GDPR for Accountants: A Complete Guide

This guide is designed to help accountancy professionals understand the main features of the GDPR, its impact on day-to-day operations, and the practical steps required to achieve compliance.

It is based on technical factsheets and FAQs from leading professional bodies and provides a comprehensive overview of how to implement GDPR requirements within accountancy practice.

Introduction

This guide provides accountants with an overview of the GDPR, explains how it differs from previous data protection laws, and outlines the steps needed for compliance. It emphasises both the legal obligations and the opportunities for enhancing data governance.

The content is specifically designed for accountants, audit professionals, tax advisers, and other practitioners who handle both client and firm data.

Effective from 25 May 2018, the GDPR impacts any individual or organisation processing the personal data of EU residents. Accountants must understand the new responsibilities, including enhanced accountability and improved data protection practices, to safeguard their data and that of their clients.

Understanding GDPR

The General Data Protection Regulation (GDPR) is a comprehensive data protection framework that replaces earlier legislation, such as the Data Protection Act 1998. It governs how personal data is collected, stored, and processed—whether digitally or in paper records. A key change introduced by the GDPR is the accountability principle, which requires firms to actively demonstrate compliance through robust documentation and internal controls.

The GDPR builds on earlier data protection principles by enhancing transparency and accountability. It mandates stricter consent requirements where consent must be specific, informed, and given through a positive opt-in mechanism without pre-ticked boxes. Furthermore, the scope of personal data has expanded to include online identifiers, IP addresses, and cookie identifiers, thereby broadening the range of information protected under the law.

Data Protection Principles & Accountability

Under the GDPR, personal data must be processed in a lawful, fair, and transparent manner. Firms are required to ensure that only data necessary for a particular purpose is collected (purpose limitation and data minimisation) and that all information remains accurate, is retained only as long as necessary, and is adequately protected against unauthorised access or accidental loss.

The accountability principle compels firms to maintain detailed records of data processing activities, including how and when consent was obtained and how breaches are managed. This involves establishing robust internal controls, appointing a senior data governance lead or Data Protection Officer (where appropriate), and ensuring regular staff training. The Information Commissioner’s Office (ICO) recommends that training sessions be conducted at least every two years to keep all staff updated on GDPR requirements.

Expanded Rights under GDPR & Implications for Accountants

The GDPR grants individuals enhanced rights regarding their personal data. Data subjects have the right to be informed about how their data is processed through clear privacy notices, the right to access and rectify their data, and even the right to have their data erased (commonly known as the “right to be forgotten”) under certain conditions. Additionally, individuals can request that processing be restricted, demand data portability, and object to data processing practices such as direct marketing.

For accountants, these expanded rights mean that both client data (information received during professional engagements) and firm data (internal records) must be managed with strict adherence to GDPR standards. Firms must develop and implement internal procedures to respond promptly to Subject Access Requests (SARs) and any requests for deletion or restriction within the mandated 30-day period.

Lawful Bases for Data Processing

Before processing personal data, firms must identify a lawful basis. In many engagements, data processing is necessary to fulfil contractual obligations or comply with legal requirements (such as those for audit or tax purposes). Alternatively, processing may be justified by legitimate interests, provided these do not override the rights of individuals.

When relying on consent, the GDPR requires that consent is explicit, freely given, revocable, and unbundled from other terms or services. Firms must document in detail when and how consent was obtained and record any subsequent withdrawals to ensure ongoing compliance.

Data Processing, Records Retention & Secure Communication

Data should be retained only for as long as necessary to fulfil its intended purpose. Firms are advised to establish retention periods that align with both regulatory requirements and professional standards often ranging from 7 to 8 years for audit files, tax records, and client engagement documents.

A risk-based approach should guide the secure communication of personal data. This includes using encrypted emails, secure client portals, and avoiding generic cloud storage solutions that lack proper data protection agreements. The chosen communication methods should always reflect the sensitivity of the data being handled.

Roles & Responsibilities

In the context of the GDPR, a data controller determines the purposes and means of processing personal data, while a data processor acts on behalf of the controller. Accountants may find themselves in a dual role—acting as data controllers when managing firm data and as data processors when handling client data. It is important to maintain clarity in these roles to ensure compliance with all regulatory requirements.

A Data Protection Officer must be appointed in cases of large-scale or high-risk data processing. Although many accountancy practices may not meet the threshold for “large-scale” processing, it is still advisable to designate a senior person responsible for overseeing GDPR compliance. The DPO’s role includes advising on data protection obligations, monitoring compliance, and serving as the primary contact with supervisory authorities.

Engagement Letters & Privacy Policies

Engagement letters must clearly inform clients about the GDPR’s applicability and detail the lawful basis for processing their data. It is essential to separate service terms from consents for additional processing activities such as marketing, ensuring that any consent obtained is freely given and can be easily revoked.

Privacy policies should be written in clear, plain language and must include comprehensive details on how personal data is processed, the retention periods, and the rights available to data subjects. Regular reviews and updates to these policies are crucial to ensure ongoing compliance as processing activities evolve.

Data Breaches & Enforcement

In the event of a data breach, firms must notify the ICO within 72 hours if the breach poses a risk to data subjects’ rights. Furthermore, if there is a high risk of adverse effects, data subjects themselves must be informed without undue delay. Developing and regularly testing a breach response plan is essential to ensure that all actions taken are properly documented.

Failure to comply with GDPR can result in significant fines up to €20 million or 4% of global turnover, depending on the severity of the breach. By maintaining robust technical and organisational measures, firms can reduce the risk of breaches and avoid the potential for costly sanctions.

Best Practices & Compliance Steps

Conducting a thorough data audit is a critical first step in GDPR compliance. Accountants should identify all data processing activities, document data sources, and review existing records. Keeping detailed records of how consent is obtained, and any subsequent changes is also essential.

Regular GDPR training sessions should be scheduled for all staff members, tailored to their specific roles. Additionally, internal policies should be reviewed and updated periodically to reflect any changes in data processing practices or legal requirements.

In complex situations or when there is uncertainty about the roles of data controller or processor, seeking specialist legal advice is recommended. Leveraging available resources such as ICO checklists, sample privacy notices, and engagement letter templates can also help streamline the compliance process.

Conclusion

GDPR compliance is an ongoing process that requires regular audits, updates to policies, and continuous staff training. By following the steps outlined in this guide, accountants can meet their legal obligations while establishing a robust data governance framework that protects both client and firm data. For further information, professionals are encouraged to visit the ICO website, review updates from the EU Article 29 Working Party, and refer to professional bodies such as ICAEW and ACCA for the latest guidance and resources.

By adopting these practices, accountancy professionals can navigate the complexities of the GDPR and enhance their data protection strategies in a rapidly evolving regulatory landscape.