Management & Engineering 17 (2014) 1838-5745

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Management & Engineering

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Challenges and Strategies of Promoting Cloud Accounting

Cancan ZHANG ∗
City College of Dongguan University of Technology, 523416, P.R.China

KEYWORDS ABSTRACT

Cloud accounting, Cloud accounting, as a new mode of accounting information model, plays an important role
Accounting informationization, in enterprise accounting informationization process. Compared with the traditional
Promotion accounting informationization system, cloud accounting boasts the advantage of low
investment cost, low maintenance costs, low barriers to entry, while as the continuous
development of cloud accounting, relevant problems raised from one to another such as poor
security and unique services. To solve these problems in order to promote the popularization
and application of cloud accounting in our enterprise requires the joint efforts of enterprises,
suppliers and the government.

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1 Introduction

Traditional accounting information system is limited by many factors including the inadequate preparation of hardware facilities, lack
of professionalism, high initial investment costs, complex maintenance process, which restricts the development process accounting
information of some companies, and greatly weakens the enterprise’s competitiveness. In recent years, cloud accounting has received
high attention for its low-cost, high-efficiency mode of accounting information technology in the industry. Cloud accounting is
virtualized accounting information system providing accounting services for enterprise based on the Internet. Its conception can be
explained from two aspects. For cloud accounting supplier, cloud accounting is an accounting information system by cloud
computing technology, and suppliers need to provide hardware and software facilities and the construction of accounting information
systems. For businesses, cloud accounting is based on the Internet, so payment is required in order to access online accounting
information system. Construction of cloud accounting is currently a hot issue in the industry and academia, and it has an absolute
advantage in terms of cost, efficiency, reliability, etc. However, cloud accounting encountered many difficulties in the promotion
process, so how to solve these problems and make a better, faster development of cloud accounting is worthy of our in-depth study.

2 Advantages of Cloud Accounting

Cloud accounting provides online accounting services through the Internet platform, so compared with the traditional accounting
information system, it has an absolute advantage in input costs, maintenance costs, barriers to entry, and data reliability, as well as
easy to promote in the enterprise.

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Corresponding author.
E-mail address: 36690772@qq.com

English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD

DOI:10.5503/J.ME.2014.17.015
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2.1 Low input costs
Traditional enterprise accounting information system is the general software for enterprise self-development and purchasing
commercialization. Charges of genuine software is based on modules, ranging from thirty or fifty thousand to as much as hundreds of
thousands RMB, but modules the company purchased are not usually used entirely, resulting in great wastage. In addition, companies
are also required to invest large sums of money to purchase hardware facility including server, computer room, and data center. In
initial phase, enterprises are required to invest a substantial sum of money in hardware and software facilities. The “Cloud
Accounting” belongs to software services, so companies are only required to purchase it according to their needs and pay relatively
low “monthly fee” or “annual rental”. Companies are not required to pay for one-time investment which can effectively alleviate the
financial pressure.

2.2 Less maintenance costs

As traditional accounting information system requires a lot of hardware infrastructure, we need to consider the security issues of
these facilities and accounting information systems. Companies need to set aside large amounts of time, money and manpower on
maintaining the normal operation of the equipment. Meanwhile, due to the complexity of the upgrade of software, companies also
need to spend a lot of time on software upgrades and maintenance, and constantly facing bottlenecks which occurred during usage,
affecting the normal operation of the software. As the “cloud accounting” is leased, only the payment for rent is required. Companies
do not need to bear the cost of depreciation of hardware because of one-time investment, as well as not having to pay for a
professional maintenance and management, which reduces corporate spending on maintenance of accounting information to a large
extent.

2.3 Low barriers to entry

The traditional financial accounting information software requires the operator to receive a long professional training in order to
master the operation method of the software, and when a software problem occurs, a professional staff is required to carry out the
maintenance. When the relevant criteria changes, and the software has not been updated in time, the financial staff will have to be
re-trained in order to respond to changes in the criteria, and requirements for financial personnel will become higher, which brings
inconvenience to the enterprise. When using “cloud accounting” services, it is very simple for companies to operate online, following
the instructions, and does not require specialized training. When accounting standards require companies to adopt new accounting
treatment, cloud accounting service providers can update the product online in time, and companies can consist with GAAP in a
timely manner. Meanwhile, service suppliers also provide professional accounting information technology consultation for
companies, so financial officers do not need to be too concerned over the lack of software maintenance knowledge and financial
expertise knowledge, and the requirements for access become lower.

3 The Challenges in the Promotion of Cloud Accounting

3.1 Security of cloud accounting has been questioned

In the model of cloud accounting, a cloud may store a number of corporate data, where its security is being questioned by the whole
world. Therefore, we must solve the security issues of cloud accounting as soon as possible. For example, whether the spaces of
cloud accounting suppliers are safe; transmission lines are secure, whether suppliers can ensure customer data is stored in the
transmission process and cannot be stolen or suffer hacker attacks, viruses; whether hackers or competitors will take advantage of the
professional virus and spyware software, illegally intercept and tamper data during transmission or enter into the financial accounting
software database through bypassing checkpoints; whether cloud accounting services can ensure ruggedness of network when it was
applied to regional and even international groups and data increase to a large amount. All of those are the key factors when choosing
the cloud accounting.

3.2 Lower recognition of cloud accounting

The user’s trust is essential for a good accounting service to gain social recognition. According to (Lin Jing 2012), a survey of 200
sample companies shows that in all respondents, only 35.24% use cloud accounting services, of which 52.17% and 53.84% are small
and Medium-sized enterprises and individual users (bookkeeping accounting services). From the survey we find that large enterprises
have a relatively high level of understanding of cloud accounting services while few could use it. The accounting data is the core data,
and related to the lifeblood of business, while current government does not make a clear cloud accounting policy and does not
identify cloud accounting standards, regulatory policies, obligations, defined rights, and ownership of information resources, causing
most enterprises’, especially large enterprises’ sidelining attitude towards cloud accounting and low recognition to cloud accounting.

3.3 Single function of cloud accounting services

The current cloud accounting information service provided by suppliers of cloud accounting is single, and are well developed cloud

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accounting service suppliers such as Shenzhen Kingdee business network, Beijing Huacai accounting online, Beijing Ufida designed
for network, Xi’an accounting net, Ali software “money manager”. There companies mainly provide common module of online
accounting, financial management, reporting processing, while due to lack of financial budgeting, financial warning, financial
analysis and other functions, the integration of online financial processes cannot be achieved currently. Meanwhile, today cloud
accounting cannot be customized according to the needs of enterprises, which is difficult to meet the growth required of the
enterprise.

4 Promoting Related Countermeasures of Cloud Accounting Application

4.1 Enhancing the security of cloud accounting applications

Security of cloud accounting applications directly determines a company’s willingness of applying cloud accounting for accounting
informationization. To enhance the security of cloud accounting applications, includes the following three points: (1) Physical
security. Enhance the security of cloud accounting applications in a technical aspect including: authentication, user privileges
distinction, strengthens access control and so on. Supplier shall make data backup and strength remote backup in normal daily
backup to ensure the system could use historical data of company to recover in time and prevent the loss of important financial
information in the event of unusual circumstances in the system. Meanwhile, suppliers need to establish a proper data recovery test
system, and regularly conduct data recovery tests to prevent the loss of historical data and ensure the integrity of customers’ critical
financial information. (2) Data security. Data is inevitably lost or stolen through network transmission, so taking prevention and
control measures is necessary. We can use encryption security mechanisms that online banking uses. As for the security of database
and application process, we should periodically change password, and also take regulatory measures of many points responsibility.
Meanwhile we can explore a dedicated transmission channel for cloud accounting services, a channel similar to the Thunderbolt
high-speed download software, which improves the security of data exchange and avoids exposure to other harmful information on
the internet. (3) Stability of the network. The important part of the network system is preferably a two-line network, and provided by
different independent operators, one of which is regarded as a backup line to increase network support for service continuity. In
addition, we should establish contingency plans for network outage, power outages and other incidents, for example, provide a
backup circuit, multi-level UPS, server with storage capacity and set a higher priority for the processing of online accounting
information.

4.2 Strengthening government regulation and increasing public recognition

Because enterprises use cloud accounting processing for daily economic activities, and its core data is stored in the cloud of the cloud
accounting suppliers, we must further strengthen the regulatory on cloud accounting suppliers and make it safe and reliable, so as to
enhance public awareness of the cloud recognition of cloud accounting and promote the development process of cloud accounting.
Firstly, we should strictly audit cloud accounting qualification of suppliers. There are many cloud accounting suppliers currently in
China, but the operation scale, financial strength, service capacity, product quality, information security of those suppliers are uneven.
The relevant departments should strictly audit the cloud accounting qualification of suppliers, and only cloud accounting products
with the appropriate qualifications can access to it on the market. For example, Google has passed the audit of U.S. government’s
Federal Information Security Management Act before cooperating with the United States federal government. As for the cloud
accounting suppliers who has obtained the qualification, they need to be reviewed periodically.
Secondly, government should issue cloud accounting regulatory policies. Government should monitor cloud suppliers to continue to
improve its accounting products so as to ensure product maturity and stability; oversight cloud accounting providers does not means
seeking benefits by discoursing business information of users; supervising suppliers and timely reporting enterprise resource and
information status to users. Unqualified cloud service providers should be disqualified, and cease all of its cloud accounting services.

4.3 Improving cloud accounting services

Functions of financial cloud accounting software should continuously develop and be improved, and realize the integration of online
financial processes in an earlier time, which specifically include: (1) Electrification of original documents. Purchase and sale
businesses of a company can be conducted through internet and contracts are in a form of electronic data where the accounting
officer issues accounting documents according to economic business, and upload to the cloud contractual linkages as original
certification. (2) Part of business outsourcing. Enterprises divide the whole economic activities into many segments, and outsource
only one or several segments to specialized companies, such as accounting firms, financial companies, which can reduce staff and
increase the efficiency of the companies. (3) Intelligentization of financial analysis. Cloud stores data, operates and forms financial
statements and analysis indicators; company set the company reports, audit reports to the permission of “Everyone can
see”; management layer can see a variety of financial data, analyzing data, monitoring indicators on its screen; shareholders conduct
online meeting, and each shareholder can access to financial data while discussing company statues and development strategies.
(4) Integration of relevant interest groups. Accounting information of accounting firm that has obtained authorized access to the
company to process part of the accounting operations instead, such as adjusting the differences between the accounting and tax
confirmation; company upload various reports to cloud space of tax authorities, after being checked by tax authorities, company can

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declare a reasonable return in the tax department; after being commissioned, accounting firm will audit financial company online and
create an electronic version of the audit report. (5) Dynamic of business performance measurement. Future cloud accounting service
is also expected to achieve dynamic performance evaluation, compared with similar financial situation of enterprises, so that
enterprises can make decisions in favor of their own development in the competition, thus boosting the level of development of the
whole industry. Meanwhile, the enterprise should provide personalized cloud accounting services according to the needs of users to
enhance the customer’s self-defining software that will not only meet the needs of business growth, but also will meet the needs of
diversification requirements of different sectors and enterprises with different scales, thereby promoting the application of cloud
accounting processes in different enterprises.

5 Conclusion

In conclusion, cloud accounting as a new accounting online accounting service has its unique advantages, but it also faces many
challenges in the application process. Cloud accounting suppliers should consider how to improve the security, functionality and
public recognition of cloud accounting services, contributing to sound and healthy development of cloud accounting services, and
allowing more companies to accept and adopt cloud accounting services. With the gradual improvement of cloud accounting services
model, the large enterprises, multinational organizations will adopt this model to enhance the development of cloud accounting and
popularize it in future so as to facilitate the process of accounting information technology.

References

[1]. Neal Leavitt. Is Cloud Computing Really Ready for Prime Time [J]. Computer. 2009 (1): 15-20
[2]. Ron Gill. Why Cloud Computing Matters to Finance. Strategic Finance. 2011 (1): 43-48
[3]. LIN Jing. Online Accounting Service Model Study in Cloud Computing Era. Beijing, Capital University of Economics and
Trade. 2012: 12-15 (in Chinese)
[4]. CHENG Ping. Security Issues Study of Cloud Accounting Information Under Cloud Accounting. Friends of Accounting. 2013
(9): 28-31 (in Chinese)
[5]. CHEN Songsheng. Cloud Computing, Accounting Information Technology Transformation and IT Governance—Twelfth
Annual Meeting of the National Review of Accounting Information Accounting Research [J]. 2013 (7): 93-95 (in Chinese)

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