Applicability of Cloud Computing for Accounting & Taxation Firms

In the present day business functions and financial activities technology acts as a major requisite. Technology has changed the ways we exchange financial information and presentation of this interpreted and analyzed financial data to the end user or the client. Information technology has a great role in mounting the heights on which Business functions are today. From the e-filling of tax returns to maintaining of books of accounts electronically, technology has helped the facades of business functions particularly Accounting and Taxation in achieving flexibility and efficiency like never before. The technology has again played its role in giving new dimensions to these business functions via the model of Cloud Computing. 

Cloud computing is defined by a major web encyclopedia (Wikipedia) as “The delivery of computing and storage capacity as a service to a heterogeneous community of end-recipients”. In the layman’s language Cloud Computing is a technology based on utilization of resources which are stored on the cloud (the internet) in which the user of such resources need not have specialization in technology and he/she need not care about the infrastructure and management of these resources in the cloud. The user can have access to all of the required data and use the storage to save, amend or modify the requisite data without any “physical” storage, server and other infrastructure.

When we specifically consider the utility of Cloud Computing in view of the needs of Accounting and Taxation firms we find that many major dilemmas faced by these firms are sorted out by the technological model of Cloud Computing. Whenever we start thinking about the needs of an effective service providing firm we come up with three major needs/areas where if control of the firm is ensured, the probability of the operations of firm being carried out smoothly and profitably increases manifold. These three areas are –

1. Cost

2. Efficiency, &,

3. Future Returns

It seems quite obvious when we assume a firm having a cost effective structure with considerable efficiency and certainty; that the present technique of doing work of the firm i.e. Cloud Computing is “Future Proof” and this would continue to yield profits and won’t get outdated very soon due to changes in future parameters. With this great gift of Cloud Computing it becomes feasible to achieve control over these areas to a greater extent if not completely. In fact this assurance of cloud computing that reasonable control over these areas can be achieved by firms after implementing it, is the major driving force behind the urge to implement the Cloud Computing Structure.

 

How Implementation of Cloud Computing is Beneficial for Accounting and Taxation firms?

Accounting and Taxation firms can achieve control over the above discussed three areas by moving to Cloud Computing and derive major benefits in these areas after implementation of Cloud Computing as summarized below:

1. Cost –

• Reduce Expense
• No initial Investment
• Pay only for what you use
• Save “Money value of Time”
• Get an edge over the competition

2. Efficiency –

• On-Demand utility
• Flexibility
• Opportunity to focus your resources in doing “what you do best”, and leaving the hustle for IT management to Cloud vendor

3. Future –

• Cloud Computing is (near) future proof
• Be in pace with the internationally acclaimed firms
• Be the first among your competitors to embrace the future
• Cloud Computing being Eco friendly to a great extent, will help to reduce carbon emission and hence fulfill the firm’s CSR( Corporate Social Responsibility)

In a firm where Cloud Computation Environment is not present, firm’s management will employ offline software for Accounting and Taxation related work or a software utility which is either generalized or custom made for the firm and doesn’t need a 100% online access, in such a case the firm will have to bear expenses for application licensing( if the utility is tailor made), recurring membership fee(if the utility is bought without making it custom made for the firm), updation costs, development costs, maintenance costs etc. The firm can get rid of all these expenses by embracing Cloud Computing; as in Cloud Computing, the utility related expenses including those related to updation and maintenance are to be borne by the Cloud Vendor. The employer of the firm only needs to use the accounting/taxation/ERP utility effectively and all other actions are carried on within the cloud without employer’s interference or knowledge of such actions.

Similarly, in absence of Cloud Computing, a developing firm will need to take care of its hardware components and hosting components like storage devices (hard disks), servers, and power components. With advancement towards cloud computing, a developing firm can avoid these expenditures and can avoid (or reduce considerably) its future hardware investments and Power & Cooling expenses.

There also lies a CAPEX vs. OPEX angle in migration towards Cloud Computing; all of the firm’s hosting and storage costs are capital expenditure, while in the cloud, costs are completely operational (OPEX or operational expenditure),i.e., Pay-as-you-go.

 

Document Management – Made easy via Cloud

A great deal of ordeal faced by any Indian Accounting or taxation firm is bulk quantity of documents lying in their premises. At later stage of cloud computing implementation, documents are to be uploaded to the cloud. This will facilitate in reduction of physical storage and space consumption. And in addition to this reduction, there will be an additional saving of the time which would have otherwise been wasted in searching for a particular data or document. After healthy implementation of Cloud Computing, all that an employee needs for fetching a particular data/document is “Keywords” or “Phrases”

In above diagram, the central figure denotes the employee and A,B,C,D & E denote the physical units where a particular data might be stored.

It is evident from the above diagram that when an employee of accounting firm needs a particular details, for example, past financial data, rules and regulations regarding a particular case, taxation details etc., there might be two cases when he goes to search for the same.