The tech world is constantly in the spotlight when it comes to regulations, data sharing, and data protection. In a world of fast-moving information and ultra-sensitivity when it comes to the overall safety of our digital landscape, new steps are being taken to alter daily functions of global companies.
Taking effect May 25, the General Data Protection Regulation (GDPR) is a piece of legislation that’s based in the European Union, but has the reach to impact companies like Facebook and Google, bringing more attention to the tech world. But other industries besides tech are set to feel a change when GDPR lands, including the financial and accounting sectors.
What is GDPR?
GDPR was approved in April 2016 in the European Union and gave companies two years to comply with legislation. What it does is replace the Data Protection Directive and bring together rules across the European Union and its 28 nations.
The main goal for the GDPR is to give consumers control of their personal data, something that has become a talking point in many industries. This is data collected by companies to help them with things like targeting ads and mining information for insights. But even though this is based in the EU, it has reach across the globe by applying to companies that offer goods or services to people in Europe.
Key Policies in Motion
After the GDPR becomes in effect companies will not be able to use vague statements to get consumers to agree to give them data. Firms won’t be able to bundle consent pages together, essentially creating a confusing or ambiguous package that allows a company access to all data. What will happen is that there will be individual responsibilities and accountabilities for every piece of data. So, accounting firms for instance will have to comply with a consumer-focused approach to offering services even for their international clients.
How Does This Affect Accounting Firms?
Accountant firms and CPAs in the United States who deal with clients overseas in the EU will not escape these compliance regulations. These firms frequently process personal and sensitive data as part of the blueprint of their own services (i.e. tax returns, financial statements) and retain data on their employees for marketing purposes.
Accounting firms are already adjusting to the new regulations by looking into coverage such as accountants professional liability insurance. This kind of protection guards firms and their employees against claims related to errors and omissions in financial responsibilities and duties.
Breaking the Rules
If companies, no matter where they’re based, don’t comply with the new regulations there are punishments handed down. A business in breach of GDPR laws can be fined up to $25 million, a 4 percent rate in relation to annual global turnover. This will hit global companies that see major profits in global turnover, some in the billions.
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