CFOs have faced the challenge of juggling multiple regulatory requirements concerning data handling, data privacy, and data safety as part of the bigger financial puzzle. This is one of the many reasons why Cloud computing has seen increased adoption among finance functions across medium-sized and large businesses.
Even though Making Tax Digital is a sign of more compliance rules to come, many financial functions still have a difficult time maintaining and confirming compliance due to their legacy systems.
Many solutions providers understand this struggle and have upgraded their Cloud accounting software offering to provide greater compliance and security. Going forward as new laws and regulations continue to arise, software provider partnerships will prove to be the future of robust financial compliance.
Following on from our article discussing the importance of financial governance and compliance, we will explore how Cloud technology addresses compliance concerns while offering long-term benefits for compliance across the board.
The importance of robust financial compliance
A significant parameter in the finance function is to have a robust compliance management process. CFOs must ensure that they have proper compliance checks in place for the following reasons:
- To ensure that the standards set by regulators in the UK are adhered to and that requirements are up to date.
- To avoid facing heavy monetary fines imposed by regulators for non-compliance, which may, in some cases, lead to business closure.
- To preserve the reputation of the business and to prevent costs associated with losing trust from valued customers.
Common challenges for compliance within Cloud technology
Today, Cloud technology has become an integral part of business operations across all industries, but it is not without risks. Take, for example, apps that run in the Cloud. Applications are being launched daily with new codes that, without proper monitoring, may negatively impact compliance posture.
Compliance programs set a baseline for control, but these are based on common threat vectors. Compliance standards may recommend strong passwords to protect system access, but they may not consider attackers using phishing and injection attacks to grab credential information or bypass password controls entirely.
The theft of Cloud-based data and other major security breaches have influenced the development of better Cloud security practices and the development of automatable controls.
It is, however, a reactive approach, which does not offer solutions for unknown or future threats. Cloud microservices present a greater challenge because they not only need to meet compliance standards, but they also need to be closely monitored for security and compliance posture management.
How does Cloud technology address these compliance concerns?
To address these potential risks, we must first understand how compliance monitoring and auditing programs can be set up and monitored securely.
In terms of compliance, Cloud technology provides the best solution to businesses by ensuring that key elements such as logging, data control, and classification, as well as redundancy and maintenance, are met.
Cloud computing offers an easy way to implement this key security principle of compliance. Since Cloud software providers maintain multiple data centers around the world, they can replicate workloads to aid in data recovery should an entire data centre become damaged or destroyed by a natural disaster.
Data log retention
Data compliance can be achieved with a scaled approach and attention to detail. It's not just about tracking data; it's about keeping track of the right data, and reliable Cloud software providers help ensure that every detail is recorded. Log retention requirements contain the length of time data must be stored according to regulations. Cloud services facilitate this by providing easy access to storage, native support for aging data, and low-cost, long-term storage options.
To prevent customer-facing online banking systems from accessing information on their back-end systems, banks need to classify the data before controlling access. Today, Cloud software providers and third-party MSPs offer services that automate tagging and data classification, making it easier to identify data and understand its location and access details. In addition, finding misclassified or unlabeled sensitive information has become easier with new tools and capabilities that are built into the Cloud platform to ensure user convenience.
Maintaining network and application visibility is crucial for automating redeployments and avoiding security breaches. These processes can be automated in the Cloud, making updating and implementing applications and deployments easier and more efficient, which reduces the risk of an out-of-date network.
What are the benefits of adopting Cloud technology for wider compliance?
Businesses must follow regulations to manage day-to-day operations, which is why a growing number of medium-sized and large businesses have migrated their financial functions to the Cloud. By using robust Cloud accounting software, compliance with regulatory requirements is no longer a manual chore for finance teams.
Complying with government regulations is also enhanced by the Cloud's high availability and scalability of resources, while it also leads to improved financial cybersecurity.
Many finance functions have already embraced the Cloud for its ability to make operations faster, more scalable, and more flexible, as well as its robust security. This level of agility also facilitates the rapid deployment of new applications, which is key to driving innovation.
Enhanced security through automated systems
Financial data kept by businesses is the most valuable and sought-after by cyber criminals. Therefore, faster deployment release cycles and automated deployments are some of the key factors attracting finance functions to adopt Cloud accounting software in this day and age. As soon as a breach occurs, a patch can be quickly implemented across the automated fleet.
The Cloud provides multi-layered security to guard against network attacks such as distributed denial of service (DDoS). It also facilitates network segmentation, enabling businesses to achieve more prescriptive network design, limiting exposure and reducing the risk of a breach.
Agile software updates
Implementing automated deployments means that the finance function can release updates and new software faster compared with outdated accounting software legacy systems. This seamless software update process enables businesses to quickly respond to customers' needs alongside resolving issues with systems in good time.
Ability to scale
Using the Cloud, finance functions can easily scale up and down their network infrastructure to meet business demand accordingly. This is thanks to the physical infrastructure being operated and maintained by their Cloud software providers.
How Advanced Financials can help you improve compliance
Cloud accounting software provides real opportunities for finance teams to simplify controls, streamline reporting and scale securely - all while staying on top of new compliance standards and regulations.
There may be a variety of reasons why some businesses might hesitate to make the move to the Cloud. But the advantages of improved accountability, enhanced security, and operational standardisation play a significant role in improving wider governance and compliance too.
Managing your financial governance and compliance is an important part of your business, but it isn't something you should be afraid of. The good news is that our Cloud-based accounting software, Advanced Financials, adheres to UK compliance and legislation guidelines. It is regularly updated with the latest financial legislation, incorporating aspects of GDPR, Making Tax Digital and Brexit, which makes life easier for finance teams.