The Application Of Cloud Computing In The Accounting Field (Essay Sample)

Cloud and Accounting
Name
Institution
Cloud and Accounting
The cloud has been gaining importance over the last number of years, why do you think so?
Cloud computing provides a mechanism in which computing resources can be shared on a real time basis across various internet enabled devices and platforms. Plummer et al., (2008) asserted that cloud computing has 5 main characteristics which include the use of the internet, scalability of computing resources, the service based nature of cloud computing and, much of it is metered; meaning that some form of quantification of service has been determined and applied. Over the last few years the adoption of cloud computing has tremendously increased globally. According to the Information Systems Audit and Control Association [ISACA] (2012), the drive for value, increased product and service demand, and the need to ensure cost reduction in IT, are factors that have fuelled the increased adoption of cloud computing and its associated strategies. Irms (2015) found that today, 9 out of 10 organizations are using at the very least one cloud computing application. Cloud has been adopted in various business processes ranging from accounting and finance, human resource management, procurement, business research and development, business data storage and retrieval, remote processing of transaction as well as the establishment of business backup and recovery centers such as hot and cold sites and so on.
How is the cloud used for accounting by organizations?
Accounting being a business process incorporates cloud computing in a number of ways. The adoption of cloud computing in accounting can be best described through the interaction of this technology resource with the accounting cycle. The Accounting cycle comprises of the processes of accounting data collection through the use of source documents and journals, the posting of these transactions in the ledger system, preparation of a trial balance and recording adjustment entries, and finally the extraction of financial statements such as the Income Statement, Balance sheet and the Statements of Cash flows.
Integrating cloud computing in this cycle; the following sequence of processes can be adopted. Accounting data collection could be collected and posted on the company’s Enterprise Resource Planning (ERP) system hosted on a cloud server and accessible over the internet. This means that real time transaction data from various locations, be it branches or international subsidiaries can be easily accessible from anywhere and at little cost. Postings in the ledger systems could also be automated from the postings done through journals using software embedded in the company’s ERP hosted in the cloud server. While preparing the trial balance, posting the adjustment entries, and even extracting the financial statements, the lead Accountant and his or her team can do this from any location by simply accessing the organization’s ERP hosted at the cloud server. Most importantly, financial auditors may also not need to travel to the client’s site to access accounting information because the same can be accessed remotely or transmitted through the cloud computing infrastructure. A number of prestigious business ERPs such as SAP, Oracle and PeopleSoft incorporate cloud computing in their Accounting Mechanism (Moller & Chaudhry, 2012). Accountants on the cloud system can perform a number of accounting processes such as accounting data entry, transaction authorization, payments approval and the preparation of financial statements just like in a conventional Accounting Information System without the need to be in an office where they can access the necessary software and computing resource; Telecommuting in Accounting has been enabled through cloud (Ebenezer, Omane & Kyei, 2014).
What are the advantages and disadvantages of cloud data storage?
Cloud data storage offers a number of advantages. When data storage is outsourced through cloud computing, the company frees up a lot of the storage capacity in its limited onsite computing resources, usually at tremendous cost saving since organizations providing cloud data storage facilities are usually specialized in their operations and therefore enjoy operational efficiencies which can be passed down to the businesses hosting with them in terms of reduced data storage costs. Secondly, cloud computing facilitates the replication and simultaneous backing up of data which can prove beneficial in case the primary data storage source is destroyed or compromised. Thirdly, through cloud computing, the locational restrictions on access to data are eliminated and this means that data stored on cloud computing servers can be accessed from anywhere as long as one holds a compatible internet enabled device.
A number of disadvantages can ...