Web 20 and Cloud Computing.doc by yan198555

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									ACC 626 Assignement 2
Iv, Kieng; Lam, Grace; Li, Chang




          New Technologies:
          Web 2.0 and Cloud Computing

          Are we techno enough?




          Kieng Iv                 20233702

          Grace Lam                20224242

          Chang (Grace) Li         20240147

          7/15/2011
ACC 626 Assignement 2
Iv, Kieng; Lam, Grace; Li, Chang

Introduction
        “Web 2.0 is the next generation of Internet use, with a focus on Web-based communities and
hosted services such as social networking sites, Weblogs, and wikis. All Web 2.0 technologies foster
sharing and collaboration - which makes them high-potential technologies for use by [accounting] firms as
                                                                                              1
a way to share information, as well as to explore recruits and build the firm's brand online” . Below are
examples of how accounting firms can adopt or already adopted Web 2.0, cloud computing, and/or other
technologies into their practices. It is important to note that Web 2.0, cloud computing, and other
technologies also present many legislation, security and independence risks for firms that need to be
dealt with in order for the firms to reap the full benefits of technology.
Defining the Problem
        It is important to define the problems that firms are facing before discussing how these
technologies can solve those problems. Within internal processes, firms are facing the challenge of how
to manage knowledge; how to market to new clients and potential employees; and access internal
documents. Regarding external processes with clients and how to facilitate audit, the problems are how to
share and obtain client information; and how to enhance the audit trail. This report will address how these
new technologies can address these problems.
Internal Processes
        Before discussing the benefits and risks of new technologies within internal processes of firms, it
is important to define internal processes. “The Internal Process Perspective measures the internal
business processes that impact the value proposition components: price, features, quality, support,
                             2
availability, and reputation.” The definition that will be used is the processes that involve support
activities of the value chain such as human resources, accounting, information technology and other
         3
functions .
New technologies present benefits and risks to internal processes. The report will now discuss how social
media, cloud computing, and wikis impact internal processes; what are the risks of using these
technologies and how to manage these risks; and lastly, whether firms are using these new technologies
and, if they do, whether they are using them effectively to optimize internal processes.
Wikis
                                                             4
        A firm’s most important asset is its human capital . “Ninety-six percent of the partners at the 300
firms surveyed said that being an intelligent business is an important part of their firm's growth strategy,


1
  Anonymous,. "How Web 2.0 Could Change Your Firm's Recruiting & More. " Accounting Office
Management & Administration Report 1 Apr. 2008: ABI/INFORM Trade & Industry, ProQuest. Web. 9
Jul. 2011.
2
  Business News and Concepts. Web. 9 July 2011.
<businessnewsandconcepts.com/performancemeasures.html>.
3
  "Value Chain Analysis." NetMBA Business Knowledge Center. Web. 9 July 2011.
<http://www.netmba.com/strategy/value-chain/>.
4
  "Managerial Auditing Journal | The Association between Auditor Quality and Human Capital." Emerald.
Web. 9 July 2011. <http://www.emeraldinsight.com/journals.htm?articleid=1795160>.

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but only 6 percent believe that their firm is very effective at operating as an intelligent business today” .
                                                                               6
Wiki is the “short form of the Hawaiian word wiki wiki, for fast or quick” . “Wikis are self-organizing…great
                                     7                              8
at managing knowledge bases” , and allow for more creativity ; these characteristics distinguish wikis
from most formal knowledge bases.
                                                                                   9
           The turnover rates are 17% at large firms and 15% at small firms . This high turnover makes
                                                                    10
documenting and managing knowledge even more important.                  An example is that at
PricewaterhouseCoopers LLP (PwC), software called Groupware is used to facilitate the process of
“Connected Thinking” which allows its 147,000 employees share information and decision making
                11
processes . After Sarbanes-Oxley, accounting firms saw their workload increase by 3000 hours.
                                                                                                               12
“Groupware allows professionals to share their understandings of these new audit-related demands”.
           At Deloitte, wikis are used as a collaboration tool on projects and ongoing initiatives. Deloitte
Mentorship program at the University of Waterloo used a wiki where co-op students created a database
of collaborative best practice documents for resume editing, cover letter writing, how to be a good mentor,
                13
and FAQs . Wikis allowed the mentorship program to distribute consistent and useful documents. In
addition, the knowledge is maintained within the firm so the documents will not have to be re-created year
                                         14
after year, saving time and effort .
           Using wikis also improves efficiency of communication. “Documents can be updated by multiple
users in real time, avoiding the inefficiency of the back-and-forth nature of email attachments.
Furthermore, real-time updates avoid delays caused by the bottleneck effects of centrally-managed
           15
entries”        through the use of wikis. Due to the collaborative nature and lack of formal authority imposed on
wikis, security and legislation risks exist. Firms need to manage copyright issues and legislation risk such


5
  Staff, WebCPA. "Accounting Firms Build Intelligence into Businesses." Accounting Today - Tools and
Resources for the Tax and Accounting Professional - An Investcorp and SourceMedia Publication. 7 Nov.
2007. Web. 14 July 2011. <http://www.accountingtoday.com/news/25855-1.html>.
6
  "Copyright and Collaborative Spaces: Open Licensing and Wikis." SpringerLink. Web. 9 July 2011.
<http://www.springerlink.com/content/n1140486nl56x118/fulltext.pdf>.
7
  "Using Wikis or Blogs to Manage Knowledge in Firms / Neil McIntyre, CA." Neil McIntyre, CA. 8 Nov.
2007. Web. 9 July 2011. <http://neilmcintyre.ca/using-wikis-or-blogs-to-manage-knowledge-in-firms/>.
8
  "Backbone Magazine - Using Wikis or Blogs to Manage Knowledge in Firms."Homepage | Backbone
Magazine. 16 Nov. 2007. Web. 14 July 2011.
<http://www.backbonemag.com/Backblog/1_11160701.asp>.
9
  Stuart, Alix. "The People Who Count - CFO Magazine - April 2006 Issue - CFO.com."CFO.com - News
and Insight for Financial Executives. 1 Apr. 2006. Web. 14 July 2011.
<http://www.cfo.com/article.cfm/5674536>.
10
   "Mind Power: Managing Knowledge in Accounting Firms." CCH. Web. 9 July 2011.
<http://www.cchgroup.com/opencms/opencms/web/TAA/PDFs/all/mind-power-managing-knowledge-in-
accounting-firms.pdf>.
11
   "Accounting Firms Becoming Intelligent Businesses." Straight Bloggin' 21 Oct. 2008. Web. 9 July 2011.
<http://ttopolka.blogspot.com/2008/10/accounting-firms-becoming-intelligent_21.html>.
12
   Ibid
13
   Iv, Kieng. ACC 626 Assignment Interview. 10 July 2011.
14
   Ibid
15
   "Accounting Firms Becoming Intelligent Businesses." Straight Bloggin' 21 Oct. 2008. Web. 9 July 2011.
<http://ttopolka.blogspot.com/2008/10/accounting-firms-becoming-intelligent_21.html>.

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as copyright infringements. Copyright issues arise when internal users post and create wikis using
                                      16
information belonging to third parties . To resolve such issues, standards should be set which prohibits
wiki users to post information belonging to others and effective monitoring procedures should also be in
place to verify the violation of such standards.
        There are also operational risks such as duplication of effort, inconsistent and inappropriate
                                                                      17
content from wiki users, which prevent wikis from working effectively . In particular, inconsistent contents
could lead to conflicts among users in disagreement and lead to unprofessional behaviours such as
                                                                           18
inappropriate name calling or arguing that does not add value to the wiki . In addition, inappropriate
content could lead to damages in firms’ reputation. The risks of duplicated effort and inconsistencies can
be reduced by encouraging employees to use the search function before posting a new discussion. The
risk of inappropriate content can be resolved through monitoring of revision history and assigning user
accountability. Monitoring will ensure that only appropriate content is posted and user accountability
provide users a disincentive to post irrelevant content and to participate in unconstructive argument.
                                                                                19
        Due to the collaborative nature of wikis, the author of wikis are unclear , which raises issues
                                                                                       20
such as who is liable for the content especially when editing can occur anonymously.        In order to
mitigate risks over authorship, it is recommended that users must login into the wiki with their work user
name so an audit trail can be created and traced to content, therefore creating more accountability.
Furthermore, users should be asked to sign a terms of agreement that any content posted and the right of
content usage belong to the firm.
Social Media
        Facebook, the world’s largest social network, just passed 750 million users and on its way
                       21
towards a billion users . In March 2010, it passed Google as the most visited site for the week in the US
                                                   22
and accounted for 7% of the web pages visited . Given these staggering figures, social networks present
a great opportunity for firms along with a new set of risks. The Wiley Online Library “define[s] social
network sites as web-based services that allow individuals to (1) construct a public or semi-public profile




16
   "What Is a Wiki or Blog?" Startcopying. Web. 10 July 2011.
17
   "Wiki Risks." Everything Wiki. Web. 10 July 2011. <http://wiki.wetpaint.com/page/Wiki+Risks>.
18
   Ibid
19
   "Copyright Issues." Web. 10 July 2011. <http://techsi.wikispaces.com/Copyright+Issues>.
20
   "Copyright and Collaborative Spaces: Open Licensing and Wikis." SpringerLink. Web. 9 July 2011.
<http://www.springerlink.com/content/n1140486nl56x118/fulltext.pdf>.
21
   "Facebook Says Users Hit 750M Every Day." Florida Today. 8 July 2011. Web. 9 July 2011.
<http://www.floridatoday.com/article/20110710/BUSINESS/110708022/Facebook-says-users-hit-750M-
every-day>.
22
   "Experian Hitwise - Facebook Reaches Top Ranking in US." Hitwise Intelligence - Analyst Weblogs.
Web. 10 July 2011. <http://weblogs.hitwise.com/heather-
dougherty/2010/03/facebook_reaches_top_ranking_i.html>.

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within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3)
                                                                                               23
view and traverse their list of connections and those made by others within the system.”
        Social networks are an easy way reach out to new employees, potential clients, and the business
                         24
community in general . In a study performed in September 2010, it was found that 88% of accountants
                25
use Facebook.        “Ernst & Young (E&Y) was among the first accounting firms to launch a
recruiting/networking page on Facebook, available exclusively to college students. E&Y's page contains
                                                                 26
job openings and photos of young employees at social events.”         This Facebook page has allowed E&Y
to network with students and enhance their relationship with students.
        Social media can also increase client service. “Clients can feel part of your community through
                                                                 27
the development of accounting firm social media communities.”         It is a cost effective way of reaching out
                                              28
clients when compared to traditional media .
        Tools such as Twitter provide a means of obtaining and sending out relevant and interesting
                                                                                                    29
articles to clients about their business or regulatory changes that would be relevant to them . For
                                                                                     30
example, a new tax change can be ‘tweeted’ to all the clients that are “following” .
RSM McGladrey is an example of a successful accounting firm that has engaged in social media. It
currently operates two twitter accounts and a Facebook page. This social media outreach has allowed the
                                                                                          31
firm to connect with new and potential recruits, clients and the business community .




23
   Danah, Boyd M., and Nicole B. Ellison. "Social Network Sites: Definition, History, and Scholarship -
Boyd - 2007 - Journal of Computer-Mediated Communication."Wiley Online Library. Oct. 2007. Web. 9
July 2011. <http://onlinelibrary.wiley.com/doi/10.1111/j.1083-6101.2007.00393.x/full>.
Pinkston, Megan. "CPAs Embrace Twitter." Journal of Accountancy. Aug. 2009. Web. 9 July 2011.
<http://www.journalofaccountancy.com/Issues/2009/Aug/20091828.htm>.
25
   "Facebook for Accounting Firm Partners." Boost Accounting Referrals. Web. 9 July 2011.
<http://www.boostaccountingreferrals.com/facebook-for-accounting-firm-partners/>.
26
   Greene, Jeff. "Web 2.0 and the Accounting Firm: Perfect Together." SmartPros Accounting: Articles,
CPE and Career Resources. Dec. 2007. Web. 9 July 2011.
<http://accounting.smartpros.com/x58623.xml>.
27
   "Accounting Firm Social Media | Makovsky Company." Public Relations in New York | PR Firm -
Makovsky & Company in New York. Web. 9 July 2011.
<http://www.makovsky.com/branding_interactive/Accounting-Firm-Social-Media>.
28
   "Benefits of Using Social Media Marketing for Accounting Firms « South Wales Social Media." South
Wales Social Media. Web. 9 July 2011. <http://irunmonmouth.wordpress.com/2011/03/14/benefits-of-
using-social-media-marketing-for-accounting-firms/>.
29
   Danah, Boyd M., and Nicole B. Ellison. "Social Network Sites: Definition, History, and Scholarship -
Boyd - 2007 - Journal of Computer-Mediated Communication."Wiley Online Library. Oct. 2007. Web. 9
July 2011. <http://onlinelibrary.wiley.com/doi/10.1111/j.1083-6101.2007.00393.x/full>.
Pinkston, Megan. "CPAs Embrace Twitter." Journal of Accountancy. Aug. 2009. Web. 9 July 2011.
<http://www.journalofaccountancy.com/Issues/2009/Aug/20091828.htm>.
30
   "Benefits of Using Social Media Marketing for Accounting Firms « South Wales Social Media." South
Wales Social Media. Web. 9 July 2011. <http://irunmonmouth.wordpress.com/2011/03/14/benefits-of-
using-social-media-marketing-for-accounting-firms/>.
31
   "Case Study: Can Accounting Firms Really Be Social?" B2B Voices. Web. 9 July 2011.
<http://www.google.com/url?q=http://www.b2bvoices.com/2010/01/case-study-can-accounting-firms-
really-be-social/>.

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        There are many risks associated with using social media, ranging from regulatory, operational
and information related risks. It is important to understand these risks before entering social media and to
create safeguards to mitigate or eliminate the risks.
        The SEC’s fair disclosure is a relevant regulation because it enforces firms to verify that no
insider information is leaked and through the use of social media, information can be leaked easily. For
example, if employees “tweet” information that is not public, which is classified as insider information, this
                                32
could lead to legal implications . “Best practices call for establishing social media policies to help
                                            33
manage employees’ use and content”               and these policies will mitigate the risk of regulatory violations.
        There are also reputation risks. Useful tools such as Twitter and Facebook can also be abused
and a careless or disgruntled employee can use the tool to damage the firm’s reputation by posting
                      34
inappropriate content . As well, there is the risk that hackers can access and compromise social media
         35
accounts . To manage these risks, training should be used as part of the orientation process for
employees to understand the risks and implications of social media.
Cloud Computing
        Cloud computing is commonly defined as a “model for enabling convenient, on-demand network
access to a shared pool of configurable computing resources … that can be rapidly provisioned and
                                                                                    36
released with minimal management effort or service provider interaction.”                Cloud computing presents
many benefits and risks for internal processes.
        More specifically, Software-as-Service (SaaS) offers many benefits to the profession such as
                                                              37
providing a safe and secure area to store information . SaaS solutions also offer convenience as users
                                                                    38
can access the information through the Internet at anytime .
        Most risks of using cloud computing relate to data. Data availability is one of the most important
                                       39
operational risks of using the cloud        – even the most well-known cloud computing service providers have

32
   "The Ohio Society of CPAs - Tweeting & Social Media Can Facilitate Insider Trading Claims." The Ohio
Society of CPAs. 30 Mar. 2011. Web. 9 July 2011.
<http://www.ohioscpa.com/PublicArticle.aspx?ID=3080>.
33
   Ibid
34
   "IT Examination Reveals Risks of Cloud Computing, Social Networking - Financial Institution Insight by
Clifton Gunderson LLP." Clifton Gunderson LLP. Apr. 2011. Web. 10 July 2011.
<http://www.cliftoncpa.com/publications/enewsletters/FinancialInstitutionsInsight/issues/April_2011/Cloud
ComputingRisks.asp>.
35
   Acohido, Byron. "Most Social-network Users Ripe to Be Hacked - USATODAY.com."News, Travel,
Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. 22 June 2011. Web. 14
July 2011. <http://content.usatoday.com/communities/technologylive/post/2011/06/most-social-network-
users-ripe-to-be-hacked/1>.
36
         Rapp, Peet. "Auditing the Cloud." Financial Executive May (2010): 62-63. Web. 1 June 2011.
<http://proquest.umi.com.proxy.lib.uwaterloo.ca/pqdweb?index=12&sid=1&srchmode=2&vinst=PROD&fm
t=6&startpage=-
1&clientid=16746&vname=PQD&RQT=309&did=2046898071&scaling=FULL&ts=1306972929&vtype=PQ
D&rqt=309&TS=1306973354&clientId=16746>.
37
   Pulaski, Eric. "Setting Up Your Accounting Firm for Document Management in the Cloud – CPA
Trendlines." CPA Trendlines. Web. 10 July 2011. <http://cpatrendlines.com/2010/10/02/setting-up-your-
accounting-firm-for-document-management-in-the-cloud/>.
38
   Ibid

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                                      40
experienced data availability issues . In addition, there are legal implications if a data breach has
                                           41
occurred and client information is stolen . To mitigate these risks, it is important for firms to research the
reliability of the vendors and to require explicit clauses in the Service Level Agreement that address the
data integrity, availability and confidentiality concerns.
External Processes with clients
        In any assurance engagement, clients need to provide financial records to accountants. In many
instances, clients are not in a nearby geographical location as the firm. For example, a Waterloo, Ontario
situated firm can have clients from another province or city. These clients will either need to mail in their
records, which pose the risk of the data being lost or intercepted en route, or, physically drive to the
accounting firm’s office to drop off necessary documents. Both of these methods are inefficient and
inconvenient to clients because it takes time to deliver the data and the time spent on sending in the data
is not value adding. Furthermore, when accountants need additional information, the extra documents will
have to be, again, mailed, faxed or delivered personally by the client, causing delay to the progress of the
engagement. With the advanced technology available today, these tasks can be dealt with digitally and
efficiently. A Web 2.0 online portal can be implemented by the firm; client access can be granted with
unique userids and password. The portal can enable clients to upload their relevant financial reporting
records. The accountants can then assess the information via the Internet as soon as upload is complete.
Clients are able to upload files frequently at any desired time, keeping the accountants up to date with the
latest information available. Using Web 2.0 allows accountants to receive required data in a timely
manner, resulting in a faster completion of engagements. The efficiency gained will increase client
satisfaction through faster service and reduced hassle for the clients to deliver required information.
However, a major concern of such portal is its security as information uploaded onto the portal is highly
sensitive and confidential. There are threats such as hackers obtaining confidential data, information
unavailability due to server downtimes and so forth. Also, there is a need for undisrupted Internet access,
which depends on the reliability of the Internet service provider. The cost for bandwidth for both the firms
and clients will increase with the use of this technology.
        In terms of consulting engagements, consultants and clients can also use online portals to
                                                                                                  42
streamline collaboration. However, few clients have yet to come on board with this technology .


39
   "Cloud Computing: Understand the Risks — MBAF, Florida CPA and Advisory Firm."Certified Public
Accountants, CPA and Business Consultants. 2 May 2011. Web. 14 July 2011.
<http://www.mbafcpa.com/whitepapers/1502/Cloud-Computing--Understand-the-Risks.aspx>.
40
   Dvorak, John C. "The Amazon Cloud Failure Redux | John C. Dvorak | PCMag.com."Technology
Product Reviews, News, Prices & Downloads | PCMag.com | PC Magazine. 25 Apr. 2011. Web. 14 July
2011. <http://www.pcmag.com/article2/0,2817,2384274,00.asp>.
41
   "Data Security in the Cloud." AICPA Publications, CPE, Conferences and Webcasts. 27 Sept. 2010.
Web. 14 July 2011.
<http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2010/CPA/Sep/D
ataSecurityCloud.jsp>.
42
   "Accounting Firms & Clients Benefit from the Cloud - Page 2 - CPA Practice Advisor."Practice
Management Technology Advice for Tax & Accounting Professionals - CPA Practice Advisor. 17 May

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Consultants can get the latest information to perform analysis and subsequently, provide advice to clients
on a timely matter. With the use of portals, firms can also offer remote consulting services as well as
online billing processes that simplify the paper work firms and clients have to deal with. Again, there are
security concerns present for this form of billing management. Firms must ensure that the portals are
secured, data are encrypted and access is restricted. Although collaboration between the client and firm
are maximized, the line between the client’s business and the firm’s begin to blur as the two parties act
more and more in tandem..
        Furthermore, through the cloud, firms can assist clients with their day-to-day bookkeeping issues
if the clients use a web-based accounting program such as any of QuickBooks’ Online products. Clients
can inform the accountants any problems they are experiencing and the accountants can then log onto
the client’s online account and offer a solution. This process enhances customer service. Another cloud
accounting application is Intacct Accountant Edition, which both the firm and client have access to the
client’s information in real time, 24/7. This application allows the firm to be deeply involved in the client’s
business which may raise similar issues to consulting services discussed previously. Intacct claims the
                                                                                                              43
close relationship established from the high degree of collaboration increases the rate of client retention ,
presenting an important benefit to the accounting firms which often struggle in retaining their clients. The
usage of the cloud is most applicable to small and medium sized firms that offer bookkeeping assistant
service. However, the pricing model for such cloud based product is inconsistent and can actually cost
                                    44
more than traditional software ; firms have to perform a cost-benefit analysis before adopting cloud
based software.
        Lastly, another benefit of cloud based service relates to document management – both for the
firms and the clients. Fujitsu Computer Products of America, Inc. – a market leader in document imaging
scanners and services – assists in the reduction of documentation storage space needed. In offices
where square footage is scarce, retaining documentation in the form of soft copies will free up valuable
space. As well, they can be easily assessed online when they are needed. Furthermore, with proper
labeling and categorizing, documents can be filed in a systematic manner that eases search efforts in the
future. However, there is an issue with the level of security companies provide on servers used to stored
the scans; therefore, companies should choose a service provider with high level of security.
Facilitation Audit
        In the past, “concerns have been raised regarding a deteriorating audit trail and diminishing
                    45
internal control”        due to the automation of accounting functions. Such automations resulted in “the loss of


2011. Web. 14 July 2011. <http://www.cpapracticeadvisor.com/news/10267561/accounting-firms-clients-
benefit-from-the-cloud?page=2>.
43
   "Cloud Computing and the Top CPA Firm Challenges for 2010." View from the Cloud, the Intacct
Blog! 12 May 2010. Web. 14 July 2011. <http://blog.intacct.com/2010/05/cloud-computing-and-top-cpa-
firm.html>.
44
   Ibid
45
   “XBRL-Beyond the Basics”. Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2010.
Vol. 80, Iss. 5; pg. 62, 10 pgs

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a paper-based audit trail [as] electronic accounting systems may not generate any hard copies of source
                                                                          46
documents to provide evidentiary support for past transactions” . In addition, as part of an audit trail,
electronic records are easier to destroy or alter compared to paper records, thus “raising concerns
                                                           47
regarding the security and validity of the audit trail.”        Some critics also argue that there is lack of “proper
documentation, segregation of duties, controls over access and exchanges, or other internal controls” in
automated accounting systems to ensure the accuracy and security of data, therefore leading to a weaker
                                48
internal control environment . The following sections describe how technologies such as XBRL and
cloud computing can help to enhance audit trail and/or internal control.
XBRL
        XBRL is an application that supports information modeling and accounting expressions in
                      49
financial reporting . The main benefit of using XBRL for accountants is “improved data flow and data
                                                                                                               50
sharing, as well as the automation of many information consolidation and aggregation processes” . In
addition to using XBRL for financial reporting purposes, XBRL can be used to enhance audit trail and
                 51
internal control , therefore facilitating the audit. It should be noted that auditors do not directly use XBRL
themselves but rather, the implementation of XBRL in clients’ systems, will help auditors in their audits.
First of all, data accuracy is automatically checked via “XBRL’s data and taxonomy validation
            52
processes” ; auditors can obtain error-free financial data faster and devote more time in performing
                                                                                     53
analytical procedures rather than data gathering and checking its reliability . By adding outside XBRL-
                                                                                    54
tagged information such as “rating agencies...complex statistical models”                and other third party sources,
auditors can efficiently obtain key financial metrics, “perform other analytical procedures and make critical
                                                   55
judgments regarding... subsequent audit effort”         to obtain sufficient appropriate audit evidence.
Regarding risk assessment of an audit, XBRL “can make the process faster, more accurate, more
comprehensive, and more current” achieved from using more information, updated in close to real time, in
                           56
risk assessment models . “Risk assessment using XBRL financial information can increase the quality,




46
   Eñe E. Cohen, "The Need for and Issues Surrounding the Seamless Audit Trail," www.oasis-open.org,
2008
47
   “XBRL-Beyond the Basics”. Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2010.
Vol. 80, Iss. 5; pg. 62, 10 pgs
48
  “Ibid
49
   Ibid
50
   Ibid
51
   Eñe E. Cohen, "The Need for and Issues Surrounding the Seamless Audit Trail," www.oasis-open.org,
2008
52
   “XBRL-Beyond the Basics”. Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2010.
Vol. 80, Iss. 5; pg. 62, 10 pgs
53
   “Using XBRL Global Ledger to Enhance the Audit Trail and Internal Control”.
Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2011. Vol. 81, Iss. 5; pg. 64, 8 pgs
54
   Ibid
55
   “XBRL-Beyond the Basics”. Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2010.
Vol. 80, Iss. 5; pg. 62, 10 pgs
56
   Ibid

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timeliness, and frequency of risk assessment, while decreasing the overall cost of risk assessment.”
Using older financial statements could distort the current financial position, inaccurately describe the
underlying economic reality, and therefore may cause errors in auditors’ judgment.
        Furthermore, XBRL can help to accelerate the implementation of continuous auditing. From a
survey performed by PwC on 392 companies, “81% reported that they either had a continuous auditing or
                                                                         58
monitoring process in place, or were planning to develop one.”                Since XBRL renders transactional data
                          59,60
machine-understandable            , “XBRL will help auditors obtain and validate business data on a much
                          61
closer to real time basis” , resulting in identifying potential problems in the financial statements earlier. In
addition to accelerating the implementation of continuous auditing, having machine-readable data from
XBRL also improves internal controls: XBRL eliminates mathematical errors and since “XBRL formatted
business data can be transferred from machine to machine [,] XBRL can be used to eliminate manual
                                                                                  62
intervention...with its associated labour costs and possibility for error.”
        In terms of leaving an audit trail, XBRL captures two pieces of important information: first, it
identifies “whether the data came in from another automated system or were manually entered [; second],
information can be maintained regarding the physical location of source documents (e.g., a filing cabinet
                                                                                       63
or electronic storage), helping an auditor find the source documentation.”
        Although XBRL has benefits for both internal and external auditors, they should be aware of the
                                                 64
implementation challenges present by XBRL . XBRL is challenging and complex to learn and use.
“According to a recent survey by the Institute of Internal Auditors, 51% of internal auditors confess that
                                                          65
they lack a good understanding of XBRL technology.”            In addition, “the lack of standardization in XBRL
                                          66
software hampers available training.”
        There is also an increased network security risk because XBRL can “provide live links from
                                                               67
financial documents back to the underlying databases.”              “[S]ubstantial security risks exist if the security
of the operating system, application, and database is inadequately configured...and could allow




57
   Ibid
58
   www.pwc. com/en_US/us/internal-audit/assets/state_ internal_audit_profession_study_06.pdf
59
   U.S. Murthy and S.M. Groomer, "A Continuous Auditing Web Services (CAWS) Model for XML Based
Accounting Systems," University of Waterloo Symposium on Information Systems Assurance, Oct. 31-
Nov. 1, 2003
60
   Rezaee Zabihollah, Ahmad Shargatoghlie, and Peter McMickle, "Continuous Auditing: Building
Automated Auditing Capability," Auditing: A Journal of Practice & Theory , vol. 21, no. 1, 2002, pp. 147-
163
61
   “XBRL-Beyond the Basics”. Pascal A Bizarro, Andy Garcia. The CPA Journal. New York: May 2010.
Vol. 80, Iss. 5; pg. 62, 10 pgs
62
   Ibid
63
   Ibid
64
   Ibid
65
   Ibid
66
   Ibid
67
   Ibid

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unauthorized changes or even the destruction of the transactional data supporting the financial
               68
statements.”        The auditors should consider the adequacy an entity’s security controls if such links exist.
Cloud Computing
          Cloud computing can help facilitating internal audits using “cloud based analytics and business
                      69                                                                        70
intelligence tools”        along with access of “massive public data sets for rich analytics”        such as census,
human genome and federal contract data.
          The risks of using cloud computing, on the other hand, include data security and reliability.
Companies will likely reveal confidential data when using cloud based analytics and business intelligence
tools, and the protection of data is out of companies’ own controls. Companies should inquiry cloud
providers regarding “intrusion detection, firewalls, physical security, timely application of security patches,
                                                                71
and data leak protection, among other safety measures” to choose a cloud provider with adequate
security measures. In terms of reliability, companies need to consider choosing a cloud provider with up
to standard quality-of-service where the cloud service is available when needed with minimal down
     72
times .
Other Areas
          New technologies such as Web 2.0 and cloud computing are useful in other areas such as
training and updating employees about new methodologies and professional standards. At Deloitte,
webcasts are used to update employees from across the country simultaneously through the use of web
conferencing technology. This technology also allows employees from across the country to pose
                                                                     73
questions to senior partners about the new methodologies . BDO has also developed an in-house online
university that provides training to all employees across the country. To complement in-class learning,
                                                                          74
BDO also requires its CA students to participate in online learning . The issues with webcasts and online
training are the loss of the interactive component of learning and the ability to verify if participants are
paying attention.
Conclusion
          There are many ways to incorporate Web 2.0, cloud computing, and other technologies such as
XBRL into the accounting profession through internal processes, external processes with clients, and
facilitation of audits. However, there are also associated security and legal risks. Firms need to fully

68
   Ibid
69
   "Cloud Computing - The Role of Internal Audit." Ernst & Young. 8 Oct. 2009. Web. 14 July 2011.
<http://www.isaca-oregon.org/docs/Cloud%20Computing%20-
%20The%20role%20of%20Internal%20Audit.pdf>.
70
   Ibid
71
  "Cloudy with a Chance of Risk: Top Five Internal Audit Considerations for Cloud Computing - Grant
Thornton LLP." Grant Thornton LLP. Spring 2011. Web. 9 July 2011.
<http://www.grantthornton.com/portal/site/gtcom/menuitem.8f5399f6096d695263012d28633841ca/?vgne
xtoid=d3a493e746d0f210VgnVCM1000003a8314acRCRD>.
72
  Ibid
73
   Iv, Kieng. ACC 626 Assignment Interview. 10 July 2011.
74
   "LEARNING AND DEVELOPMENT." BDO. Web. 12 July 2011.
<http://www.bdo.ca/careers/professionals/learning-and-development.cfm>.

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understand the risks and implement safeguards to minimize the risk exposure before adopting these new
technologies; a cost-benefit analysis is also needed to determine whether the benefit of using these
technologies exceed the costs of mitigating the associated risks. If benefits exceed the costs, firms should
engaged in these technologies to help them improve staff training, increase client retention rate, and
increase efficiency of consulting, assurance, and other engagements.




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