Traditional Accounting and Computerized Accounting

Question: Discuss about the Traditional Accounting and Computerized Accounting. Answer: Introduction The cloud-based accounting system is the need of the hour as it provides a secure environment and helps in storing financial information in a more secure manner as compared to the traditional accounting system (Zissis Lekkas, 2012). When it comes to a traditionally based accounting system, the critical information is always in danger leading to a breach in the information (Carroll, 2014). However, cloud accounting does not provide any trace of financial data on computers and the access to such data is encrypted thereby providing strong protection. The traditional accounting system is based on the conservative method and under it a company has one hard drive that is dedicated and the accounting software is installed. The financial data is recorded over here. Therefore, the major reliance is the traditional method and hard drive (Shanker, 2014). More risk is involved in this case because there is a problem of the breach of information as the data can be accessed. Difference between Cloud based accounting and Traditional accounting system Cloud-based accounting system Traditional accounting system 1. It is flexible in nature and the data can be accessed from any place on any device. The requirement of an internet connection is essential. 1. This system requires office computers and does not carry the advantage of access to data from anywhere. 2. Under the cloud-based system, the business is not attached to permanent devices and other licenses when a business expands. Hence, there is no fear of an increase in the cost of expansion (Shanker, 2014). 2.. When a firm prospers, a problem arises with the software license and cost of maintenance. It can be due to licenses, database, and other softwares (Shanker, 2014). 3. It is secure in nature because the data are automatically backed up and data cannot be encrypted. There is no danger of a breach of data. 3 Under the traditional based system, the data cannot be backed up automatically and there is a problem of a breach of data. It is because the data can be accessed easily. 4. Cloud accounting software works on various platforms and hence carry the advantage of access from anywhere 4 Traditionally based system software work only on a single platform and hence, it is not suitable for multitasks. Potential Risk or Limitation The service providers take care of various clients every day and hence it might be exposed to technical issues. The business processes might be suspended on a temporary basis. Further, if the internet connection appears online then it will not be possible to access any applications, server or data from the cloud (Beckham, 2011). Switching services of the cloud-based system have not evolved totally. It is difficult for the organization to migrate the services from one vendor to other. Support issues might crop up when the integration of current cloud application is done on another platform (Beckham, 2011). Cloud infrastructure is totally owned as well as managed by the service provider. Hence, there is little control over to the customer. The customer is in a position to take control, as well as tame the applications (Beckham, 2011). Key tasks like shell access and update cannot be done by the customer which is a major risk. Conclusion Companies that contain a small budget can use cloud-based accounting software because both time and effort are needed. Small companies that cannot provide huge security can use this system as cloud solution provides a host of benefits including safeguard of the data. Further, businesses that have employees who work in remote places can use this system as it is convenient to use and accessible (Van Venzke, 2015). Moreover, a business that wants to keep at bay from the physical mishaps can use this system as there is no imminent problem from fire, flood, etc. References Beckham, J. (2011). The Top 5 Security Risks of Cloud Computing. Accessed March 17, 2017 from https://blogs.cisco.com/smallbusiness/the-top-5-security-risks-of-cloud-computing Carroll, J.M. (2014). Computer security. Butterworth-Heinemann. Shanker, S. (2014). The Difference Between Traditional Accounting Computerized Accounting. Accessed March 17, 2017 from https://smallbusiness.chron.com/difference-between-traditional-accounting-computerized-accounting-4021.html Van A.S. Venzke, C. (2015). Predatory Innovation in Software Markets. Harvard Journal of Law Technology 29(1), 46-55 Zissis, D. Lekkas, D. (2012). Addressing cloud computing security issues, Future Generation computer systems, 28(3), 583-592.