What Accountants Must Know Before Choosing The Right Cloud Application Vendor

February 7, 2012 Off By Hoofer
Grazed from CloudTweaks.  Author: Florence G. de Borja.

With the recent worldwide popularity of cloud computing, it is expected to gain more momentum with more and more industries making use of such technology. The accounting profession can experience the most benefits because the accounting field processes a lot of data which can be housed online through cloud computing. However, not every accountant knows cloud computing and it is but expected that they have doubts as to the integrity of the technology. As such, this article hopes to explain the advantages and disadvantages of cloud computing with regards to the accounting profession.

Accountants can benefit from cloud computing because it eliminates purchasing software and servers, and maintaining and running them. The old technology infrastructure which requires all software and servers to be housed in the accountant’s office is now being replaced with a more robust and inexpensive technology known as cloud computing. Cloud applications are run through the web. An accountant just needs a computer or a laptop and an internet connection to be able to run accounting applications.  The software and server are managed not by the accountant but by the cloud application vendor. Typical applications available for accountants include full ERP (enterprise resource planning), payroll, and tax software. The accountant need not purchase a license to use the software. He/she just needs to pay subscription fees…

Many accountants are hesitant to use the cloud computing technology because they don’t know the benefits of moving to a cloud environment. One of the benefits of cloud computing is that the accountant doesn’t need to install a software in his/her computer. He/she just has to remotely access his/her application anytime, anywhere. If he/she has employees, his/her employees can access the same application and data. As long as there is internet connection, the accounting application and data can be accessed wherever and whenever.

Instead of paying an annual fee or a license fee, an accountant can pay monthly subscription fees for the use of accounting cloud applications. Some vendors charge on a yearly basis and some also charge fees on a per user basis. Cloud applications are usually cheaper than the traditional applications because cloud computing allows a lot of users to share storage and server. It should be noted also that although several users can use the infrastructure, it is designed in such a way that users can only access their own data. Because of cloud computing, there is no need to maintain IT personnel and costly hardware in-house.

Accountants who switch to cloud computing also pay minimal, if not zero, maintenance or hardware costs because the responsibility of maintenance is shifted to the cloud application vendor. Because the vendors sell the service to a lot of users, the share of the accountant to the total maintenance cost becomes minimal.

The main concern of accountants, however, is the security not only of their data but of their clients’ data which is understandable because they are dealing with financial records of their clients. Therefore, an accountant must exercise caution in dealing with cloud application vendors. He/she must ensure that the vendor’s data center has the AICPA (American Institute of Certified Public Accountants) Service Organization Controls Report which provides the guidance for the data center’s internal control. A vendor which has been examined by AICPA is evaluated stringently on its service or system control that it offers to its users. The data center’s infrastructure, software, personnel, data, and procedures are all examined to ensure that each component pass the stringent measures of AICPA.

In choosing a cloud application vendor, the accountant must make sure to ask for a copy of the AICPA reports to ensure that the data center has passed all the requirements of AICPA. There are also applications available such as the Comodo HackerGuardian or McAfee Secure which can be used to check daily the cloud applications’ security. The vendor website must be able to show the logo of this third party monitors together with the date stamp which shows when the data center has last been checked.

The accountant must also check for the data center’s downtime and the ease at which users can have access to their own data. He/she must ask the vendor about unscheduled and scheduled downtime. Such downtimes are often included in the contract and vendors are often penalized if actual downtimes go beyond what is stated in the contract.

With the power of cloud computing, accountants will surely benefit a lot from it. Researching about cloud computing can help them get rid whatever apprehensions they have regarding cloud applications. It is the purpose of this article to somehow alleviate the accountants’ fears regarding the new technology.