Many accountants, especially the younger generation, have heard of SaaS by now, and no we're not talking about Statements on Auditing Standards(SAS)--though they are a delightful topic as well.
SaaS stands for Software as a Service and basically means instead of having a physical copy of your software, everything is run through the Internet.
This means that it isn't absolutely necessary to go to the store and buy Quickbooks, you can actually just use online software that will store all of your information.
This somewhat recent technology has advantages and disadvantages over the traditional method.
Advantages The biggest advantage of accounting SaaS is that you can access your accounting information/software from anywhere in the world and from any computer in the world.
Before SaaS, accountants were still able to access their accounting information from anywhere in the world as long as they had their laptops with them.
With SaaS, the accountant no longer needs to bring a laptop along, all the accountant needs is access to the Internet from any computer.
You can think of accounting SaaS as being like checking your email.
All you have to do is log in and you have complete access to all of your accounting data (pretty unbelievable).
You can even use your phone to update/check your accounting system as long as the phone has Internet capabilities.
Another big advantage of accounting SaaS is that someone else is responsible for the upkeep of your data(this is also the biggest weakness, but more about this in a minute).
With SaaS the accounting data is hosted by the company providing the software.
They are responsible for its integrity and security which can save accounting organizations a lot of headaches and time.
Having the information hosted on another server also frees up room on the organization's personal system.
Weaknesses Did we mention that someone else is hosting your precious, invaluable data? With accounting SaaS they are, and it can be scary to think that years worth of important invoices, payables, and other ledgers are in someone else's control.
If the company that is hosting your information is not established, they could simply go out of business and with them all of your data.
A simple suggestion is to make sure that you have physical backups of all of the accounting data.
You can request these regularly from the companies hosting your accounting data.
Inherent risk of the Internet.
Accountants know all about inherent risk and the nature of the Internet can be a little risky.
Your data is being stored online and could be stolen or ruined by bored hackers or eager competitors.
Set inherent risk to "very high" when using the beloved audit decision making model.
Accounting SaaS is a very valuable tool that offers flexibility that was previously unknown in the accounting world.
Deciding whether the benefits of accounting SaaS outweigh the costs is a decision that shouldn't be taken lightly.
We suggest picking up some more work on the way by having your accounting company audit the hosting company to check for proper internal controls (wink, wink).