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Accounting in the Clouds

External storage services can take your firm up, up and away from the limits of your server.

Cloud computing has become mainstream, allowing access to files and applications over the Internet, rather than having them stored on a local server. Consumers are increasingly embracing services such as Apple's iCloud and Google Docs to store and share information. According to Gartner Inc., by 2015, at least 20 percent of all services will be consumed via internal or external cloud-service brokerages.

Accounting firms are reaching for the cloud as well. In a survey conducted by CPA2Biz, 70 percent of firms plan to increase their use of cloud-based applications in the next six to 18 months, with planned adoption of cloud-based solutions at more than 80 percent in the largest firms.

Cloud computing eliminates the expenses associated with purchasing and maintaining software and hardware in-house, which can provide cost savings for accounting firms. The cloud supports a collaborative environment with far-flung clients and also delivers efficiencies, since employees can work anytime, anywhere.

But is the cloud secure enough for client data? Security has always been a concern of cloud detractors, however, cloud providers have implemented improved security methods. Even the U.S. government has given its stamp of approval to cloud computing, with its Cloud First policy that mandates government agencies "take full advantage of cloud-computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness, and minimize cost."

The American Institute of CPAs (AICPA) believes in the future of cloud computing too. AICPA is a member of the Cloud Security Alliance (, a not-for-profit organization that issues security guidelines for protecting information in the cloud. To help firms verify the security policy of cloud providers, AICPA has replaced its SAS70 with a Service Provider Certification to indicate service provider trust and security.

The following are security questions every firm should ask any vendor offering a cloud-computing solution:

  • Who will own the data?
  • How do you protect data against unauthorized access?
  • Where will the data reside? (U.S. data privacy laws may not protect data residing outside the U.S.)
  • How are data backup, retention and disposal managed? Is deleted data truly gone?
  • How is data protected in the event of a disaster? What are the recovery timelines?

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