Some Accounting Benefits Are Obscured In “The Cloud”

by Mark Gibbons 1. August 2016 14:21
The use of “cloud” storage technology supported by services such as iCloud, Amazon Web Services, and Dropbox has achieved ubiquity in our everyday lives for applications such as photo storage, transferring documents, and remote server hosting. The business applications are many, and accounting is among the professions that is enthusiastically embracing the cloud for a variety of obvious, and some less obvious, reasons. In addition to well-documented advantages such as cost, accessibility, bandwidth, and disaster recovery, assurance professionals are discovering that the use of cloud-based technology can make service delivery better in a variety of other ways. Audit teams are often in different locations utilizing the same data, which can cause version control as well as security issues. Cloud services can eliminate difficulties inherent in multi-location audits by allowing teams to contemporaneously access the same data, eliminating version control ambiguities. Using cloud services reduces the exposure to human error by keeping information from being directly loaded on multiple users’ laptops, which are particularly vulnerable to loss from theft and human error. Software updates can be implemented with minimal disruptions to an engagement. And, data privacy and cybersecurity are better than what many accounting firms could promise on their own, because the companies that host services for accounting and financial firms are held to strict SOC2 standards, their livelihood depends on their ability to keep sensitive information secure, and they have access to and budgets for the latest cybersecurity resources. The result is cloud services are increasing productivity and reducing costs, adding value to the audit process. It is this value that is driving adoption of cloud services by the accounting profession. According to the most recent Management of an Accounting Practice (MAP) Survey from the AICPA’s Private Companies Practice Section, use of cloud-based systems has increased by 66% in two years and is used by 59% and 77% of firms with $5-10 and $10+ million in revenue. Cloud technology is here to stay in the accounting profession, and clients are receiving the benefits.

House Approves Some SOX Relief for Issuers < $1B

by Hiller Hardie 14. March 2012 11:00
  The House recently approved a measure aimed at creating jobs and easing the regulatory burden on smaller businesses.   A major component of this bill exempts small and mid size businesses initiating public offerings from some key provisions of Sarbanes Oxley.  As drafted, prospective issuers with less than $1 billion in revenue and $700 million in publicly traded stock would no longer be subject to external audits of their internal controls (among other things).   As I have noted in prior blogs, there has been tension between the conflicting goals of protecting investors and shielding business from excessive regulation.  While the above measure still needs to pass the Senate and be signed by the President, it is a strong indication that the latter goal is gaining traction. I do believe this is a good trend but also urge caution in moving too far. There continue to be major “blows” in financial reporting, such as those recently announced by Diamond Foods.  Moreover, outright fraud can be perpetrated by public companies.  The recent story of Puda Coal (a Chinese company which gained access to the US securities markets via a “reverse merger”) is an excellent case in point.  In this saga, the executives of this company effectively stripped the company of all operating assets, leaving shareholders with a shell company.   
Categories: Assurance