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What is GDPR? How it Affects Accountants in Practice?

The General Data Protection Regulation (GDPR) came into effect on 25th May 2018. GDPR is a long-planned data protection regulation enforced to replace the 20 years old data protection rules. It has now been in place for over three years and brought reforms to data protection laws.

Bear in mind that the withdrawal of the UK from the EU (Brexit) doesn’t affect the efficiency of the GDPR. So all organisations in the UK must ensure that they meet the GDPR standards.

In today’s post, we’ll discuss; what is GDPR, what changes it will bring about and how it is important for accountants. Let’s find out!

 

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What is GDPR?

It is a data protection framework approved by the parliament of the European Union in April 2016. This took effect on 25th May 2018. It is the replacement of Data Protection Regulation 95/46/EC. This regulation is for DPOs (data protection officers) and others who deal with data protection.

This regulation aims to modernise and harmonise data privacy laws in the UK and across the member countries of the EU. It covers the UK General Data Protection Regulation (UK GDPR) as per the Data Protection Act 2018.

This regulation explains the data protection laws, principles, rights, and obligations. The GDPR strictly regulates the collection, storage, and use of personal data. After its enforcement, all the organisations, accountancy practices and their business clients need to provide evidence that they have a system that company with GDPR standards.

 

What Does GDPR Apply to?

It applies to all companies – regardless of size – responsible for processing and holding personal data in the EU (no matter if the process takes outside the EU). It means that processors and controllers are subject to GDPR regulation if:

  • They operate within the EU
  • They operate outside the EU if they offer goods/services to EU individuals
  • Process personal data in the context of an establishment within the EU, no matter if the processing is done within the EU

Controller is a company or individual that determines how and why personal data is processed

Processor is an individual or company that takes the responsibility to process data under the instruction or on behalf of controllers.

 

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Measures and Changes Introduced by GDPR

These are the new measures and changes that GDPR has brought about.

 

Changes Introduced by GDPR

 

Compliance with Law for Personal Data Processing

Under this regulation, all organisations who want to deal with the processing of personal data need to identify and document their lawful status first. They should include it in the privacy notice of their organisation. In addition, this can affect the rights of the individuals.

Consent

After the introduction of GDPR, companies are required to provide clear requests for consent in an understandable and accessible format. It must be as easy for individuals to withdraw consent as it is to provide it. With this consent, individuals get more rights. Old consents are also taken into consideration by GDPR if they meet the strict requirements.

Data Breaches

Organisations must inform ICO within three days (72 hrs) about a personal data breach that might be risky for the rights and freedoms of individuals. In this stance, individuals must also be notified if there are chances of high risk to their freedom and rights as a result of a breach.

Data Transfer

GDPR has prohibited the transfer of personal data outside the European Economic Area. Many conditions need to be met for the data transfer like:

  • If the receiving organisations have provided adequate safeguards
  • If any derogations apply ( for exceptional circumstances)

Children’s Data

The GDPR sets special protections for handling the children’s data if informational society services are directly provided to the children. More guidance is available at the Information Commissioner’s Office (ICO). The privacy notice should be written in plain language and the consent of the parent or guardian is needed to process the data.

Data Access and Erasure

Individuals have the right to ask controllers if their data is being processed, where and why it is processed. They can also get a copy of it. Moreover, they can also ask controllers to delete their personal data.

 

What are the Implications for Accountants?

As accountant and accountancy, firms deals with a large amount of data on regular basis. For this reason, firms need to make sure that the protected data is as per the GDPR provisions. Firms may conduct an audit on current procedures to find out if and where they fail to meet the GDPR standards.

If anyone fails to meet them, accountants may face large penalties. On the other hand, if organisations breach the regulation, a standard penalty of 10m or 2% to 4% of annual global turnover, or €20m, whichever is greater.

Therefore, accountants and accountancy firms need to ensure clients that they hold and process information securely as per the GDPR standards. They should demonstrate to clients that the protection of their personal data is their first priority. By doing this, clients will build trust with the accountants allowing them to handle their business and personal data. This will strengthen their relationship. As a result, their business will grow.

 

Quick Sum Up

After giving this blog a read, now you have a better understanding of what is GDPR, what does GDPR apply to, what are the measures and changes introduced and what are its implications for accountants? GDPR aims to apply data protection standards to protect EU citizens from data breaches and privacy issues. Businesses and accountants need to comply with GDPR standards to avoid hefty penalties and to build a stronger relationship with their clients.

 

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Disclaimer: This blog provides general information on what is GDPR.

 

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