Cloud technology and virtual data rooms (VDRs) in particular have become a significant value driver for the accounting industry. In fact, 61% of accounting firms say technology helps them improve chargeable hours and percentage realization per client.
“Most firms believe that their tech is significantly or moderately improving how they can compete…” Wolters Kluver in its 2024 Annual Accounting Industry Survey Report.
How do virtual data rooms help accounting firms achieve greater results? To answer this question, we explore the benefits and features of data rooms. Upon reading this article, you will discover the following:
- Two main benefits of virtual data rooms for accounting firms
- Nine data room features that enhance security and efficiency in accounting
- Three recommendations when choosing accounting data rooms
What is an accounting data room?
Virtual data rooms are modern versions of traditional physical data rooms. An accounting virtual data room is a secure online workspace for digital collaboration, cloud storage, and secure sharing of legal, taxation, and financial documents. A virtual data room for financial records helps accountants execute the following tasks:
- Maintain professional communication with clients and auditors
- Assign tasks and manage internal stakeholders
- Set detailed content access permissions
- Store company documentation in a secure online repository
- Track and manage document versions
- Redact sensitive data in documents
- Share confidential documents with multiple parties securely
- Track user activity for record-keeping and regulatory compliance
Top 3 data rooms
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Benefits of virtual data rooms for accountants
The primary benefits of virtual data rooms for accounting firms are process automation and data security compliance. Let’s explore these benefits in detail.
Accounting automation
Accounting virtual data rooms automate management tasks like gathering sensitive documents, tracking project progress, and compiling activity reports. Moreover, leading virtual data rooms offer powerful collaboration tools like question-and-answer workflows for improving client response time and auditor communications.
These capabilities enable accounting firms to improve efficiency when facilitating daily activities, the due diligence process, and business transactions, including mergers and acquisitions, initial public offerings, and corporate bankruptcies. In fact, 89% of accounting firms that use automation achieve higher process efficiency and profits, according to a recent BILL report.
Secure file sharing in accounting
Secure file sharing and data security compliance have become increasingly important for U.S. accounting firms amidst regulatory scrutiny. The U.S. data security and privacy compliance regulations are becoming more fragmented, with 20 new state laws enacted in 2024. That requires accounting firms to continuously monitor changes in data compliance regulations and update their security systems accordingly.
Virtual data rooms simplify these processes with built-in secure file-sharing features, like advanced data encryption, granular access permissions, information rights management, and detailed audit trails. These features make it possible for accounting firms to exchange documents in a secure online environment and align with data security regulations.
Nine data room features for accounting firms
Let’s explore nine key features of VDRs that enhance day-to-day accounting activities and facilitate accounting services in complex business transactions:
- Q&A workflows
- Data storage with automation features
- Automatic file conversion
- Optical character recognition (OCR)
- Data security controls
- AI-powered document redaction
- Secure spreadsheet viewer
- Activity tracking
- Compliance with regulatory standards
Q&A workflows
Virtual data rooms provide question-and-answer (Q&A) workflows enabling real-time collaboration between clients and auditors. Leading data rooms enable automated Q&A workflows where queries are submitted, tracked, forwarded to experts, and approved without manual intervention.
VDR users can assign multiple Q&A roles, including question drafters, question submitters, experts, coordinators, and approvers. This feature improves information flow and ensures that all interested parties receive prompt and relevant answers.
Image: Q&A workflow demonstration in a virtual data room
Data storage with automation features
Industry-leading VDRs optimize accounting firm document management with automated data storage features:
- Unlimited data storage. Unlike regular file-sharing solutions with upload size and storage limits, data rooms allow accounting firms to store documents without size and quantity restrictions.
- Upload from cloud storage and FTP. You can directly transfer content from cloud storage solutions, like Microsoft OneDrive and SharePoint, to your data room. Also, you can synchronize your data room with an FTP client for smooth project migration.
- Data index import. VDR users can upload entire folder structures alongside individual files and folders, substantially reducing project setup time.
- Automatic index numbering. VDR systems update and reorganize reference numbers of items in a hierarchical folder structure, relieving administrators from manually updating index numbering after uploading, moving, deleting, and updating content.
- Document tagging. You can assign custom tags to files and folders for easier information retrieval and project navigation.
- Bulk rename. You can apply consistent naming conversions across multiple files in one action, saving time and improving consistency.
- Secure document viewer. You can open popular file formats in a secure scroll-through online viewer with note-taking and document sharing capabilities. Collaborators can share private, public, or group notes in files and folders, supporting collaboration and decision-making.
Automatic file conversion
In virtual data rooms, popular file formats are automatically converted into encrypted PDFs for secure viewing and sharing. Some VDRs support over 25 textual, image, and video formats, including TXT, DOC, DOCX, XLS, XLSX, XLSM, PPT, PPTX, HTML, SVG, JPEG, GIF, MP4, AVI, MKV, WEBM.
This feature saves substantial document preparation time and excludes manual conversion errors. It simplifies financial records management, ensuring consistency of files shared between accounting firms, clients, and auditors.
Optical character recognition (OCR)
Optical character recognition (OCR) technology in virtual data rooms automatically recognizes characters in scanned documents and converts them into searchable digital text formats. Thia advanced search tool substantially improves document management and information retrieval processes for accounting firms.
Data security controls
Financial data breach expenses reach $6.08 million per incident, 24% above the average data breach cost. That carries significant material, legal, and reputational risks for accounting firms.
How to protect accounting files online, then? The solution comes from VDRs which are core tools for companies to minimize data breach risks. Let’s explore how VDR security features protect accounting and consulting activities.
| VDR security feature | What it does | How it impacts accounting firms |
| AES 256-bit / RSA 2048-bit encryption | Encrypts data at rest and in transit, making it impossible for unauthorized parties to access business critical documents | Protects critical financial data from hacking and reduces data breach risks |
| Multi-factor authentication (MFA) | Requires one-time passcode in addition to password and login credentials | Protects accounting firms from phishing and social engineering attacks |
| Granular access permissions | Enables role-based access to data room content and sets restrictions on viewing, uploading, downloading, and managing documents | Ensures precise control of information flow prevents unauthorized stakeholders from accessing restricted content |
| IP and domain restrictions | Limits VDR access based on predetermined IP addresses and domains | Offers extra protection against phishing, social engineering, and business email compromise |
| Email verification | Requires VDR users to periodically verify email addresses associated with VDR accounts | Reduces the data breach risks associated with business email compromise |
| File encryption and device management (IRM security) | Retains granular access controls for locally saved files and folders and allows administrators to wipe content from user devices | Protects critical information from being extracted from stolen or lost devices |
| Session timeouts | Automatically logs VDR users out after a period of inactivity (can be configured) | Safeguards unattended sessions and minimizes time available for cyber attackers to exploit active sessions |
| User security impersonation | Allows project administrators to browse VDR content from other users’ perspective | Allows to double-check security permissions and reduces data breach risks associated with security misconfiguration |
| Fence view | Enables “window blind” view on document pages, limiting visibility to the central portion of the page | Protects critical information against screen capturing, photographing, and video-recording |
| Dynamic watermarking | Watermarks display user information and time stamps during viewing, printing, and downloading of files | Deters malicious insiders from unauthorized file sharing, tracks document access, and enhances the ability to trace data leaks |
| Real-time backup | Continuously backs up VDR content | Prevents accidental data loss and ensures business continuity in various incident scenarios |
Image: Demonstration of granular access permissions in virtual data rooms
AI-powered document redaction
A secure data room offers powerful document redaction capabilities, helping accountants protect PII and comply with data privacy regulations:
- Automated process. You can search for and redact specific keywords and phrases in an entire document in one action.
- AI-powered PII recognition. The AI algorithm automatically detects and redacts names, addresses, dates, emails, phone numbers, IBAN, and other types of confidential data.
- Multiformat support. Redaction can be applied to popular file formats, including but not limited to PDF, Microsoft Office, HTML, JPEG, and SVG.
Image: Demonstration of AI redaction in virtual data rooms
Secure spreadsheet viewer
While there are plenty of benefits to using spreadsheets, there are also disadvantages. For instance, spreadsheet files carry inherent data security risks, due to the absence of password protection or access permissions management.
An accounting firm, however, can mitigate this problem by managing Excel files inside an online data room with secure spreadsheet viewing capabilities. A secure spreadsheet viewer allows you to work with encrypted Excel files, which opens the following possibilities:
- Encrypted permissions. Excel documents can be downloaded as encrypted files, with role-based access permissions, password protection, and copy and screen capturing disabled.
- Formulae visibility control. Formulas, editing, and data analytics functions can be disabled in encrypted Excel files for privacy and security.
Activity tracking
Virtual data rooms offer activity-tracking capabilities that complement the data analytics and reporting needs of accounting firms:
- Audit trail. VDRs track workspace interactions, including document views, downloads, edits, and version changes, offering clear and transparent records for regulatory compliance.
- Visual insights. Color-coded charts and graphs make reports easily digestible, simplifying activity reviews.
- Scheduled reporting. Accounting firms can automatically generate and distribute VDR activity reports at a desired frequency, supporting stakeholder accountability and automating project reporting.
Image: Demonstration of activity reports in virtual data rooms
Compliance with regulatory standards
VDR features meet various compliance standards, including financial reporting and data security regulations, like SOX, GDPR, ISO 27001, and AICPA, enhancing regulatory compliance for accounting firms. Let’s explore the connection between SOX regulations and virtual data rooms and see how VDR features improve GDPR compliance for accountants.
| Standard | Core requirement | How VDRs facilitate compliance |
| SOX | Implement access controls and audit trails of financial transactions for financial reporting | Granular access permissions ensure access control implementation, while full audit trail and reporting tools offer transparency and clarity to financial transactions |
| GDPR | Implement protection and privacy measures for customers’ personal data | Document encryption, MFA, access permissions, and network security ensure customer data safety |
| ISO 27001 and AICPA | Implement document security controls, PII protection, and information security systems | VDRs enable security controls that satisfy requirements developed by the International Organization for Standardization (ISO) and The American Institute of Certified Public Accountants (AICPA):Data encryptionMFAIRM securityRedactionAccess permissionsAudit trailActivity reports |
Case study: Baker Tilly
Baker Tilly, one of the world’s 10 largest consulting and accounting firms, successfully launched an office in Costa Rica and improved project efficiency by 95% using Ideals virtual data room in 2021-2022.
The key challenge for Baker Tilly was managing an influx of local clients and complying with Costa Rica’s regulatory standards. The firm chose Ideals as the primary solution for accounting, audit, taxation, and consultancy services.
“Ideals is a great platform for us because it solves all our major pain points,” said Alberto Porras Rojas, Managing Partner at Baker Tilly Costa Rica.
Ideals assisted Baker Tilly in managing extensive tax compliance documentation, creating clear and transparent audit reports, and enhancing data security with granular access permissions and second-factor authentication.
How to choose a virtual data room for your accounting firm? Three practical recommendations
Let’s explore practical recommendations for choosing the best VDR for accounting firms:
- Choosing between per-page and fixed pricing
- Assessing VDR integration capabilities
- Using free trial data rooms
Choosing between per-page and fixed pricing
Virtual data room providers typically offer per-page pricing or tiered subscriptions. The considerations can help an accounting firm choose the right virtual data room:
- Per-page pricing. VDR fees are based on the number of documents you handle. This pricing model suits small business owners dealing with minimal data flow or recurring low-activity periods.
- Tiered subscriptions. Tiered subscriptions offer flat-rate fees based on project size, often with unlimited data storage and users. This pricing model suits projects with predictable workflows and minimal disruptions.
Assessing VDR integration capabilities
When choosing a VDR, an accounting firm should verify how this platform integrates with its existing systems, like cloud storage or single sign-on (SSO) solutions.
The ability to seamlessly exchange data between a VDR and cloud storage significantly simplifies project migration. SSO, in turn, offers more robust data protection.
It’s important to note that data rooms that support co-editing and document integrations like Google Docs and Google Sheets can be prone to cyberattacks — continuous connectivity may open space for potential cyber threats. For maximum security, it’s advisable to opt for data rooms that support data transfer between cloud platforms without co-editing and document creation features.
Exploring free trials
Opting for a data room with a free trial is highly recommended. Testing the platform first-hand can help you understand how its features and capabilities meet your productivity and security requirements. This way, organizations can make informed decisions without committing to specific platforms.
Bottom line
- A virtual data room for accounting firms is a secure workspace where accountants manage sensitive information, communicate with clients, maintain activity records, and collaborate with auditors.
- Accounting firms use virtual data rooms for regulatory compliance, accounting automation, and data security.
- VDR features like Q&A workflows, unlimited data storage, AI redaction, optical character search, data security controls, and activity reporting, help accounting firms make daily activities more efficient and protected.
- Choosing VDR pricing based on project needs, evaluating VDR integrations, and testing free trial VDRs help accounting firms make informed software decisions.
Explore the 15 best virtual data rooms for accounting firms at data-rooms.org. Compare VDR features, pricing options, and user reviews when choosing your best virtual data room provider.