Business info Flashcards
(16 cards)
What is cloud computing and how does SaaS relate to AIS?
Cloud computing provides on-demand computing services over the internet.
SaaS (Software-as-a-Service) is a model where accounting software is hosted remotely and accessed online.
It allows real-time collaboration, remote access, and automatic updates.
Example: Xero, QuickBooks.
List and explain two benefits of SaaS for accounting firms.
- Cost Efficiency – No need for expensive on-premise servers; predictable subscription pricing.
- Scalability – Easily scale services with business growth, accommodating more users or features without full reinstallation.
What are two major risks of cloud-based accounting platforms?
- Vendor Lock-in – Businesses may struggle to change providers due to proprietary formats and retraining costs.
- Cybersecurity & Jurisdictional Risks – Sensitive data may be hosted in foreign servers, raising legal and privacy concerns.
How does cloud accounting transform the accountant’s role?
Automates routine tasks (data entry, reconciliation), shifting the role toward strategic advisory, financial analysis, and interpreting analytics.
Requires accountants to develop digital fluency and communication skills to advise management.
Define Enterprise Systems (ES) and give examples.
ES are integrated software platforms that manage cross-functional business processes using a shared database. Examples: ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), SCM (Supply Chain Management).
What is ERP and how does it relate to ES?
ERP is a type of ES that centralizes core business functions like finance, HR, manufacturing, and procurement. All ERPs are ES, but not all ES are ERPs (e.g. CRM systems are ES but not ERP).
List 3 benefits of ERP systems in accounting.
- Operational Efficiency – Automates tasks such as payroll and invoicing.
- Real-Time Reporting – Enables fast decision-making and performance tracking.
- Financial Transparency – Consistent and traceable data improves audit readiness.
What are 3 major limitations of ERP systems?
- High Implementation Cost – Includes licenses, consultancy, and user training.
- Integration Difficulty – Especially with outdated legacy systems.
- Over-Customisation Risk – Can make updates costly and introduce inconsistencies.
How do ES support different managerial decision levels?
- Operational: Automates daily processes (e.g., sales orders).
- Tactical: Supports mid-term planning (e.g., budget variance reports).
- Strategic: Enables scenario planning and long-term strategy (e.g., profitability analysis).
What are two benefits of AI tools in auditing?
- Anomaly Detection – AI scans large volumes of transactions to flag irregularities.
- Increased Efficiency – Automates repetitive audit tasks, allowing wider coverage and faster turnaround.
What are two limitations of using AI in audit work?
- Black-Box Algorithms – Lack of explainability makes it difficult to understand or justify AI decisions.
- Over-Reliance – Auditors may blindly trust AI, undermining judgment and professional responsibility.
How does AI reshape the auditor’s role?
Auditors now act as overseers of AI, validating outputs and maintaining ethical governance. Their role shifts to interpretation, skepticism, and ensuring AI use complies with professional standards.
What ethical principles must auditors uphold when using AI?
Per the ICAEW Code:
1. Integrity (honesty and fairness)
2. Objectivity (no bias)
3. Professional Competence
4. Due Care (act diligently)
Compare descriptive, predictive, and prescriptive analytics with accounting examples.
- Descriptive: Summarises past performance (e.g., monthly profit reports).
- Predictive: Forecasts future events (e.g., expected cash flow using trends).
- Prescriptive: Recommends optimal actions (e.g., suggesting a cost-cutting strategy).
Explain the 5Vs of Big Data and their accounting relevance.
- Volume – Large transaction volumes processed daily.
- Velocity – Fast-paced data from online systems.
- Variety – Data from different sources: structured (ledgers), unstructured (emails).
- Veracity – Ensuring accuracy and reliability of financial data.
- Value – Turning raw data into actionable insights (e.g., investment decisions).
Why is data analytics important for accountants today?
Accountants must extract meaning from dashboards and KPIs, and translate them into recommendations. Analytics supports performance monitoring, forecasting, risk assessment, and strategic planning.
