Sample Vendor Management Policy for [Accounting Firm Name]
Purpose
This Vendor Management Policy establishes the framework for [Accounting Firm Name] to oversee third-party service providers handling nonpublic personal information (NPI), ensuring compliance with the Gramm-Leach-Bliley Act (GLBA) and applicable state data protection laws (e.g., California CCPA, New York SHIELD Act), while mitigating cybersecurity and operational risks.
Scope
This policy applies to all third-party service providers (e.g., cloud accounting software, tax preparation platforms, IT vendors) who access, process, or store NPI on behalf of [Accounting Firm Name]. NPI includes client names, Social Security numbers, tax records, financial statements, or any information that could identify a client.
Definitions

Nonpublic Personal Information (NPI): Information about clients, including names, Social Security numbers, tax IDs, financial data, or account details, as defined by GLBA.
Third-Party Service Provider: Any external entity contracted to perform services that involve handling NPI.

Policy
1. Due Diligence

Pre-Engagement Assessment: Before engaging a third-party service provider, [Accounting Firm Name] will evaluate their cybersecurity practices, including:
Security policies and procedures (e.g., encryption standards, access controls).
Compliance with GLBA and state data protection laws.
History of data breaches or security incidents.
Financial stability and reputation.


Documentation: Due diligence findings are documented and reviewed by the Compliance Officer.

2. Contract Requirements
Contracts with third-party providers must include:

Data Protection: Requirements for AES-256 encryption at rest and TLS 1.3 in transit for NPI.
Breach Notification: Obligation to notify [Accounting Firm Name] within 72 hours of a suspected or confirmed breach involving NPI.
Compliance: Agreement to adhere to GLBA and applicable state laws.
Access Controls: Use of unique user IDs, strong passwords, and multi-factor authentication (MFA).
Termination: Provisions for secure data return or destruction upon contract termination.Contracts are reviewed by legal counsel and approved by the Compliance Officer.

3. Ongoing Monitoring

Annual Reviews: Vendors are assessed annually for compliance with this policy and regulatory requirements, including audits of cybersecurity practices.
Performance Metrics: Vendors must provide regular reports on security incidents, system uptime, and compliance status.
Risk Assessments: Conduct risk assessments for vendors handling sensitive NPI, focusing on alignment with business risks.

4. Incident Response Coordination

Breach Response: In the event of a vendor-related breach, [Accounting Firm Name] will:
Coordinate with the vendor to assess the breach within 24 hours.
Ensure client notifications are issued within 30 days if sensitive NPI is accessed, per state data breach laws.
Document the incident and response for at least 5 years.


Vendor Cooperation: Vendors must provide full cooperation, including access to logs and forensic data.

5. Recordkeeping

All vendor-related documentation (due diligence, contracts, reviews, incident reports) is retained for at least 5 years, compliant with state recordkeeping requirements.
Records are maintained in a secure, encrypted system and available for regulatory inspections.

6. Training and Oversight

The Compliance Officer oversees vendor management and ensures staff are trained on this policy annually.
Training includes procedures for reporting vendor non-compliance to the Compliance Officer.

7. Compliance and Enforcement

The Compliance Officer is responsible for administering this policy. Violations by vendors (e.g., failure to notify of a breach) may result in contract termination.
Internal violations (e.g., failure to follow due diligence) may result in disciplinary action, up to termination.

Approval
This policy is approved by [Compliance Officer Name], Compliance Officer, and effective as of [Date]. Annual reviews are documented and maintained for regulatory inspections.