Question

Business Plus Advisors (BPA) are a well established accounting firm located in Melbourne, Victoria. The Managing Partner, Brady, has read a number of professional articles talking about cloud accounting and its impact on accounting firms and their clients. At present, all of the firm’s clients use more traditional accounting systems where their accounting software is located on computers within their offices. When it is time for Business Plus Advisors to review the accounting files and prepare financial advice and / or tax returns, their clients backup their accounting data and email the file to the firm. Brady would like you to undertake some research into Cloud Accounting and its impact. He is very limited in time and has asked you to prepare a document to the executive committee covering the following: 1. What is Cloud Accounting? (1 mark) 2. What are the benefits and limitations of using cloud accounting when compared to their traditional accounting systems from the perspective of: Business Plus Advisors? the clients of Business Plus Advisors? 3. Should Business Plus Advisors encourage their clients to transition to a cloud accounting system when compared to their current system? Justify your recommendation, which should be consistent with the benefits and limitations you have identified above. (1 mark)

Answer 1

Cloud accounting refers to the process of sending accounting data over the internet to the cloud software,which processes it and send it back to the user. Cloud accounting uses only the traditional method of accounting only , it is just that it is done over the clouds.

Advantages of cloud accounting for Business Plus Advisor:

1. It is more economical because it does not require highly costly system , software etc. Simply a purchase of cloud software will do like quickbooks .

2. It is more flexible because it can be accessed from any where.

3. A number of clients can be handled simultaneously because of the capacity of the software.

Disadvantages of cloud accounting for Business Plus Advisor:

1. Since it is over the internet, security issues may prevail regarding the safety of data.

2. It is based on the sever of the cloud, so just in case it is down , Business Plus Advisor may not be able to access the data.

Advantages of cloud accounting for Clients:

1. Clients can authorize only those rights to the accounting firms which they require for example they can give right for just passing the journal and not viewing reports etc hence mainting the privacy of the financial data.

2. They can check the work done live by the accountant firms.

3. Various reports can be seen due to the use of new software

Disadvantages of cloud accounting for Clients :

1. Security concern is there as well for clients because of the new viruses , data hacking happening all over.

2. It may be diffcult to the clients to understand the whole new software as they generally dont belong to the accounting background.

On the basis of the above discussion we would like to recommend Business Plus Advisor to ask his client to switch to the new software because it will help in terms of flexibility, reports and maintenance of data. Though there are several disadvantges but they can be taken care by use of appropriate security measures.