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Sage Accountants Blog

The importance of knowing where client data is stored

18 September 2014

With the prevalence of hosting in the cloud, it’s important that you are clear and confident about where your clients’ data is hosted, the benefits and risks of hosting in the cloud. and the need to inform your clients about how their private information is stored.

1. Obligation to inform clients where their data is stored.

You are obliged to disclose to your clients where their data is stored if its stored offsite. 

The Tax Practitioners Board has developed a valuable Code of Professional conduct – Confidentiality of client information information sheet which you can find here on their website.  

Specifically Point 12 states to “Further, a third party may also include entities that maintain offsite data storage systems (including ‘cloud storage’)” which means you need to let them know where their data is stored.

Some of our clients use engagement letters as a way to communicate this to their clients. We suggest you speak to your legal council or industry bodies for assistance with this.

2. Legal requirement to inform clients if data is hosted outside Australia

As you well know the Australian Privacy Principles (APPs) came into affect on March 11, 2014 and specifies that you need to inform your clients if their data is stored on servers outside Australia.

As per The Institute of Chartered Accountant's article dated 31 May 2013: “When collecting information, Accountants need to notify their clients that their information will be transferred offshore and, if it is practicable to specify, the countries in which the recipients are likely to be located.”

3. Data security risks

If the software providers’ servers are based overseas, security of your data can also be questionable.

It is not always clear where personal data is located, by whom it is processed and who is responsible for data processing as your customer’s data may be stored anywhere in the world, depending on where the servers are located.

If the data circulates freely around the globe via the internet, it may also be unclear as to which data-protection authorities at which location are responsible for ensuring the observance of the principles of data protection.

4. Speed of information & update times

If you have your practice software hosted outside Australia, you might incur slower site load times. Although this is unlikely to be a major issue, it could cost you your competitive edge.

Companies that host your software overseas may also run updates at inconvenient times that can cause your website to become slow, sluggish or even crash.

These are just a few things to consider in reference to data hosting. Because of some of these risks, Sage HandiSoft has chosen to engage Australian private cloud providers and secure data services in Australia.

5. The great benefits of private cloud hosting 

The good news is that moving to a private cloud provider in Australia, you can reap the benefits of:
  • Reduced costs of managing internal software systems onsite
  • Access software securely online from any internet connection
  • Eliminate disaster recovery concerns
  • Enjoy full access to support
Make sure you do your due diligence and understand redundancies to ensure high availability and as close to 100% uptime as possible.

If you are interested in moving to a private cloud, HandiSoft have rigorously researched the market and selected two industry partners to host your systems. These partners are Habitat3 and Integrated Private and are already hosting HandiSoft for many of our other clients.

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