Do You Really Need to Anonymize Your QBO Portfolio Data for Benchmarking?

6 MIN READ

Jessica Kentch, Founding Partner, Ablaze Collective

For CPA firms managing QBO portfolios, benchmarking across client files is a valuable service. It enables firms to provide clients with insights like performance comparisons, industry averages, and tailored KPIs. But when the CPA firm is the primary administrator on all the QBO files, a common question arises: Do you really need to anonymize your data for benchmarking purposes?

The answer is nuanced. It depends on your ethical obligations, legal requirements, and the value you aim to deliver to clients. Let’s dive deeper.

Who Owns the Data in a QBO File?

Understanding data ownership is critical. In most cases:

• The business (client) is the data owner since they provide the financial data.

• The CPA firm acts as a data steward, responsible for managing, processing, and protecting the data.

• Intuit is the data custodian, housing the data on its servers and ensuring compliance with privacy regulations.

Even as the primary admin on the QBO files, your firm doesn’t own the data outright. This distinction matters because your firm’s use of the data—whether for benchmarking, reporting, or advisory services—should align with your clients’ expectations and applicable data privacy laws.

When Anonymization Is Necessary

1. To Comply with Privacy Laws

Even if your firm manages all QBO files, data privacy regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) may still apply. These laws often require anonymization when using data for purposes beyond the original scope, such as benchmarking across clients.

For example:

• GDPR mandates that personal and identifiable business information be anonymized when used in aggregate analyses.

• CCPA emphasizes consumer rights to know how their data is used, including whether it is shared or aggregated.

2. To Protect Client Confidentiality

Beyond legal compliance, anonymization builds trust. If clients become aware that their data is being aggregated without anonymization, they may feel their confidentiality is compromised, even if no laws are technically violated. Anonymizing data ensures clients’ trust in your firm remains intact.

3. For Ethical Business Practices

As stewards of sensitive financial data, CPA firms have an ethical responsibility to prioritize privacy. Anonymization prevents unintended biases, favoritism, or misuse of data, particularly when providing benchmarking insights that might indirectly reveal sensitive details about another client.

When Anonymization May Not Be Necessary

1. Client Consent

If your clients explicitly consent to their data being used for benchmarking without anonymization, you may not need to anonymize the data. However, this requires:

• Clear communication about how the data will be used.

• Written agreements outlining the scope and purpose of data use.

2. Internal Use Only

If the benchmarking is strictly for internal use and not shared externally, anonymization may be less critical. For instance:

• If your firm uses the data to develop internal KPIs for advisory services.

• If the insights are aggregated and only presented as averages or percentages, without individual identifiers.

3. Industry-Specific Scenarios

Some industries may be less sensitive to data aggregation if it serves their collective benefit. For example:

• Dental practices may appreciate benchmarks that help them gauge operational efficiency without concerns about anonymity.

• Professional services firms may view aggregated insights as a collaborative effort to improve industry standards.

Balancing Anonymization and Utility

While anonymization protects privacy, it can reduce the utility of the data. For instance:

• Anonymized Data: Provides broad benchmarks but may lack the granularity to create highly tailored recommendations.

• Non-Anonymized Data: Offers deeper insights but carries higher risks of privacy violations and client dissatisfaction.

CPA firms must strike a balance by using tools and strategies that preserve privacy while delivering actionable insights. Tools like Ablaze Collective help CPA firms anonymize data efficiently, ensuring both compliance and utility.

Practical Steps for Using QBO Data for Benchmarking

If you decide anonymization is necessary—or even just a good practice—here’s how to proceed:

1. Extract and Clean Data

Use the QBO API to pull client financial data while excluding identifiable fields like business names, tax IDs, or account numbers.

2. Aggregate Data

Combine datasets across similar industries or client groups. For example:

• Calculate average profit margins for dental practices.

• Measure expense ratios for professional services firms.

3. Use Data Visualization Tools

Leverage tools like Power BI or Ablaze Collective to visualize anonymized insights in the form of dashboards or reports.

4. Obtain Client Consent

Even with anonymization, it’s wise to inform clients about your benchmarking efforts. Transparency fosters trust and ensures ethical data use.

Conclusion

While CPA firms acting as primary admins on QBO files may have significant control over the data, anonymization is often a necessary step to ensure compliance, protect client trust, and adhere to ethical standards. Whether legally required or not, anonymizing data can provide peace of mind to both your firm and your clients.

By striking the right balance between data utility and privacy, your firm can leverage its QBO portfolio to deliver powerful benchmarking insights, driving value for your Cloud Accounting Services (CAS) offerings and cementing your position as a trusted advisor.

Interested in learning how Ablaze Collective can help you anonymize and analyze your QBO data efficiently? Contact us today!