Cloud Accounting: Pros, Cons & Future

This assignment examines the pros and cons of cloud-based accounting software. It discusses the benefits for businesses, such as ease of use and accessibility, but also points out challenges like limited technical support for individual users. The document proposes recommendations for accounting software companies to improve customer service and ensure software quality, ultimately emphasizing the importance of user-friendly cloud accounting solutions in today's business landscape.

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Part - 1
Introduction
Accounting software packages are such software’s that enables an organization to record,
classify and process accounting information such as; accounts payable, accounts receivable,
general ledger, pay roll etc. Another name for accounting software packages are accounting
information system. Accounting Information System is prepared for the ease of workings for an
organization. All the accounting information’s are stored in AIS and used according to the need
of the hour. Accounting information systems can be prepared by the firm itself or it can be
prepared by third parties or the firm and the third parties together. Earlier accounting was done
manually, errors and discrepancies were common. The invention of accounting information
systems made it easy for all the organizations to perform accounting functions which reduced the
chances of errors and discrepancies. In Australia also accounting information systems are widely
used, there is a majority of companies that are using AIS and has put an end on paper or manual
accounting. Accounting information systems has come out as the most successful invention in
accounting field since 2000 (keth, 2001)
Literature Review
A most common reason behind the failure of a company can also be the selection of wrong
accounting software’s. A right accounting software will work in favor of an organization
whereas the wrong one will bring failures to the organization (berth, 2014). Now we will talk
about an organization that is using accounting information system and is already undertaking its
business operation in Australia. Harley & Carl is a private organization that manufactures air-
conditioners, undertaking its operations in Australia Melbourne and is also a user of accounting
information software’s. There are many accounting information systems; a firm always uses an
accounting system that is prepared by itself or by a third party. Few of the accounting
information systems that are used by small or medium scale business firms in Australia are:
MYOB, Quick-books, and Reckon One etc.
MYOB: Mind Your Own Business is an accounting system that is prepared by an Australian
company which provides services related to taxation, accounting or other related things. MYOB
was formed By Christopher Lee. (MYOB, 2000). MYOB uses cloud storing for data, which
enables it to provide required safety to its users. It has around 600000 active users (SETH, 2014).
Quick-books: Quick-books are accounting information software which is introduced by an
Australian accounting firm and it works in the area of: payroll, tracks reports and change in
orders etc (doulas, 2001). Quick-book is most suitable for small scale firms that do not require

much of accounting or other related services in form of computer based systems. (Mathhir,
2006).
Reckon-One: This software is widely used in Australia and New Zealand. It is a cloud based
storage accounting information system, perfect for small and medium size businesses, and it is
mostly used by accountants, book-keepers, individuals and Small or medium business firms
(Becky, 2000).
Now if we talk about Harley & Carl Pvt Ltd, the prevailing accounting software in this firm is
MYOB, the organization uses this accounting system because of its following benefits:
 Accessibility: In this constantly changing and internet driven world, Large or Small
organizations are making changes in their working. Computer based accounting is a
result of such change. Harley & Carl Pvt Ltd uses Reckon-One as it is cloud based
storage system that stores the accounting or other related information in the servers that
are accessible through internet which makes it easy for the employees to use it anywhere
and at anytime.
 Cost: The cost of maintaining Reckon-One is really reasonable as it provides so many
facilities that its users never hesitate to pay for it. It is an economical accounting
information system that is primarily made for Small or medium scale organizations.
 Security: Cloud storage systems are the best in security. It is more secure than any other
storing method. If a company or an accountant uses a laptop (spreadsheet) to store
accounting transactions then the chances of breaching of security is much higher than the
hacking of the server in which the accounting information is stored.
Harley & Carl Pvt Ltd follows’ a line Organizational structure. A line organizational structure is
that form of organizational structure which follows a line pattern or it can also be called military
form of organizational structure i.e. there will be only one head and others will follow him
(Mark, 2013). It will be much easier to understand this structure with help of the following
diagram:

This diagram was given in a journal (feriz, 2007) explains the LINE organizational structure.
The line organizational structure is one the most common organizational structure. Under this
structure it has been seen that many operational problems occurs as several departments are not
inter linked and do not know what the other department is doing. As you can see in the above
diagram sales and production departments are not inter-linked, which will now or later effect’s
the working of Harley & Carl Pvt Ltd.
In my opinion the most likely system acquisition method for this firm can be custom software,
the reason behind this is that custom software may sound an expensive one but a firm can alter or
change this software according to their needs. In fact another name for custom software is tailor
made software. Because an organization that choose this software as system acquisition method
can prepare this software and cut out all the functions that are not required to be performed. This
kind of software do need a large amount for installing as well as for maintaining but a firm can
really enjoy its benefits once it is installed.
Control Problems or Frauds
There is no guarantee in the market for such software’s. At any time they can be attacked by
harmful viruses or can be hacked. Another reason is that companies that make such software’s
Workers

never sit ideal they work 24*7 to develop new re-defined version of already developed
software’s or they work on developing new software’s. So as soon as the newer versions hit the
market, the worth of the earlier one starts diminishing (Ley, 2003). Possible problems for such
systems can be their difficult know how, and the possibilities of them getting hacked. Now if we
talk about, if it is possible for fraud to take place then the answer would be YES, an inside trader
(working inside a company) can do this. As all the financial and other related information of the
companies are stored in such systems, an inside trader can leak it to the rival firms or can
him/herself use this information in achieving unethical gains. He can also takes out financial
information of such clients who have affluent background and can do any malpractice in order to earn
money out of them.
Part – 2
Development & Adoption
In this part of the project we will talk about the development and adoption of accounting
software packages. The need of these software’s felt when it became almost impossible for big
firms to maintain their daily financial or other transactions in their registers. It Is now more than
60 years to the development of the first ever accounting software (Ferrito, 2015). First
accounting software’s were primarily developed for the work within the company, later on these
software’s were taken to the market which ultimately resulted in its vast adoption. Every small or
big firm was interested in updating their data from manual to computerize. This Jump from
manual to computerize assured a long run for such software’s. As there were a large number of
companies using such software’s, the no. of companies making such software’s was also not less.
At present it is MYOB that is most widely used accounting software is popular among its users
because of its features and capability of providing right services to its clients (Satuzi, 2014). It
comes with many benefits such as it is easy to use; it provides best of the security, and most
importantly it is very economical which makes it a complete package for small and medium
scale companies.
Current Market Size
There are three supreme cloud accounting services provider in Australia namely MYOB, Intuit
and Xero (Ley, 2003). MYOB has been crowned as the leader of cloud based accounting
software’s (Reez, 2003). The current market share of MYOB is 4 $ per share, plus this software
company has an earnings of around 831-833 $ this year. This again makes it the unbeaten king of
this market. The market value of MYOB is around 2.4$-3.6$ billion. Xero and Intuit also has a

good share but they do not stand anywhere in front of MYOB. MYOB is ruling the market
because of its variety of services that they provide with perfection. Below is a table that is taken
from internet just to show the difference between the earnings and profits of Xero and MYOB
could base accounting software companies (Ramjy, 2005).
Gaps and Challenges
When there is a bright side to something then there is a dark side too, and that dark side is the
gaps and challenges that these cloud based accounting companies has to face. Below are few
challenges that are mostly faced by the client and their service providers (qneaccoutning, 2013).
 Deficient in of safety: The biggest challenge for these accounting software companies is
to provide best of security to their clients. A competent hacker can easily hack into the
servers of the companies and steal all the confidential documents.
 Poor exposure examination: Another pit hole of these software’s are that they start
giving weak reports after a certain point which again put the security of the client in
danger.
 Complicated to manage: In every organization employees at first shows their resistance
to even small changes, and if such employees get complicated accounting software either
they will totally surrender their works or they will corrupt the working of the software.
 Costly: Everyone wants to enjoy good services at nominal prices; this is a problem with
these accounting software companies. They do not provide best of the accounting
software’s at nominal prices.
 No technical support: It is not necessary that these software’s are always owned by the
firms, they can also be owned by individual accountants, single users etc. so if they ever
need any kind of technical support, they get none.
Recommendations
To bridge this gap all the cloud based accounting software companies need to put all these
problems at first to any other thing. It is their clients only that has helped them in reaching the

top spots of the market. Following recommendations can be done in order to bridge this gap
between the firms and their clients:
 All these computer based accounting software companies should make such software’s
that are easy to manage and to understand, so that in absence of the any professional it
can be used without having much problem.
 These companies must provide technical support or services. There should be a rule
within the lobby of this industry to provide free services to its end users after every 5
months.
 The software companies should not compromise with the qualities of the software’s.
Conclusion
After collecting and reading all the facts a brief conclusion is provided here, it is not wrong to
say that Cloud based accounting is the future of every business entity and the firms involved in
developing such software’s are enjoying huge profits. These software’s have many pro’s and
con’s too. However in today’s dynamic world it is not at all possible for a firm or an individual
to process, record, and classify daily financial or other related transactions manually so for their
ease cloud based accounting systems are the best.
Bibliography
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