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Intellectual Capital And Business Performance

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Discuss about the Intellectual Capital and Business Performance.



With the increasing ramification of changing business environment there are several technologies which are gaining momentum throughout the time. Accounting is the simple term which is used for reflecting the process of keeping financial accounts. In this report a complete study has been prepared over the use of cloud based accounting system and how it should be adopted by organizations for making their accounting information system more effective. In addition to this, comparative analysis between accounting information system and cloud based information system has been taken into consideration to reflect the vulnerability of both accounting system in keeping records and collection of financial accounts of company.

Accounting information system

With the increasing changes in technology and ramified inbound and outbound activities of organization firms are more inclined toward using cloud based accounting system. Nonetheless, small business enterprises do not need to purchase expensive business accounting software programs or spend hours lost in complicated reports. It is concerned with accounting software that is hosted on remote servers. This provides accounting capabilities to business in accounting tools such as SAAS (Software as a service). If small business enterprises will use cloud based accounting software then all the data would be sent into “The cloud” where it will be processed and returned to users in determined approach

Cloud computing accounting system

Cloud computing accounting software is developed technology which is used to collect accounting data, making financial information and other required data accessible to users and manager  wherever they want provided that internet is available there. With the traditional accounting system, organization has to struggle with posting data into ledgers, preparing financial statement by adjusting all the financial data in set format (Chen, et al. 2014).

In order to understand merits and demerits of cloud based accounting system following differences has been described as below (Toor, et al. 2014).

Differences between AIS and CCAS

Accounting information system

Cloud computing accounting system

It is a structure of that a business uses to collect, store, manage, retrieved and report its financial data so that it could be deployed by financial managers, accountants, consultants and auditors of the firm.

Cloud computing accounting services are accompanied with process which is used to make automation in storing and collecting accounting data.

It consumes more time and renders possibilities of several mistakes in the preparation of financial statement.

In this accounting system everything is done by machines and all works are done by system networks which results into less time consuming process.

It is accompanied with long route process.

This software is developed technology which is used to collect accounting data, making financial information and other required data accessible to all users with the help of internet connectivity.

It is beneficial for the organizations with less complicated business functioning.

On the other hand If SME uses cloud based accounting software then it will result into automation in gathering and collecting financial data. In addition to this, it will also reduce the time consumption of accountant in preparing journal entries and ledger of financial data.

Traditional accounting system is also accompanied with high maintenance cost such as hiring accountant, data entry feeders, expenses in data collection process and several expenses in research and evaluating present accounting standards. The most effective advantage of adopting cloud based accounting software is related with its backup plan of data. It is considered that if organization has uploaded its data on clouds then it could download the data from anywhere and automation in server creates backup for all data. While, traditional accounting system may poses high amount of threat of losing data if something goes wrong in organization such as natural disaster and other acts of god.  It is found that use of cloud computing software result into several benefits such as high security of data, easy availability of information and systematic working process (Helo, et al. 2014).


Potential risk or limitation in adopting cloud based accounting system

It is observed that using computerized accounting system keeps all of the information organization and systematic manner and makes finding and accessing data in easy and determined manner. Nonetheless, there are several hackers and ill-intentioned persons who take advantage of information to make personal profit. There are several limitations and challenges which have been seen cloud based accounting system such as denial of services, hackers peep into the cloud to gain confidential information of companies. In addition to this, the most valuable risk is related with cost- benefits of installing cloud based accounting system. It is evaluated that if organization is not earning enough money which could be used to compensate the cost associated with installing cloud based accounting system then it would result into big loss to organization. Cloud based accounting system is technical system. Therefore, there is a chance of technical error in file which may result into drastic loss to organization in preparing financial statements (Cleary and Quinn, 2016).


Cloud based accounting system keeps all the information in optimized and in once place. Therefore, finding and assessing of financial information on accounting software program is much easier than other traditional accounting systems. It is evaluated that if Small and medium size enterprises is accompanied with large amount of inbound and outbound activities then it would be advisable for them to adopt cloud based enterprises resources planning. In addition to this, if a firm is incurring loss from its business functioning and want to adopt enterprises resources planning in its accounting system then it would not be called a rational decision. Therefore, it is inferred that small business enterprises has to consider its several factors such as nature of business, complexity of business activities, laws, rules and regulation of government. Now in the end gracious advice would be for small business enterprises that are inclined toward making information in snap, with less confusion and aggravation then should adopt cloud based accounting software system (Pierce, et al. 2015).


Cloud based accounting system is accompanied with several benefits which provides intense motivation to organization to implement automation in accounting system of organization. Now in the end it would be inferred that installation of cloud based accounting system would result into several complexity and high cost. Therefore each and every organization need to make capital budgeting analysis and cost and benefits analysis before installing cloud based accounting system in determined approach. It would be reflected that cloud based accounting system is very imperative for organization for the sustainable developing of their business functioning.



Cleary, P. and Quinn, M., 2016. Intellectual capital and business performance: An exploratory study of the impact of cloud-based accounting and finance infrastructure. Journal of Intellectual Capital, 17(2), pp.255-278.

Helo, P., Suorsa, M., Hao, Y. and Anussornnitisarn, P., 2014. Toward a cloud-based manufacturing execution system for distributed manufacturing. Computers in Industry, 65(4), pp.646-656.

Toor, S., Osmani, L., Eerola, P., Kraemer, O., Lindén, T., Tarkoma, S. and White, J., 2014. A scalable infrastructure for CMS data analysis based on OpenStack Cloud and Gluster file system. In Journal of Physics: Conference Series (Vol. 513, No. 6, p. 062047). IOP Publishing.

Pierce, D., Mworks Worldwide, Inc., 2015. Integrated enterprise software and social network system user interfaces utilizing cloud computing infrastructures and single secure portal access. U.S. Patent 9,003,297

Chen, Z., Hu, W., Ha, K., Harkes, J., Gilbert, B., Hong, J., Smailagic, A., Siewiorek, D. and Satyanarayanan, M., 2014, February. QuiltView: a crowd-sourced video response system. In Proceedings of the 15th Workshop on Mobile Computing Systems and Applications (p. 13). ACM.


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