What to do when the cloud goes down

September 3, 2019

By Courtney L. Vien, Journal of Accountancy 

When cloud software provider Wolters Kluwer shut down most of its systems, including its popular CCH Axcess tax software, on May 6, accounting firms were left unable to access client data or e-file tax returns just nine days before the May 15 tax return filing deadline for calendar-year not-for-profits as well as certain fiscal-year corporations, S corporations, and partnerships.

“No one was able to get into the program when I came in,” recalled Les Nettleton, director of information technology at New Orleans-based Bourgeois Bennett, which uses CCH Axcess. “We went out to their support website and weren’t able to get on.” Nettleton went online to confer with his fellow IT professionals and found that other accounting firms were in the same predicament.

On May 7, Wolters Kluwer confirmed that it had suffered a malware attack. Service was not restored until May 9. The situation proved so disruptive that the IRS granted a waiver of the Sec. 6651 late-filing penalty for affected firms to file Forms 990, Return of Organization Exempt From Income Tax; Forms 1120, U.S. Corporation Income Tax Return; Forms 1120S, U.S. Income Tax Return for an S Corporation; and Forms 1065, U.S. Return of Partnership Income, that were due May 15.

Still, firms like Bourgeois Bennett had to scramble to make up the lost time. “We were dead in the water,” Nettleton said. Once the firm regained access to CCH Axcess, he said, employees worked throughout the weekend to meet their deadlines.

When asked for comment, Wolters Kluwer referred the JofA to its news releases. The firm hired the cybersecurity firm CrowdStrike to investigate the incident, the company said in a public statement. The investigation has not found any evidence that customers’ data was stolen.

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