The past decade has been characterized by technological development and innovations. The modern ways of communicating and sharing data have consistently changed the way people and businesses interact. The revolution in the world of commerce affects the entire supply chain including billing and accounting systems. Rittinghouse and Ransome (2016) observe that technology has exponential growth, which means one unit growth initiates growth in other areas. This commerce reality has made more investors, governments, and institutions to embrace technology and mechanize their ways of business. It thus becomes viable for accounting firms to embrace the change and align their skills and systems to the market needs. Cloud computing is the art of storing, managing, and processing data using remote servers instead of local servers or personal computers. This technological revolution has enabled many corporations to transfer their operations from physical offices to online interactions. In accounting, cloud computing gives endless possibilities. For instance, it will allow accounting firms to confirm real-time transactions based on internet communication and communicate with clients in time. This will increase the overall efficiency of the operations. However, there are associated challenges such as training and security issues. The challenges notwithstanding, cloud computing is a necessary adoption for any future-oriented account ting firm.
Advantages of Cloud Computing
The growth of technology has allowed most of the global investors to use the internet to make an investment decision. As observed by Puthal, Sahoo, Mishra, and Swain (2015), the use of the internet is a better option due to its increased efficiency and convenience. Between 2010 and 2019, e-commerce grew at a rate of 54% with 35% of global investments embracing internet communication as a part of the investment model. This trend is based on cloud computing, which allows business and clients to communicate with each other and enhance the efficiency of the supply chain at an increased convenience.
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In cloud computing, a client can place their orders, make valid payments, and receive their billing notice in under a minute. The supplier or the business owner receives these real-time orders and activates them immediately. Within a short time, the supply chain can be fully activated with a client receiving his or her billing number to confirm physical or online delivery. This is the biggest business innovation in recent history. CPA firms, by default, support industry to local and international investors and acts as an internal or external consultant in accounting. In most countries, this is a requirement by the government to increase the accuracy of economic measurements.
Therefore, any CPA firm that seeks to remain in business for the next few decades must embrace cloud computing. Adoption of this technology will not only help the company identify and exploit new opportunities, but it will guarantee its sustainability in the long run. Moreover, a company that fails to adapt to the new accounting systems and policies will soon lose market value as more companies move from traditional accounting to modern, technology-based accounting systems. There are various advantages associated with the adoption of cloud computing in CPA firms.
Socially Viable and Future-Oriented
Even before we can examine the independent advantages of cloud computing to CPA firms, we must first realize the general advantage brought about by the mere adoption of cloud computing. As observed by Drew (2012), the period between 1995 and 2010 was characterized by tremendous growth in technology and investment models. The development also led to the introduction of a new style of support industries where the most updated systems seem the most legitimate. This means that, even when the traditional accounting systems are efficient, clients are likely to move to companies that are adopting new technology. Companies respond this way in the attempts to increase their economies of scale and competitive advantage against their competitors who are yet to adopt the new technology.
As such, adopting new technology, and sharing its projected benefits to clients and shareholders is likely to increase the legitimacy of the company. Even if the clients fail to adopt the new system immediately, the get the notion that their accountant firms have the capacity to advise them on the right time to move and the associated benefit. The degree of legitimacy, loyalty, and trust characterized all business. Moreover, adopting computing technology is likely to invest more shareholders who believe in technology and future revolution in accounting, and the entire way of doing business. Just by adopting cloud computing, a company positions itself for the future in terms of clients, investors, and the market.
Quality
CPA services based on cloud computing are faster and more accurate. In the past, people had to handle complex computations using standardized methods. Due to increased human interference, the end results were often inaccurate or completely misleading. Cloud computing integrates the accounting software to the system ensuring that every data filed is easily readable and verifiable. This has increased the accuracy of the CPA industry in general. As a result, companies have become accustomed to zero errors. In the past, companies were tolerant of filing errors as they were also prone to making the same mistakes. The world of technology has eliminated this tolerance by proving that data can be as accurate as it needs to in the first filling. Therefore, the proposed adoption of CPA comes as both as an addition to the technical system as well as an expected upgrade by the market. Failure to adopt this technology could lead to the loss of clients.
Time-Saving
Time is one of the most constraining factors of human capital especially if you are working on a hands-on industry like accounting. In some occasions, people are forced to work long hours just to verify figures and present refined data to the client. The long hours leads to low productivity and poor quality of work delivered. Cloud computing offers the possibility of integrating the entire system to accounting applications that can simplify the human efforts needed and increase the rate of delivery. Cloud computing also means that there are multiple data input models, where more than one employee can work on the same transaction remotely. This increases the efficiency and accuracy of the refined data.
Real-Time Communication
Following global integration, and the increasing global entrepreneurial spirit, people are coming together to invest in different vestures despite the cultural and geographical differences. These examples are seen in all large corporations looking to internationalize into new markets in Asia and Africa. Due to the dynamism of the explored markets, the key players require constant communication including financial overviews and international financial models (Drew, 2012). The modern market also happens to change so fast putting these investors at risk if they fail to act on any relevant information. Using cloud computing will allow any CPA firm to relay information to its clients within the shortest time possible. This will increase the value enjoyed by the client, which will translate to client’s loyalty and eventual growth of the entire company.
Easier Disaster Coordination and Recovery
One of the major features of cloud computing is a remote backup, which means that every bite of data that passes through the system is stored automatically into a remote server. This means that even in case of a disaster that leads to loss of operational data, the company can still reclaim its operations by recovering past data. This feature is mostly unavailable in traditional CPA systems where fire or natural disaster can destroy all the available documents. Moreover, it allows clients and other stakeholders to keep a copy of their documents in real time thus enabling faster recovery.
It is also possible to integrate security accounting features to the system. These systems are designed to increase the accuracy of the accounting systems by detecting any anomalies or extreme figures. If any of these situations are met, the system notifies the relevant parties who review the case. The real-time coordination between the shareholders during a disaster and regular working days makes cloud computing a necessary adoption. The necessity is based on the assumption that errors in accounting can lead to huge losses if not detected in time. Investing in a system with basic recovery models and security features to avoid machines or human errors should be a priority.
Human Capital Flexibility
In every business, understating the independent market that makes the larger market has always been a success determinant factor. For instance, a company dealing with products from Asia to Africa or Europe needs to understand the subjective attributes that make these markets. The same trend is applicable to the accounting industry. A CPA firm needs to understand the local economic, political, and social environments that might affect business in that region. For instance, a change of national or economic blocs reporting standards directly affects the CPA firm’s ability to do business in the region. CPA firms thus need to keep a diversified human capital that can survey the market data and influence the direction of the company based on regional and global changes.
Occasionally, the need for diversification of human capital leads to complex logistics. The main challenge is the language barrier that limits collaboration between region leaders. Another challenge is immobility where companies find themselves with the right but non-feasible skill sets. This might include a CEO who can only work in Africa but meets the requirements set by the firm hiring. Cloud computing eliminates this challenge of human capital rigidity by allowing employees to access data and work together in collaboration regardless of the physical locations. The design of cloud computing systems also allows employees to share progressive files with multiple data inputs to increase productivity. Giving employees such friendly environments to work in is likely to increase their loyalty to the company and retain high motivational levels.
Disadvantages of Cloud Computing
Despite all these advantages of cloud computing, the process has various disadvantages that a company must emphasize on. Challenges involved in cloud computing in CPA systems and financial analysis are the same transitional challenges, but with a higher affinity to cause losses or put a company into jeopardy. Therefore, effective adoption of cloud computing must review these challenges and appraise their probability of occurring in preparation of mitigation methods.
Data Security Issues
Electronic funds theft is the most increasing type of fraud in the word. The trend is quickly replacing the old methods of robbery where robbers sought for capital value. Today, electronic fraud focuses on digital currency, which is a major part of cloud computing businesses. As communication systems develop, hackers are also developing counter systems to beat the default security features. The relevance of information held by accounting firms and its ability to direct criminals to other loopholes for electronic crime makes CPA firms the primary targets for hacking.
In response, the developers of cloud computing and support systems have come up with premium security features to safeguard clients’ data. By investing in customized security features to meet the loopholes of the accounting systems, CPA firms have managed to leverage the advantages of cloud computing while keeping the risks at minimal. To achieve this, a firm needs to engage in critical security risk analysis before the design of the cloud computing systems. The data possessed by the company and its business models are some of the determinants of risks. A cybersecurity consultant would be able to review these aspects and offer the most valid solution. In addition to the initial security feature set-up, it is also vital to come up with regular updates to review new risks.
Requires Training
There is a generational gap between the millennial and the senior adults with experience. The millennial is machine oriented, while senior employees are systems oriented. Companies struggle to meet a transition between the two systems to achieve smooth and fruitful change. To achieve these companies invest in a two-tier training system where the senior employee learn about the new technology as the new employees run about managerial aspects such as organizational culture and the nature of the business. Introducing cloud computing further heightens this challenge by necessitating a mandatory training for all employees. A company that seeks to adopt this form of accounting, and venture into the future market must meet the training budget for its employees.
Recommendations
Unarguably, the adoption of cloud computing has both advantages and disadvantages. While the system supports the future growth of CPA firms and financial industry at larger, it brings forth challenges such as security issues and the need for training. However, a comparison of the benefits and challenges shows that the long term benefits outweigh the short term challenges. It is vital to note that cloud computing will eventually take over the market. The past growth of technology indicates that new systems will overtake traditional human-based processes. Therefore, despite a company’s unwillingness to shift its investment model in fear of disrupting its position, it will have to eventually deal with the consequences as adoption becomes inevitable. It is thus advisable that CPA companies adopt cloud computing now and train their employees on how to minimize challenge and deal with other challenges. Furthermore, early adoption of cloud computing means that an accounting firm can move with technological advancement rather than adopt when the systems are more integrated and complex, which might create even complicated logistics.
References
Drew, J. (2012). Heads in the cloud: Part 1. Journal of Accountancy , 213 (2), 20.
Drew, J. (2012). Heads in the cloud: Part 2. Journal of Accountancy , 213 (2), 20.
Puthal, D., Sahoo, B. P. S., Mishra, S., & Swain, S. (2015, January). Cloud computing features, issues, and challenges: a big picture. In 2015 International Conference on Computational Intelligence and Networks (pp. 116-123). IEEE.
Rittinghouse, J. W., & Ransome, J. F. (2016). Cloud computing: implementation, management, and security . CRC press.
Weinman, J. (2012). Cloudonomics: The business value of cloud computing . John Wiley & Sons.
