Cloud Accounting: Online Accounting

Cloud Accounting also known as Online Accounting, is an accounting procedure which is similar to accounting software that are installed in home computers but the difference is it runs on the person or company’s server and using the individual or company’s web browsers using the internet. In this process, the data are safely stored and processed on the servers or “in the cloud”, hence its called “Cloud Accounting”. The National Institute of Standards and Technology defines cloud computing as following five characteristics:

On-demand self-service.

Broad network access.

Resource pooling.

Rapid elasticity.

Measured service. (Wikipedia, 2015)

Fig 1.2

Cloud accounting is normally offered in two formats:

As per CRN website (Sep, 2013), “ NSW police technology uses Amazon Web services for catching and punishing traffic violators”.

The National Australian Bank shifted nab.com.au into cloud from its former internal legacy set-up according to NAB enterprise delivery general manger Thor Essman. (The Australian, October, 2013)

If we consider the National Australian Bank as example, its big move on changing from internal set-up into “public cloud” computing using the Amazon Web Services back in 2013 has strongly benefited the company. It has saved millions of dollars in the long run. The public cloud has made the services available for everyone over the Internet. Also, a private cloud is confined for the company’s firewall and security need which can be accessed only by the authorized officials. NAB information expects for those require log-in credentials are operated via Amazon at the Sydney data centre, according to Mr. Essman. He also added that the cloud usage has saved around 250 percent on technical operating cost and reduced around 90 percent of all internet traffics that are received. Going public has also benefited the visits of the bank website too. More than 20 million visits are noted in the nab.com.au

The data is stored in various locations based on the users.

No fuss on updates: No installations or updates are required for software installation.

Risks :

With numerous benefits listed above, the cloud accounting also has certain risk factors that should be considered while working with it. Some of the common risks are listed below.

Security breach: It can be a major risk involved when comes with cloud accounting. Since both the software and data of the company are relaying on Internet, there is a risk for third party obtaining the access of our data.

Vendor is non-reliable: There is a risk that the online vendor may not require the business consistently or goes away for a while so it is mandatory to keep a plan for overcoming this situation.

Failure of Internet: If there is any trouble with the Internet, then accessing the accounting data when required is not possible.

PRISM Surveillance program: It is a clandestine surveillance program under the US National Security Agency (NSA) which revealed classified data to journalists.