Read this if you are responsible for cybersecurity at your organization.
During the financial audit process auditors are required to develop and confirm their understanding of Information Technology (IT) and cybersecurity practices as it relates to financial reporting to better understand risks and because of auditors’ heavy reliance on data pulled from accounting information systems. As auditors, we have seen a significant increase in the amount of impactful incidents affecting not-for-profit organizations and our IT security experts often share valuable advisory comments in annual audit communications with our clients. With recent incidents and a very rapidly changing business environment, here are the three most important from the last six months that impact all not-for-profits.
Board oversight of cybersecurity
Cybersecurity gaps within an organization’s systems may lead to risk exposure and have material impacts on all aspects of operations. Responsibility for cybersecurity controls and for establishing a culture of awareness and security should come from the Board and senior leadership. Board members and senior leaders should stay apprised of cybersecurity efforts on a regular basis and incidents should be summarized and reported on a quarterly basis.
The Board should also consider adding a member who is a professional with IT and cybersecurity experience to help manage and understand the specific risks to the organization and help drive and support cybersecurity efforts.
Ransomware threats and preventive controls
The use of ransomware as a profitable attack on organizations by hackers continues to rapidly increase. Within the last year there have been multiple high-profile incidents that illustrate the impact of a successful attack. These impacts fall into two main areas. One impact may be financial, as millions of dollars are paid to the bad actors as ransom in hopes of being able to regain control of systems. The second impact is operational, resulting in a loss of control of systems and data during the event. Potentially, an unsuccessful data restoration could result in the total loss of information and data maintained on your networks.
Though no organization may be able to prevent a ransomware attack from occurring entirely, there are basic cybersecurity controls that help reduce the likelihood and impact of an attack. Preventive controls may include:
- Security awareness training on phishing emails and overall IT security practices for all organization users
- Multi-factor authentication
- Access controls that prevent users from installing unapproved software onto organization-owned workstations and networks
- Anti-malware software installed on devices that connect to organization systems
- Use of Zero Trust data management tools for backups
- Disabling macros in emails (prevents back-end processes from automatically running)
In addition to including these preventive controls to your cybersecurity program, your organization should assess current corrective controls already in place to react to a ransomware event if one is detected or reported. Corrective controls may include:
- Disaster recovery plans/business continuity plans
- Incident response plans
- Backup controls and restoration tests
As the risk of ransomware continues to increase and the types of attacks continue to increase in sophistication, your organization should consider regular assessments of IT controls and cybersecurity practices on a regular basis. Such assessments may be performed in conjunction with annual financial statement audits as an expanded scope and/or as a separate annual IT assessment.
COVID-19 IT considerations
The global COVID-19 pandemic significantly impacted nearly every aspect of modern life, including the way we work. As personnel were sent home and literally became a remote workforce overnight, changes to IT systems and controls rapidly adjusted to accommodate this new way of business.
Where controls and procedures were adjusted, if not suspended, your organization should review those changes and determine if controls should revert back to the pre-pandemic process—or be formally changed and documented as policy.
Guidance from the American Institute of Certified Public Accountants (AICPA) dictates that a gap in controls associated with the pandemic is not a legitimate reason for not completing a control and that any changes must be documented and properly managed.
Well over a year into the pandemic, the concept of a hybrid workforce has emerged as the predominant way employees and businesses want to work. Your organization should review current policies and procedures that may pre-date the pandemic to ensure that the updates both document and consider the current business environment.
Additionally, with personnel working remotely or in a hybrid model, or a combination of both, you should assess practices for managing remote access and a hybrid workforce and, where needed, implement industry best-practice tools and procedures to accommodate a remote workforce while maintaining security controls. If you have questions regarding you cybersecurity procedures or want to learn more, please contact our team. We’re here to help.