Microsoft 365 Copilot is the AI assistant Microsoft offers with Microsoft 365, and under enterprise data protection it runs under Microsoft’s Data Protection Addendum with Microsoft acting as a data processor. Many accounting firms already pay for Microsoft 365 and have bought some Copilot licenses, and partners still ask where the hours are supposed to come from. This article looks at how CPA firms use Copilot process by process: what Microsoft commits to on client data, five recurring processes where it fits, and the places where a firm should slow down.
Copilot Chat and Microsoft 365 Copilot are different offerings
Microsoft uses the Copilot name for more than one product. Its documentation on enterprise data protection covers both “Microsoft Copilot and Copilot Chat” and notes that “The specific controls and policies will vary depending on the underlying subscription plan.”
In practice the difference that matters for a firm is which data each one can reach for a given user, and that depends on the license assigned. Before you plan any process around Copilot, check in your Microsoft 365 admin center which product each person has, and read the current Microsoft page for that plan.
What Microsoft commits to on your data
Microsoft commits to processing Copilot data under its Data Protection Addendum, to not training foundation models on prompts, responses or Graph data, and to showing each user only the data they can already view.
Enterprise data protection and the DPA
Under enterprise data protection, use of Copilot is covered by the “Microsoft Products and Services Data Protection Addendum (DPA)” and the Product Terms, “with Microsoft acting as a data processor.” Microsoft says prompts and responses are “protected by the same contractual terms and commitments widely trusted by our customers for their emails in Exchange and their files in SharePoint.”
One exception is worth knowing. When Copilot runs a web search, the query sent to Bing is “covered by the Microsoft Services Agreement” and Microsoft acts as an “independent data controller” for it. Client details do not belong in requests that may go to the web.
No training on prompts, responses or Graph data
Microsoft’s privacy page for Copilot states: “Prompts, responses, and data accessed through Microsoft Graph aren’t used to train foundation LLMs, including those used by Microsoft Copilot.” The same page notes that Microsoft offers third-party models, such as Anthropic and OpenAI models, that an admin can choose to enable, and that “additional terms may apply.”
Copilot sees what each user can see
“Microsoft Copilot only surfaces organizational data to which individual users have at least view permissions.” This is the sentence most firms underestimate. If a staff member can open a folder of payroll files today, Copilot can bring those files into an answer for that person tomorrow.
These commitments describe how Microsoft handles data. Your own obligations remain. Under AICPA 1.700.040 a member needs a confidentiality agreement with a third-party provider or the client’s specific consent, and tax return information carries the separate rules of section 7216.
How CPA firms use Copilot in five recurring processes
CPA firms use Copilot in new client intake, document follow-ups, engagement letters, repetitive client emails and meeting notes, where it prepares a draft or a list and a person decides. These processes repeat every week in most firms and are mostly reading, writing or moving information. In each one Copilot prepares a draft or a list and a person decides.
New client intake
Copilot can summarize the first emails from a prospective client into a short note for the partner, and turn your intake checklist into a list of what is still missing. The engagement decision stays with the partner.
Summarize this email thread with a prospective client in five bullet points: who they are, what service they ask for, deadlines mentioned, documents they have already sent, and open questions. Use only what is in the thread.
Document collection and follow-ups
Chasing missing documents comes back every season. Copilot in Outlook can draft a follow-up that lists the items still outstanding, using your checklist. Keep tax figures out of the prompt when the email only needs the names of documents.
Engagement letters
Starting from an approved template in Word, Copilot can fill in the scope and client details for a new engagement and flag sections that need a partner’s attention. If your firm uses AI on client work, the letter itself may need a paragraph about it; see AI disclosure in engagement letters.
Repetitive client emails
Questions about deadlines, portal access or estimated payments come back every season. Keep a short internal library of approved answers in a SharePoint page or Word file, and ask Copilot to draft replies from that library only. The reviewer then checks a draft that already uses the firm’s wording.
Using only the approved answers in the file ’Client FAQ 2026’, draft a reply to this client email. If the question is not covered by the file, say so and do not answer it.
Meeting notes to tasks
For client meetings held in Teams with transcription on, Copilot can produce a recap with decisions and follow-ups. Staff then copy the follow-ups into Planner or To Do with owners and dates. Ask clients before recording, as you would for any recording.
Where to slow down
Slow down on three things: tax return information, broad SharePoint permissions and any figure in a Copilot draft.
Tax return information and section 7216
Steps that put tax return information into any AI tool need a decision on section 7216 and, where required, a written consent in the prescribed form. Until your counsel has given a view, start with the steps above that need no client figures.
Oversharing in SharePoint before turning Copilot on
Because Copilot follows existing permissions, a review of who can see what should come first. Typical problems are client folders shared with the whole firm, old team sites that nobody owns, and personal OneDrive files shared by link. Fixing these before rollout is ordinary IT hygiene that Copilot makes urgent.
Output is a draft: review every figure
Microsoft’s own page says “The responses that generative AI produces aren’t guaranteed to be 100% factual.” Any number, date or citation in a Copilot draft gets checked against the source document by the person who signs off.
Settings to check before the rollout
Before rollout, check five things in your Microsoft 365 tenant: licenses and terms, third-party models, web searches, sharing permissions and named reviewers. Each item is a question to answer and write down before licenses are assigned to more people.
- Which Copilot product and plan each user has, and which data protection terms apply to that plan.
- Whether third-party models are enabled for Copilot in your tenant, and if so, which additional terms apply to them.
- Whether staff know that web searches run by Copilot fall under different terms, and that client details stay out of those requests.
- Which SharePoint sites, Teams and OneDrive links are shared more widely than they should be, starting from client folders.
- Who in the firm reviews AI-assisted output for each of the five processes, and where that rule is written.
None of these items needs new software. They need an hour with the person who knows the tenant and a partner who can decide what the firm wants.
Training by role
Staff use Copilot differently depending on their work. An admin who sends follow-ups all day needs different examples from a senior who reviews workpapers. Training that starts from each role’s own documents, and groups people by their current skill level, tends to hold better than a single general session. Two cases on our work page describe programs built this way, one for a law firm’s business staff and one for 120 office staff at a yacht builder.
Anything that goes to a client
Emails, letters and summaries drafted with Copilot go out under the firm’s name. Agree on one rule and apply it everywhere: a person reads every client-facing draft in full before sending, and nobody sends a draft they have only skimmed. Busy season is when this rule gets skipped, so put it in the AI policy and in the training.
A first month plan
Pick one of the five processes, the one that repeats most often in your firm. Measure how long it takes today for a normal week. Write down which steps Copilot prepares and who approves each one. Fix the permissions on the folders that process uses. Run it for four weeks with a small group, then measure again and decide whether to extend it.
Keep the measurement simple. For the chosen process, count how many times it runs in a normal week and roughly how long each run takes, then do the same count after four weeks. Note also how often the reviewer had to correct a draft, and what kind of correction it was. Those notes tell you whether the prompts or the source documents need work before more people start.
The same approach underlies our process reviews, and the report lists the prompts or settings for each step. Two cases on our work page describe Copilot training organized around roles and skill levels.
Frequently asked questions
Is Microsoft Copilot safe for client data at a CPA firm?
Microsoft states that Copilot under enterprise data protection is covered by its Data Protection Addendum with Microsoft as data processor, and that prompts, responses and Graph data are not used to train foundation models. Your firm’s own duties under the AICPA code and section 7216 still apply, so the answer depends on your contract, settings and process.
Does Microsoft use Copilot prompts to train its models?
Microsoft’s privacy documentation says prompts, responses and data accessed through Microsoft Graph are not used to train foundation LLMs, including those used by Microsoft Copilot.
What is the difference between Copilot Chat and Microsoft 365 Copilot?
They are different offerings under the Copilot name, and Microsoft notes that controls and policies vary with the subscription plan. Check which product each user has in your admin center and read the current Microsoft page for that plan.
Can Copilot see files a user shouldn’t see?
Copilot only surfaces organizational data that the individual user can already view. If permissions in SharePoint or OneDrive are too broad, Copilot can bring those files into that user’s answers, so permissions should be reviewed before rollout.
Where should a CPA firm start with Copilot?
With one recurring process that needs no tax figures in the prompt, such as follow-up emails for missing documents or replies from an approved answer library, measured before and after a four-week trial.
Do we need a policy before rolling out Copilot?
The IRS OPR guidelines of June 2026 say firms must deploy internal policies and procedures for Circular 230 compliance in the AI space, so a written policy is the expected starting point for any firm doing tax work.
Sources
- Microsoft Learn, Enterprise data protection in Microsoft Copilot and Copilot Chat
- Microsoft Learn, Data, Privacy, and Security for Microsoft Copilot
This article is general information. It is not legal or tax advice. For your own situation, ask your counsel, your tax adviser or the professional body that governs your practice.