Cloud computing has become a technical concern in the world and its impact has been reflected on accounting and auditing in several areas, especially in speed and availability in a timely manner and other advantages, but there are also significant risks and challenges.
Dear Abdulwahid,
There are too many challenges facing Cloud-Computing such as:
- Data Loss and Inadequate Data Backups
- Distributed-Denial-of-Service Attacks
- Phishing and Social Engineering Attacks
You may check the below link for more details:
https://insights.sei.cmu.edu/sei_blog/2018/03/12-risks-threats-vulnerabilities-in-moving-to-the-cloud.html
Best Regards,
Hi Abdulwahid
The use of cloud is becoming ubiquitous in a great many areas of all businesses in all sectors of the economy, as well as in government and other non-government organisation. It offers flexibility, scalability, efficiency, and is empowering the processing of accounting data to a massive extent, as well as providing the option of using ever more efficient analytical tools for audit purposes. This represents the positive side of the coin.
The important word to consider here is data, and this does not just apply to accounting and audit. Of course, the importance and significance of data in the context of accounting and audit is very high. Recording of financial information is extremely important at all levels within a company, since a great many business decisions need to be based on an accurate financial baseline, just as forward looking projections also relay on this high level of accurate detail to be anywhere close to realistic. External stakeholders too, want to know how a company is doing, for a variety of reasons, and this also means accuracy is important in the financial records of the business. Financial reporting is highly regulated, and governments are always keen to ensure they get an accurate contribution to their treasury through various taxation measures, so a high degree of accuracy is vital for them.
Which brings us back to cloud. The primary use to which cloud is put revolves around data. It will involve the processing and storage of data. This becomes particularly important in today's highly regulated climate, where, for example, non-compliance with the new EU General Data Protection Regulation (GDPR) can result in punitive levels of fines. Just look at last year's 'little data breach' on British Airways (BA) and the UK regulator's subsequent intention to fine BA GBP183.5 million as an example of the might of the regulator.
There are a great many challenges for cloud security which still have not been properly resolved, which means any company choosing to use cloud for accounting and audit purposes (as well as a great many other business critical purposes) will need to take additional measures to mitigate all the risks properly. It is not enough to simply rely on the Cloud Service Provider (CSP) and the Service Level Agreement (SLA). No regulator will accept that the company has done an adequate job by relying solely on the CSP and their SLA.
We already know a great deal about the huge range of risks inherent in the use of cloud, so at the very least, we need to be ensuring we monitor all system activity, and also ensure we retain proper forensic records, preferable in a location external to the cloud. Much of this can be achieved by programmatic means, so need not be a highly onerous task.
Hope this helps
Bob
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