themselves don’t become a new point of exposure.
- Set a retention schedule for logs instead of keeping them indefinitely, and store them securely.
- Review reports on a regular schedule looking for real red flags, such as a login accessing client files outside that employee’s normal workload, rather than for micromanaging billable hours.
Questions Clients May Ask Firm Owners
As monitoring becomes more visible to clients, either through a mention in an engagement letter or after a data breach makes the news, firm owners should be ready to answer a few recurring questions.
How do I know the person handling my taxes isn’t looking at other clients’ financial information?
Access to client files should be role-based and logged. Only the staff assigned to an account can open those records, and any access outside the norm gets flagged.
If something happens to my data, how would the firm even know?
Monitoring and audit logging are built for exactly this. Unusual access patterns, such as a login pulling records at 2 a.m. or downloading an unusual volume of files, get caught rather than discovered months later.
Do your employees know they’re being monitored? Isn’t that a little much?
Yes, and that’s the point. Employees sign an acknowledgment of the policy. It’s the same kind of safeguard used at banks and law firms, not a sign of distrust toward any individual staff member.
Why This Matters Beyond Compliance
Employee activity monitoring is often framed purely as a compliance checkbox, but for accounting firms it’s really a trust mechanism. Clients hand over some of the most sensitive financial information they have, and a firm that can clearly explain how that information is protected, and who has access to it at any given moment, is in a stronger position than one that can only say a policy exists somewhere in a handbook.
A written policy, paired with the technical controls to back it up and reviewed at least once a year as both state laws and firm systems change, turns activity monitoring from a liability into a genuine differentiator with clients who are increasingly asking these questions themselves.
===
Scott Carr, owner of Farmhouse Networking in Grants Pass, Oregon, is a veteran Network & Computer Systems Architect with over 30 years of IT experience. For over a decade, he’s led his team in delivering proactive, secure, and fully managed IT services to more than 80 businesses—including accounting and finance firms that rely on data security, compliance, and efficiency. Scott’s hands-on, jargon-free approach ensures every client understands their technology and gains confidence in their systems. His firm is known for fast, responsive support—most issues are resolved within 15 minutes—and deep expertise in cybersecurity, network design, and IT compliance. Learn more about how Farmhouse Networking supports the accounting industry at https://www.farmhousenetworking.com/finance-it-support/.
Sign in to get access to this free resource, and all of our whitepapers and reports.
Download this content today!
Register Now Already registered? Click here to Log In
