What is a key disadvantage of cloud accounting?

A key disadvantage of cloud accounting is the reliance on a cloud service provider. In this setup, the user's data and accounting processes are dependent on the provider's infrastructure and services. This dependence means that any issues on the provider's end, such as outages, downtime, or service interruptions, can directly impact the user's access to their accounting information and applications. Additionally, if the provider experiences a data breach or fails to comply with regulatory standards, it can jeopardize sensitive financial data. This level of trust required in the cloud service provider can be a concern for businesses, especially those that handle sensitive financial information or are subject to stringent compliance regulations.

Other options, while they may present a contrast to this disadvantage, do not capture the core risk associated with cloud accounting. Enhanced security measures and improved disaster recovery are often benefits of cloud solutions, and while higher operational costs can occur, they are not universally applicable or inherent disadvantages of cloud accounting.