Cyberattacks are no longer rare disruptions; they’re a persistent risk that can directly impact your financial reporting and audit readiness. A cyber event during an audit can negatively impact the accuracy of your financial statements and your ability to continue operations. In addition, a cyberattack can not only stop your business operations, it can also stop the audit in its tracks...sometimes indefinitely. 

We’ve compiled this survival guide to help financial executives and audit teams navigate the unique challenges posed by cyber incidents during the audit cycle. 

Key risks to be aware of 

Cyber incidents don’t just threaten IT infrastructure; they can ripple across your entire financial ecosystem. When an attack occurs during an audit cycle, it introduces uncertainty that auditors must actively investigate.  

Cyber incidents highlight the following key concerns with any financial audit: 

1. Integrity of financial data  

A cyber incident may compromise the systems that house or feed your financial data. If attackers accessed or altered financial systems – such as payroll or banking platforms – the audit team must determine whether the data can still be relied upon. This includes assessing whether privileged accounts (e.g., CFO, controller) were compromised or if financial systems were directly impacted or accessed. 

Beyond traditional financial systems, attackers may target upstream systems that feed into financial reporting. Modifications to these systems can cause downstream impacts that distort financial statements. For example, in a professional services firm, changes to the timekeeping system could affect work-in-progress (WIP) calculations, which directly influences revenue recognition. Similarly, in manufacturing and distribution (M&D) environments, tampering with inventory systems could lead to inaccurate cost of goods sold (COGS) or asset valuations. 

Even if the cyber incident occurs subsequent to the audit period, it can prevent the release of a "completed" audit. An attack that occurs after the audit period may also indicate a material weakness in the systems that existed during the audit period. 

2. Business continuity and financial exposure  

Beyond data integrity, cyber events can trigger ongoing financial concerns such as legal liabilities from data breaches, especially if they are breaches of personally identifiable information (PII) or protected health information (PHI). This can include mandatory breach notifications, potential lawsuits, and regulatory fines, among others (Discussed in our recent webinar, Recovering from a cyber incident – what you need to know, now).

In addition to overall disruption and potential litigation, a breach can erode customer trust, your brand, and beyond, leading to overall reputational damage. 

Other risks that should be considered include:  

• Cost to respond: Responding to a cyber incident is expensive - According to IBM’s Cost of a Data Breach report 2025, the global average cost of a data breach is $4.4M Does your organization have the cash on hand or insurance policy to cover the costs? 
• Future costs: Have you considered the additional, ongoing costs, including class action litigation, regulatory fines, lost business, brand and reputational damage and more. Is there a plan in place to navigate these?  
• Insurance: How much insurance do you have to cover an incident? Have you calculated the correct amount needed for your specific organization? Do you have cybersecurity insurance? Do you know if the correct types of coverage are in place? 
• Leadership continuity: In some rare, extreme situations, a leader has had to step down or be removed from their role. What steps are in place to maintain continuity in such an instance? 

These factors may also raise questions about your organization’s ability to meet financial obligations and continue as a going concern. 

Be sure to read Part 2 of this series, where we explore what the audit team will do – and what they’ll need – to effectively address these issues and complete the audit.