Cloud accounting, or online accounting, serves the same function as cloud computing, which is doing business on the web. Apart from slashing on-premise support costs and allowing clients real-time access to their financials from anywhere with an internet connection, the process also eliminates the need for in-house technology infrastructure, such as servers and software to purchase, run and maintain. Cloud accounting service providers in the proverbial sky take responsibility for maintenance and upgrades, including disaster recovery and backup. But just how safe is your financial data in a server that is owned, maintained and secured by someone else?
Take these three cloud accounting security facts into consideration before letting your concerns keep you from reaping the benefits of the cloud:
- Security and privacy
An efficient cloud accounting security architecture, first and foremost, safeguards the physical security of IT hardware (servers, routers, cables, etc.) from unauthorised access, natural calamities, technical crises and other instances where operations may be disrupted. Achieving this entails professionally specified, designed, constructed, managed, monitored and maintained data centres. Additionally, this category involves personnel security, where recruits undergo security screening, as well as awareness and training programs. They are monitored and supervised, and are made sure to abide by service level agreements, codes of conduct and privacy policies.
There are numerous laws and regulations that pertain to the storage and use of data, such as privacy or data protection laws. While these may differ specifically between jurisdictions, many of these regulations generally mandate business continuity and data recovery plans, logs and audit trails, including regular reporting. Cloud accounting service providers are obliged to adequately fulfill such requirements.
- Legal and contractual
Liability, which covers incidents of data loss or compromise; intellectual property, which denotes who the owner of the financial data is; and end-of-service terms, for when financial data are ultimately returned to the customer, are all typically negotiated between the cloud accounting service provider and the customer. Certain considerations may also include record-keeping requirements to cover instances such as when the law would dictate that electronic records be made available to the public.
According to CapioIT, a trusted advisor supporting successful outcomes in emerging technology and geographic markets globally, 70% of accounting firms in Australia have already embraced cloud technology. And as cloud accounting continues to become an everyday reality for a growing number of businesses, concerns about financial data security will hopefully be put to rest.